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Browse our 1 legal article about Restructuring & Insolvency in Canada written by expert lawyers.
Restructuring and insolvency law in Canada is a highly specialized area that deals with financially distressed businesses and individuals. The goal of this legal framework is to balance the interests of debtors, creditors, and other stakeholders. Canadian law offers mechanisms for distressed companies and individuals to reorganize their affairs, address outstanding debts, and continue operations or, if necessary, liquidate assets in an orderly manner. The process is governed by several federal and provincial statutes, with the intent to promote fairness, maximize asset value, and provide fresh starts where possible.
If you or your business faces financial difficulties, a restructuring and insolvency lawyer can provide crucial guidance. Here are some common situations where legal help is essential:
A qualified lawyer can assess your unique situation, identify the best route forward, and protect your legal and financial interests throughout the process.
In Canada, restructuring and insolvency are primarily governed by federal laws, with the most significant statutes being the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA). The BIA provides procedures for both personal and corporate bankruptcies and proposals. The CCAA allows larger companies undergoing severe financial distress to restructure their debts and continue operations. Provincial laws may also apply in certain aspects, especially regarding property rights and civil procedures.
Key aspects include:
Bankruptcy and restructuring processes are court-supervised, involve strict timelines, and must comply with detailed requirements. Legal advice is crucial to navigate these complex rules efficiently.
Bankruptcy in Canada is a legal process that involves the liquidation of assets to repay creditors, potentially leading to the end of a business or impacting an individual's financial standing for several years. Restructuring aims to help reorganize debts, allowing the individual or company to continue operating while paying back creditors under new terms.
Most cases are overseen by Licensed Insolvency Trustees (LITs) appointed by the Office of the Superintendent of Bankruptcy (OSB), with court involvement in larger or more complex matters.
Yes, individuals can file a consumer proposal under the BIA to restructure their debts by offering to pay a portion over a set period, avoiding the more serious consequences of bankruptcy.
Generally, companies with debts exceeding $5 million choose the CCAA due to its flexibility and suitability for complex restructurings, while smaller businesses use the BIA procedures.
A majority of creditors, representing at least two thirds in value and over half in number, must approve a proposal. Once approved by the court, all creditors are bound by the terms.
Employees are considered preferential creditors for certain unpaid wages and vacation pay, but outcomes may depend on the available assets and restructuring or liquidation plan.
Not all debts can be eliminated in bankruptcy. Exceptions include child support, alimony, court fines, and some student loans. A lawyer can help clarify which debts remain.
A first-time bankruptcy generally lasts nine months, but it could be longer if you have surplus income or prior bankruptcies.
Certain assets are exempt from seizure, depending on provincial laws. These may include basic household goods, some personal effects, and a portion of your home equity.
Both bankruptcy and restructuring proceedings (including consumer proposals) will significantly impact your credit rating. However, consumer proposals often result in a more favourable outcome than bankruptcy.
Several reputable organizations and government agencies provide information and assistance regarding restructuring and insolvency in Canada:
If you or your business are facing financial distress, the following steps can help you navigate the legal aspects of restructuring and insolvency:
Obtaining early legal advice is key to making informed decisions and maximizing the opportunities for resolution, whether through restructuring, proposal, or bankruptcy proceedings.
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Disclaimer:
The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation.
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