Bankruptcy proposal is one of the mechanisms provided by the Bankruptcy and Insolvency Act in giving you a second chance for your business to recover with a licensed insolvency trustee as intermediary, the company can then file a proposal to its creditors in order to find common ground enabling it to survive and continue its operations.
From the immediate filing of a proposal, the company is protected from seizure, it suspends interest on debts, puts a stop (under certain conditions) to commercial leases. Moreover, unpaid creditors to the government such as GST and QST may be released from administrators under certain conditions.
This approach consists of three parts:
- Notice of intention to make a proposal: The notice of intent allows the company to protect itself against any legal action that might emit one or more creditors. During this step, the licensed insolvency trustee would have the role of analyzing the financial status of the company and issuing a report. This step is not mandatory to the filing of a proposal. This step is frequently used to suspend all procedures, but if the company does not need to suspend it, it can be filed directly by a licensed insolvency trustee.
- Filing the proposal: The filing of the proposal and report written by the licensed insolvency trustee will be sent to the creditors via mail or in person. To explain the impacts of the proposal or bankruptcy, an estimate of the dividend proposal compared to a bankruptcy will be presented in the report.
- Creditor’s vote: For it to be accepted, the proposal must receive responses from at least 50% of the total number of creditors, obtain in favour at least 66.6% of votes (in monetary value) and have court approval. Therefore, the proposal is accepted, all creditors voting or not, will be linked to one of these.
- The advisors of BLT Lapointe & Associates Inc. will guide you through this stages to allow you to get out of your situation as quickly as possible and for the better of it.