Business Debt FAQ
- Can I file for corporate bankruptcy online myself?
No. It is not possible to file for corporate bankruptcy online. You must meet with a Licensed Insolvency Trustee in person.
- How much does corporate bankruptcy cost?
The cost of filing for bankruptcy depends on your unique situation.
- Am I liable for my spouse's business bankruptcy?
You are only liable if you have co-signed or guaranteed a debt for your spouse's business.
- How will my personal credit rating be affected after a business bankruptcy?
Your personal credit rating will only be affected if you signed a personal guarantee for a debt. If your business is operating as an LLC or corporation, your personal credit rating should not be affected.
- What are my obligations as a director of an insolvent or bankrupt company?
Your first responsibility is to promote the success of the company by fostering relationships with customers and suppliers. If the company is in financial difficulty, you should make sure the company does not make additional commitments. If there is a chance of saving the business, you must take appropriate measures to negotiate new financing and work with creditors to reach a solution.
- What are my responsibilities as a director of a company in administration or liquidation?
Your main responsibility will be to provide information regarding the business of the company to the insolvency practitioner specialists and/or the receiver.
- What are the consequences of being a director of a company which has been in receivership or liquidation?
A director, unlike a simple shareholder, is liable for any unpaid DAS (payroll deductions at source) and/or sales tax remittances (GST/PST). The company's bankruptcy does not change or absolve these debts.
- If my incorporated business goes bankrupt, will I get repaid for loans and wages like anyone else?
If your business fails, you are treated in the same way as other creditors in respect of the money they have lent to the company.
- Can I withdraw money or company property before a corporation becomes insolvent?
Taking money from the company or transferring assets at less than their market value may constitute fraud. You could face criminal charges.
- Can I buy back my insolvent company myself, from the trustee or administrator?
The Trustee/administrator has a duty to get the best price possible. If you've formed a new company, you can buy back your insolvent company with court permission, if you're the highest bidder.
- What is a section 244 notice of intention to enforce security?
A notice that a secured creditor must deliver to any debtor at least ten days prior to enforcing its security on the debtor's business.
- What is the Bankruptcy and Insolvency Act?
The act defines the roles and protects the rights of everyone involved in bankruptcy (the debtors, creditors, trustees, Superintendent of Bankruptcy, the court).
- Are sole proprietors protected in a bankruptcy?
In sole proprietorship, the business is not separate from the owner. If the owner files for bankruptcy, his/her business assets may be seized and sold.
- How much do Division 1 Corporate Proposals cost?
Costs will vary depending upon the complexity of the Proposal proceedings.
- What is the Companies' Creditors Arrangement Act (CCAA)?
This act allows companies in financial trouble to restructure their business and financial affairs if they owe their creditors more than $5 million.
- What is the Wage Earners Protection Plan (WEPP)?
WEPP compensates eligible workers for unpaid wages, vacation, and termination pay they are owed when their employer declares bankruptcy or becomes subject to receivership under the Bankruptcy and Insolvency Act.
- Who is eligible for WEPP?
You may apply if:
- Your employment has ended
- Your former employer has filed for bankruptcy or is subject to a receivership
- You are owed wages, vacation pay, termination pay from the former employer
- Amounts were earned during the eligibility period or your employment was terminated during the eligibility period ending on the date of bankruptcy or receivership
- What is a receivership?
Our Licensed Insolvency Trustees represent lenders and other creditors in filing court documents to recover secured assets from debtors.
- Who can act as a receiver?
In the province of Quebec, a Licensed Insolvency Trustee must be appointed to initiate this type of legal action against debtors.