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Corporate Restructuring Services for Business Debt in Vancouver, BC

If your company, organization or business is facing financial trouble and is unable to pay back the debt that you owe, there are alternatives to filing for bankruptcy. Crowe MacKay & Company offers corporate restructuring services to help your business restructure your debt, including a Division 1 Proposal.

A Division I Proposal (“Proposal”) is a legally binding process governed by the Bankruptcy and Insolvency Act (BIA) that can only be administered by a Licensed Insolvency Trustee (“LIT”).


Unlike informal negotiations, a Proposal acts as a binding contract between you and your creditors. A Proposal is very flexible and can be tailored to your company’s specific financial circumstances. It often includes a deferral of time for payment, an offer to settle in full satisfaction at something less than 100 cents on the dollar, converting debt to equity or a combination of all of these.


Dangers of Business Debt

Business debt can prove to be dangerous for your organization and inaction can lead to consequences including:

  • Creditors can take legal action against your business which can then further lead to legal judgement, fees and penalties.
  • You may accumulate more debts and interest compounding the situation.
  • The CRA can freeze your bank accounts and seize the funds on the charge of penalties and unpaid interest and taxes.
  • The bank can appoint a Receiver to seize your assets and completely shut down the business.
  • Leasing companies can also seize all your company’s assets in lieu of their payments.

How Does a Proposal Benefit Me?

A Proposal offers flexibility to a company in financial distress as it provides a stay of proceedings preventing your company’s creditors from taking steps to enforce their claims. A Notice of Intention to File a Proposal will provide an immediate stay of proceedings for up to six months against both secured and unsecured creditors. This time allows the company an opportunity to formulate a Proposal. There may be exceptions to the stay of proceedings which is why it is very important to speak with a LIT before a decision to file a Proposal is made.


Role of an Licensed Insolvency Trustee

If your company is facing financial challenges with debt, you should consider securing the services of a Licensed Insolvency Trustee (LIT) immediately. Only a LIT is authorized to file your Proposal with your creditors and provide you with guidance in this situation.

The LIT is appointed to administer the Proposal and the company maintains control of its business while it formulates a plan that will ultimately return the company to financial stability.


Debtors will often approach their larger creditors in advance of filing the Proposal to seek their support. It must be approved by a majority in number of your creditors holding at least two-thirds in value of the claims. Once the Proposal has been accepted by the requisite majority of creditors, it must then be approved by the Court.


A Proposal accepted by the creditors and approved by the Court is binding on all unsecured creditors regardless of their vote. It is also binding on secured creditors whose classes voted for the acceptance of the Proposal.


Once the terms of your Proposal have been fulfilled, a Certificate of Full Performance will be issued which legally discharges the debts included in the Proposal.


When to Opt for a Division I Proposal?

There are numerous provisions in the BIA which may impact a Proposal filing. There are also risks associated with same – for example, if a Proposal is not accepted by the creditors or approved by Court, a deemed bankruptcy will occur.


If your company is experiencing financial difficulties and you are unsure if a Proposal is the right choice for you, your first step is to seek the assistance of a LIT. Please contact one of the professionals at Crowe MacKay & Company to discuss your corporate debt restructuring options in Vancouver. We will evaluate your financial situation and explain the pros and cons of the various options available that could help you solve your financial problems. We are here to help.

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