Understanding Corporate Bankruptcy
Are you considering a corporate bankruptcy? Crowe MacKay & Company can help you understand the procedures to protect the interests of stakeholders when you are going through a financial crunch. The proceedings of corporate bankruptcy in Vancouver under the Bankruptcy and Insolvency Act (“BIA”) can be commenced by debtors and creditors for the purpose of:
Providing for the orderly and fair distribution of a bankrupt’s property among its creditors
Facilitating the investigation into the affairs of a bankrupt
Setting aside preferential payments to certain parties and transfers at undervalue
Rehabilitation a non-business bankrupt
Permitting an honest but unfortunate debtor to obtain a discharge of its debts
Voluntary Bankruptcy
After carefully reviewing your company’s financial circumstances, you may determine that your company is not viable and accordingly decide that the best option is to end your business by way of an assignment into bankruptcy (“Assignment”).
How It Works?
In a voluntary bankruptcy, a company assigns all of its assets and liabilities to a Licensed Insolvency Trustee (“LIT”). The LIT files the Assignment documents with the Office of the Superintendent of Bankruptcy at which time the LIT will be named as Trustee of the estate on an interim basis. The LIT will immediately upon appointment take possession of all of the assets, undertakings and properties of the company.
A meeting of creditors will be called by the LIT to be held within 21-days of the effective date of bankruptcy. The purpose of the creditors’ meeting is to affirm the appointment of the Trustee, consider the affairs of the debtor company and appoint inspectors. Only creditors with claims against the estate that have been proven prior to the meeting may participate in the creditors’ meeting.
Once the assets have been liquidated, the Trustee adjudicates the claims received and then distributes the funds to the creditors.
Involuntary Bankruptcy
Creditors have the option of petitioning a company into bankruptcy. The first step is for the petitioning creditor to obtain consent from a LIT to act as Trustee of the estate. The petition is then served on the company and there is a hearing after the expiry of a ten-day notice period. The company may challenge the application if it believes it is not insolvent. If the Court agrees with the petitioner, a Bankruptcy Order will be granted.
How It Works?
Once a Bankruptcy Order is made by the Court, the LIT will be appointed to take possession of the assets, undertakings and properties of the bankrupt estate. The LIT is obligated to complete its statutory duties, whether there are any assets available to cover the costs of administration. In most circumstances, the petitioning creditor would be required to provide a retainer to the Trustee or indemnify the Trustee for its fees and costs prior to the application to Court.
The LIT performs the same duties that it would under a voluntary assignment into bankruptcy except that it does not expect the same degree of co-operation since the bankruptcy would be involuntary.
HOW CAN WE HELP?
At Crowe MacKay & Company, we help our clients with business options and debt solutions. For over 50 years, we have been serving our customers in Vancouver and Surrey. If you are dealing with any financial difficulties and need an expert’s consultation, we have you covered. When you’re filing for corporate bankruptcy in Vancouver, reach out to our licensed insolvency trustees. We guide you through the legal process, help you with the documentation and explain debt relief options.
To find out if bankruptcy is the right choice for you, please contact one of the professionals at Crowe MacKay & Company. Schedule a free consultation with us today.
Is Your Corporation Experiencing Financial Difficulties?
Complete the following form, and one of our Licensed Insolvency Trustees will contact you for a free, no-commitment consultation to evaluate your financial situation.
If you require immediate assistance, please get in touch with us by phone at (604) 689 3928 or email at trustee@crowemackay.ca.
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