Corporate & CCAA
If the difficulty is considered to be a one-off problem or a temporary set back it is possible that the company can be saved by a formal arrangement with the company's creditors. There are two types of arrangements available:
- A corporate Proposal under the Bankruptcy & Insolvency Act, which is the most common solution.
- A filing under the Companies' Creditors Arrangement Act (CCAA), which is mostly of value in complex and larger re-organizations. Companies such as Air Canada have utilized this process to restructure.
In order for a Corporate Proposal to succeed it will generally be necessary for the directors to show that:
- The problem which caused the difficulties has been corrected.
- The company can in future be profitable.
- The creditors will receive a greater return than they would if the company was to be liquidated.
- The creditors will generally receive a reasonable percentage of their money back from the proposal.
There are several other factors which will affect the likelihood of the success of a corporate proposal, such as;
- The percentage of their debt the creditors would recover.
- The existence of secured creditors.
- The existence of Trust debts such as payroll deductions or GST/HST debt owed to the Government.
- Actions already taken by the creditors.
It will be necessary for the directors to prepare a "statement of cash flow" for a reasonable period of time to show that there is a realistic possibility for the company to pay its ongoing commitments as well as being able to contribute funds towards the proposal.
If your business is a proprietorship, it is not considered a company but rather an extension of the owner. It is not a separate legal entity. All proprietorship debts are in fact the responsibility of the proprietor. Please therefore refer to options listed under "Personal Solutions".