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Restructuring and insolvency law covers the legal rules and processes that apply when individuals or businesses cannot meet their financial obligations to creditors. In York, Canada, insolvency matters are governed by a mix of federal insolvency statutes and provincial commercial and enforcement laws. Common federal tools include consumer proposals, Division I proposals, bankruptcy under the Bankruptcy and Insolvency Act, and court-supervised corporate restructurings under the Companies' Creditors Arrangement Act. Provincial law affects secured creditor remedies, priority rules, and enforcement procedures, and local courts in Ontario hear matters arising from both federal and provincial regimes. Practical questions in York typically involve small and medium enterprises, consumer debt, landlord and tenant disputes, payroll and employment claims, secured creditor enforcement, and director liability for insolvent companies.
A lawyer who specializes in restructuring and insolvency can help you understand options, protect your rights, and navigate formal processes. You may need legal help in situations such as:
- Your business is unable to pay suppliers, lenders, or wages and you need guidance on restructuring options or an immediate stay of proceedings.
- You are facing a threatened or actual receivership, seizure of assets, or enforcement by secured creditors.
- You are considering a consumer proposal or personal bankruptcy and want to know the consequences and alternatives.
- You are a director concerned about potential personal liability, preferences, or claims by creditors.
- You are a creditor seeking to collect on claims against an insolvent debtor or to protect secured interests.
- Your company needs a court-supervised restructuring under the Companies' Creditors Arrangement Act or a Division I proposal under the Bankruptcy and Insolvency Act.
- There are complex creditor hierarchies, pension issues, tax claims, or cross-border insolvency elements that require specialized legal analysis.
Key legal regimes and local aspects relevant in York include:
- Federal insolvency statutes - The Bankruptcy and Insolvency Act governs personal bankruptcies, consumer proposals, Division II and Division I proposals, and aspects of corporate insolvency. The Companies' Creditors Arrangement Act provides a framework for large restructurings under the supervision of the Ontario Superior Court of Justice.
- Office of the Superintendent of Bankruptcy - The federal regulator supervises Licensed Insolvency Trustees, licensing, and administration of bankruptcies and proposals. Licensed Insolvency Trustees are the only professionals who can administer consumer bankruptcy in Canada.
- Provincial enforcement and priority rules - Ontario law, including the Personal Property Security Registration system and provincial execution remedies, affects how secured and unsecured creditors enforce claims and determine priorities for assets located within the province.
- Court supervision - Insolvency and restructuring cases that require judicial approval or a stay are heard by the Ontario Superior Court of Justice in the region serving York. The court supervises CCAA and Division I proposal proceedings, and approves many aspects of restructuring and insolvency processes.
- Employment and pension law - Unpaid wages, source deductions, and certain pension and benefit claims can have special priority in insolvency. Provincial employment standards and federal insolvency law interact to determine employee rights and post-filing claims.
- Tax claims - Federal and provincial tax authorities, particularly the Canada Revenue Agency, frequently assert priority claims or setoffs that affect recoveries in insolvency.
Bankruptcy is a judicially supervised process that results in discharge of eligible debts after an estate is administered by a Licensed Insolvency Trustee. A consumer proposal is a legally binding offer to creditors to repay part of the debt over time or extend payments; it avoids bankruptcy if accepted and often preserves more assets and credit options. Both are governed by federal law and administered by Licensed Insolvency Trustees.
A Division I proposal is a formal restructuring option under the Bankruptcy and Insolvency Act for companies or individuals with larger or more complex creditor structures who need creditor approval and court oversight. It is commonly used when a debtor seeks to reorganize liabilities outside of bankruptcy, sometimes as an alternative to CCAA proceedings for smaller or mid-size restructurings.
The Companies' Creditors Arrangement Act, or CCAA, is a federal statute that allows insolvent corporations owing more than a specified threshold to obtain court protection from creditors while proposing a plan of arrangement or compromise. It is generally used by larger companies with complex creditor bodies and can involve creditor committees, court-sanctioned stays, and extensive restructuring tools.
Preserve documents and financial records, stop transferring or hiding assets, notify secured creditors where appropriate, and contact an insolvency lawyer or Licensed Insolvency Trustee promptly. In many cases, filing a Notice of Intention to make a proposal or seeking court protection can impose an automatic stay that pauses enforcement actions while you work on a solution.
Directors can face personal liability in certain circumstances, including unpaid source deductions, unremitted payroll deductions, failure to remit certain taxes, or wrongful or fraudulent conduct. Directors should seek legal advice early, keep accurate records, and avoid transactions that unfairly prefer one creditor over others once insolvency is foreseeable.
Secured creditors generally retain rights against the collateral that secured their claims, subject to priorities and court orders. In restructuring proceedings, secured creditors may negotiate terms, seek adequate protection, or obtain relief from the stay. The outcome depends on the contractual security, registration status, and proceedings type.
Credit reporting practices vary, but a first-time bankruptcy typically remains on a credit bureau report for several years after discharge. A consumer proposal also appears on a credit report for a similar period. A Licensed Insolvency Trustee or a credit counselor can give more precise timing and explain options to rebuild credit.
Whether you can keep assets depends on the value of the assets, the type of proceedings, and exemptions under provincial law. In some cases, people can keep secured assets by continuing payments or negotiating with the secured creditor. An insolvency lawyer or Licensed Insolvency Trustee can review asset values and available exemptions to advise on likely outcomes.
Costs vary widely based on complexity. Consumer proposals and bankruptcies involve Trustee fees set under federal rules and possible legal fees for advice. Corporate restructurings, CCAA cases, and contested proceedings can involve substantial legal, accounting, and trustee or receiver fees. Ask for a written estimate of likely fees during an initial consultation.
Both professionals play distinct roles. Licensed Insolvency Trustees administer bankruptcies and consumer proposals and can provide practical restructuring advice. Insolvency lawyers provide litigation, negotiation, court representation, and strategic restructuring advice, especially for complex corporate matters. For many matters, you will benefit from a team that includes both a lawyer and a Trustee or restructuring accountant. Seek professionals with experience in local proceedings and positive references.
Helpful bodies and resources to consult in York include:
- Office of the Superintendent of Bankruptcy - the federal regulator for trustees and insolvency filings.
- Licensed Insolvency Trustees - professionals licensed to administer bankruptcies and proposals; local offices operate throughout York Region.
- Ontario Superior Court of Justice - the court that handles many restructuring filings and court-supervised processes in the region serving York.
- Canada Revenue Agency - for information about tax claims and collections in insolvency.
- Ontario Ministry of Labour - for questions about unpaid wages and employment standards.
- Provincial Personal Property Security Registration system - for checking registered security interests and priorities.
- Professional associations such as the Canadian Association of Insolvency and Restructuring Professionals - for professional standards and lists of trustees and restructuring professionals.
- Local business support services and small business centres in York - for practical guidance and links to business recovery programs and local advisory services.
If you need legal assistance for restructuring or insolvency in York, consider the following practical steps:
- Gather documents - assemble bank statements, loan and lease agreements, creditor notices, payroll records, tax returns, and recent financial statements or cash-flow forecasts.
- Get an initial consultation - contact a local insolvency lawyer or Licensed Insolvency Trustee for a focused assessment. Many professionals offer an initial intake to identify urgent steps and likely options.
- Protect assets and stop risky transactions - avoid transferring assets, paying selected creditors ahead of others, or taking actions that might be challenged as preferences or fraudulent conveyances.
- Explore options - discuss informal workouts, consumer proposals, Division I proposals, CCAA restructuring, or bankruptcy, and get estimates of timelines and costs for each option.
- Preserve evidence - maintain accurate records of communications with creditors, payments, and business decisions taken as insolvency looms.
- Act promptly - insolvency matters can evolve quickly, and early engagement with professionals often preserves more options and reduces the chance of costly enforcement actions.
If you are uncertain where to start, contact a local Licensed Insolvency Trustee or an insolvency lawyer for an intake meeting. They can explain applicable federal and provincial rules, provide a realistic plan for your situation, and, if needed, coordinate filings or court applications on your behalf.
