BANKRUPTCY AND INSOLVENCY 2025 (COMPLETE
SOLUTIONS)
Two primary pieces of legislation that govern insolvency law in Canada - ANS-
Bankruptcy and Insolvency Act (BIA)and the Companies' Creditors Arrangement
Act (CCAA)
- federal
Main Reasons for business failure - ANS-1. poor management (can be more
common in good financial times)
2. lack of adequate financing
3. death or illness of a principal, fraud
4. economic downturn
Informal Steps - ANS-negotiated settlements - ensuring that all creditors are in
agreement. Creditors will agree to a settlement if they believe that it will likely
produce better results for them in the long run than legal proceedings or
bankruptcy.
- some creditors will attempt to push through an agreement that is unfair to
others or that simply ignores them. The value of using facilitators with
appropriate expertise is that they are trained to identify these risks and deal with
them.
- make concessions in the terms of payment
- once in agreement, there is a contract that binds them all
- if fails, seek advice from a lawyer or accountant with insolvency expertise so that
he understands all the available options
, Purpose of Filing for Bankruptcy - ANS-allows for the orderly and predictable
distribution of assets to creditors
- keeps people civil
- attempt to reduce harm to individuals
- 80% of small businesses will become bankrupt within 5 years
- unsecured creditor typically receive 0.05/$
trustee in bankruptcy - ANS-The person who has legal responsibility under the BIA
for administering bankruptcies and proposals.
- agree to take on a matter if there is no conflict of interest present and the
debtor has sufficient assets to pay for the trustee's services; however typically the
creditors pay for the services but the trustee is chosen by the debtor
- licensed by the Office of the Superintendent of Bankruptcy
- will asses the estates and prepare a statement of assets and liabilities (need to
untangle personal and business affairs)
Estate - ANS-The collective term for the assets of a bankrupt individual or
corporation.
insolvent - ANS-Unable to meet financial obligations as they become due or
having insufficient assets, if liquidated, to meet financial obligations.
- a factual position, not bankrupt
- situations are governed by the BIA and CCAA
SOLUTIONS)
Two primary pieces of legislation that govern insolvency law in Canada - ANS-
Bankruptcy and Insolvency Act (BIA)and the Companies' Creditors Arrangement
Act (CCAA)
- federal
Main Reasons for business failure - ANS-1. poor management (can be more
common in good financial times)
2. lack of adequate financing
3. death or illness of a principal, fraud
4. economic downturn
Informal Steps - ANS-negotiated settlements - ensuring that all creditors are in
agreement. Creditors will agree to a settlement if they believe that it will likely
produce better results for them in the long run than legal proceedings or
bankruptcy.
- some creditors will attempt to push through an agreement that is unfair to
others or that simply ignores them. The value of using facilitators with
appropriate expertise is that they are trained to identify these risks and deal with
them.
- make concessions in the terms of payment
- once in agreement, there is a contract that binds them all
- if fails, seek advice from a lawyer or accountant with insolvency expertise so that
he understands all the available options
, Purpose of Filing for Bankruptcy - ANS-allows for the orderly and predictable
distribution of assets to creditors
- keeps people civil
- attempt to reduce harm to individuals
- 80% of small businesses will become bankrupt within 5 years
- unsecured creditor typically receive 0.05/$
trustee in bankruptcy - ANS-The person who has legal responsibility under the BIA
for administering bankruptcies and proposals.
- agree to take on a matter if there is no conflict of interest present and the
debtor has sufficient assets to pay for the trustee's services; however typically the
creditors pay for the services but the trustee is chosen by the debtor
- licensed by the Office of the Superintendent of Bankruptcy
- will asses the estates and prepare a statement of assets and liabilities (need to
untangle personal and business affairs)
Estate - ANS-The collective term for the assets of a bankrupt individual or
corporation.
insolvent - ANS-Unable to meet financial obligations as they become due or
having insufficient assets, if liquidated, to meet financial obligations.
- a factual position, not bankrupt
- situations are governed by the BIA and CCAA
