Ira Smith Trustee & Receiver Inc.

SHARIA LAW IN CANADA: HEARTBREAKING DIVORCE, RELIGIOUS MARRIAGE CONTRACTS, COURTS AND BANKRUPTCY

Post author By Brandon Smith
Post date February 24, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Sharia law in Canada introduction

I am no religious expert, but this past week I was consulted by a professional going through a divorce. When we got to talking about his creditors, he spoke to me about a debt he will have under Islamic Sharia law in Canada. The question I asked him is, will that debt be recognized as a debt under Ontario law? His response was yes.

Canada has always prided itself on being a cultural mosaic. We are a welcoming country to those from around the world. So I started wondering why the issue of religious divorce and claims that may arise specifically from it, is not encountered in a bankruptcy context more often.

So I did the research on the Sharia law in Canada debt from a religious divorce. Lo and behold, he was right. So now I know a bit about two religion’s divorce requirements: Jewish and Islamic.

Today in this Brandon’s Blog, I am going to be talking about Sharia law in Canada, religious divorce claims in Ontario, bankruptcy law, and divorce in Ontario. Now, a lot of people don’t know too much about these topics, but they’re very important to understand. I will explore the Canadian and Ontario laws, and hopefully shed some light on is Sharia law in Canada and other religious divorce claims enforceable in Ontario and what happens in a bankruptcy?

Judaism: The Wedding Ceremony, Religious Divorces and Getting a Get

In Judaism, like many other religions, partners are married according to religious marriage regulations in addition to provincial regulation. Jewish marriage ceremonies officiated by a Rabbi are also recognized as a lawful civil ceremony for getting married in Ontario.

The Jewish marriage contract is called the Ketubah. When they want to end their marriage, they need more than just an order from the provincial family law court. They also need to approach a religious authority to grant a formal religious Jewish divorce that would allow them to end the marriage.

Religious divorces and civil divorces are two different things and involve different steps. A religious divorce, or Get, is a document that releases a Jewish woman from the obligation of a marriage to a man, as well as releasing a man from the obligation of providing support for his wife. A Get is required for the dissolution of a Jewish marriage.

When a man gives his wife a Get, he is freeing her to ultimately enter into another marriage. Without a Get, a Jewish woman is not allowed to remarry. A Get can only be given through the act of a religious court. The parties involved in the divorce cannot grant it. Thus, the Get must be granted by the husband, and a rabbinical court must be involved.

The act of getting a Get does not in itself produce a claim by one spouse against another. That is because there is not a religious marriage contract promising property from one partner to another as part of either the religious marriage or divorce.

***Sharia Law in Canada*: The Mahr**

It is important to realize that even though some of the rules and procedures of Islamic marriage contracts and Islamic divorce are similar to those of a civil divorce, the two are separate processes and are governed by two different institutions. The Islamic divorce is conducted by an Islamic judge or qadi. The qadi is part of an Islamic court.

As I recently learned, in the Islamic religion, the Mahr agreement is a prenuptial agreement that establishes an amount of money or the property to be given by the husband to the wife as “Mahr” (dowry) at the time of marriage. The Mahr can also be waived by the wife if she so wishes.

In order to limit the amount of money that can be requested in the event of a divorce, a number of Islamic jurists have proposed that the mahr agreement should be made in the form of a promissory note, payable upon demand, rather than a lump-sum payment.

Mahr agreements are Islamic marriage contracts that are based on the Islamic religion. It explains what the bridegroom will provide to the bride as part of the marriage. The purpose of a Mahr agreement is to ensure that the bride will be provided for in the case of divorce or the death of the husband.

In an Islamic marriage, the Mahr is a gift from the bridegroom to his bride. It is typically paid in cash, but it can also be paid in other forms, including real estate, gold, or jewelry. In today’s economy, a Mahr agreement may also require the groom to provide a life insurance policy to the bride. The Mahr agreement can be written as a separate pre-marital contract.

When talking to this Muslim professional about his financial situation, there was a fascinating question that I ultimately researched the answer for. The question is, does Sharia law in Canada apply to the Mahr agreement so that the amount promised by the husband to the wife, payable upon divorce, is also a claim provable in bankruptcy?

***Sharia Law in Canada: A Religious Ceremony Marriage Agreement* Payment Can Be A Claim Under Ontario Law**

In the example I encountered, the Mahr agreement was a signed agreement. It called for a payment of six figures in Canadian dollars from the husband to the wife upon the divorce of the couple. This is a very significant debt for this man. In Ontario, the civil side of the divorce proceedings is adjudicated under the Family Law Act, R.S.O. 1990, c. F.3.

In the year 2000, the Ontario government made laws about Mahr. These laws include 1. The amount of Mahr should be a minimum of $20,000 2. The payment should be done in a way that is acceptable according to Sharia law in Canada. 3. The contract has to be made at the time of the marriage.

Fortunately, the preliminary issue of whether any religious marriage contract, including a Mahr agreement, can ever be enforced by a Canadian court was decided in Marcovitz v. Bruker, 2007 SCC 54 (CanLII). The Supreme Court of Canada held that the fact that a legal contract has a religious aspect or basis does not prevent its judicial consideration and enforceability, as long as the agreement has the necessary components to make it valid and lawfully binding.

Therefore, a Canadian court is not prevented from considering the issue of a religious nature, provided that the claim is based upon the infraction of a policy recognized by legislation. There have actually already been cases in which Canadian courts have been asked to implement the results for responsibilities stemming from a religious marriage contract.

Nonetheless, if a spouse can demonstrate that the religious marriage contract fulfills all the demands for a civil contract under provincial law, then the courts can order the fulfilment of undertakings to pay the amounts called for in the contract.

***Sharia Law in Canada: Is a Mahr An Enforceable Obligation* In An Ontario Divorce Situation?**

To answer this question, we now need to look at the Ontario Family Law Act. Section 52 of the Act deals with marriage contracts. Section 52(1) states that two people who are married to each other or intend to marry may enter into an agreement in which they agree on their respective rights and obligations under the marriage or on separation, on the annulment or dissolution of the marriage or on death.

Such a marriage contract can deal with:

ownership in or division of property;
support obligations;
the right to direct the education and moral training of their children, but not the right to decision-making responsibility or parenting time with respect to their children; and
any other matter in the settlement of their affairs.

This section goes on to state that a provision in a marriage contract purporting to limit a spouse’s rights regarding the matrimonial home is unenforceable. Section 56 identifies other areas where the court can disregard certain terms of a marriage contract. Those unenforceable aspects deal with clauses that may not be in the best interests of the children, provide inadequate support provisions or attempt to enforce chastity.

The Ontario court decision in Akkawi v. Habli, 2017 ONSC 6124 (CanLII) settles the specific issue of the Mahr. In that case, the court found that the Mahr is a valid contract and that it is enforceable as such agreements have been found to be valid and enforceable in the province of Ontario.

Therefore, under both Sharia law in Canada and Ontario law, the Mahr is an enforceable obligation in an Ontario divorce situation. Therefore, it is a valid claim by the wife against the husband. Since it is a valid claim, it is also a claim provable in bankruptcy. However, unlike alimony or support payments, but like an equalization claim, in bankruptcy, the Mahr claim is a provable claim that IS discharged upon the bankrupt obtaining his discharge from bankruptcy.

Religion-Based Mahr Agreements: Validity and Status Under Canadian Law

So based on the combination of the Supreme Court of Canada decision and the Ontario Superior Court of Justice decision referred to above, the Mahr agreement in Ontario, based upon Sharia law in Canada, results in an enforceable claim for money by the wife against the husband in divorce proceedings.

As it is a valid claim, it is also a provable claim in bankruptcy. So in the bankruptcy of a husband getting divorced from his wife who has a financial obligation under a Mahr agreement, the wife has a claim in his bankruptcy for the amount of the Mahr.

So while we are on the topic of divorce, I will answer other questions I am normally asked when it comes to divorce and bankruptcy.

Answers to the Top 5 Divorce and Bankruptcy Questions – Secular stuff

This section has nothing to do with Sharia law in Canada. Rather, it is the answers to the top 5 bankruptcy and divorce questions we are asked. It is purely secular.

What happens to spousal and child support payments during bankruptcy?

It is important to note that bankruptcy is not a “get out of debt free” card; a person is still responsible for the money they owe for spousal and child support payments. The amount set by the family court will still be required to be paid before, during and after bankruptcy. Spousal and child support payments are not discharged when a person receives their discharge from bankruptcy.

Who is responsible for joint debt when separating or divorcing?

The question of who is responsible for joint debt is not a new one and is often asked by married couples with a substantial amount of shared debt. The response depends, in part, on the type of debt incurred as well as the level of contribution of each individual to the debt. If both spouses signed a loan agreement or credit agreement, both will be liable for the debt. However, the creditor may choose to pursue one spouse and not the other.

In the case of a joint credit card, with the credit card account in the names of both spouses, both are liable for the debt. Whether one spouse used the credit card either more than the other or one spouse did not use that card at all, each is liable for the entire debt.

What happens to joint debt if you file for bankruptcy?

If one person declares bankruptcy, the other person in the relationship will have to continue making full payments on any joint debt remaining. If you file for bankruptcy to eliminate your unsecured debt, your creditors can go after your ex-spouse for the full amount of any joint debts you had while together.

Concerning secured debt, such as the home mortgage or a vehicle loan, the debt follows the asset. So depending on who ends up wanting to keep the asset, that person will want to keep making the payments so that the secured lender won’t enforce its security against the asset in question. No doubt the retention of the asset and taking over full responsibility for the debt payments will be taken into account in the overall divorce proceedings.

What Happens To Joint Debts After Bankruptcy?

After the bankruptcy process, you’ve finally received your discharge, wiping the slate clean of all of your unsecured debt. Once the bankruptcy is over, the last thing you want to do is start accumulating debts again, but what about any joint debts you have with ex-spouses? Can they come back and haunt you?

In short, no. The creditors do retain their rights to make the unsecured claims for the joint debts against the ex-spouse who did not go bankrupt.

Do Support or Alimony Payments Affect Surplus Income?

Yes, they do. If the bankrupt person is making support or alimony payments, the surplus income calculation allows the bankrupt to deduct those monthly payments from their monthly income. Therefore, the support or alimony payments end up reducing a person’s required surplus income payment.

Sharia law in Canada summary

I hope that you found the question posed in this Sharia law in Canada Brandon Blog about the Mahr claim, and specifically, can religious marriage contracts be upheld in Ontario divorce proceedings, as interesting as I did.

If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags Akkawi v. Habli, claim provable in bankruptcy, divorce and bankruptcy, Do Support or Alimony Payments Affect Surplus Income, equalization claim, get, Islamic marriage contracts, Jewish marriage ceremonies, Jewish marriage contract, ketubah, mahr agreement, Marcovitz v. Bruker, Ontario Family Law Act, religious divorce claims, sharia law in canada, What happens to joint debt if you file for bankruptcy?, What Happens To Joint Debts After Bankruptcy, What happens to spousal and child support payments during bankruptcy, Who is responsible for joint debt when separating or divorcing

Brandon Blog Post

FILE FOR BANKRUPTCY: CAN YOU FILE FOR BANKRUPTCY CANADA FROM THE LUXURIOUS CARIBBEAN?

Post author By Brandon Smith
Post date February 22, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the bottom and click play on the podcast.

File for bankruptcy introduction

You have all probably read about or heard about the Ontario judge who presided over Toronto-area court cases from the Caribbean. With today’s technology, it is electronically possible to attend Zoom court from anywhere in the world. That got me thinking. Can a Canadian file for bankruptcy from the Caribbean or anywhere else in the world?

So I did the research. In my opinion, using what is right now permissible technology, I think it is possible for a licensed insolvency trustee to either accept a Canadian filing bankruptcy or make it happen from the luxurious Caribbean or anywhere else outside of Canada. In this Brandon Blog, I will explain the bankruptcy process and why I think a person or company can file for bankruptcy from outside Canada.

You owe money: Considering bankruptcy?

To file for bankruptcy is a difficult decision to make, especially considering the financial and personal consequences it has on you and your family. But sometimes, there is no other option. If you find yourself unable to pay your debts, filing for bankruptcy may be your best bet for a fresh financial start. But before you decide to file for bankruptcy, you must assess your situation and understand the consequences.

It’s easy to be overwhelmed when you’re facing the prospect of filing for bankruptcy. Bankruptcy is a complicated legal proceeding, and the law has established procedures that must be followed in a specific order. If you’re considering bankruptcy, it’s important that you understand how the process works and the critical role a licensed insolvency trustee (formerly called either a trustee in bankruptcy or a bankruptcy trustee (Trustee) plays in that process.

As a Trustee, I can tell you that bankruptcy is a serious undertaking. It can have a big impact on you financially and emotionally, and there are many important decisions you must make before, during, and after the process. The decisions you make now will have a big impact on your future. As a Trustee, I always first try to help people and companies look at the alternatives to bankruptcy in order to avoid bankruptcy, rather than file for bankruptcy. Personal bankruptcy or business bankruptcies are truly a last resort when there is no other choice.

How to file for bankruptcy Canada: Let the licensed insolvency trustee no-cost consultation happen first

You may be considering filing for bankruptcy in Canada because you have debts that you can no longer pay. If you are drowning in debt, you might feel like there is no way out. But bankruptcy isn’t the end of the world. In fact, it can help many people get a fresh start by eliminating debts they can no longer pay. But as I always say, an individual or company may not need to file for bankruptcy. You have to consider all of your options. But in this section, we will focus on the bankruptcy filing process.

It all starts with you going to see a Trustee for a free, no-obligation initial consultation. The Trustee will listen to the facts you describe and ask you some questions to gain a better and deeper understanding of your specific situation. The Trustee will then tell you about the various debt relief options he or she believes are available to you. The Trustee will then provide you with his or her recommendation as to what is best for your situation and why.

Many factors will play into the Trustee’s recommendations, especially around your debt issues, including:

The types of debts.
Your unsecured debt vs. secured debts.
Do you have any student debt and if so, when did you graduate from the program that you acquired the student loan debt for?
The total amount of your Canadian debts and any foreign debt you may have.
Is Canada Revenue Agency hounding you for tax debt?
How appropriate are all the various debt options for your situation?
What percentage of debts are related to your assets that you cannot afford to lose.
What is the nature and extent of all of your assets?
Which assets are exempt from seizure and which are non-exempt?
Do you have any joint (co-signed) debt and how will your insolvency filing affect the other person?
Is the pressure from debt you are feeling right now require an immediate filing or could you wait a bit to see how some things play out over the short-term future?
Do you need immediate protection from debt and the related creditors or debt collectors taking collection actions right now such as trying to enforce against your assets, sue you or garnish your wages under a judgement?
How is your burden of debt currently affecting you and your family?
Comparing your current debt situation pre-filing to what your debt after filing and after your discharge will look like under each of the available alternatives.
How does the Trustee’s debt assessment factor into the realistic alternatives available to you to avoid bankruptcy?
Does your debt level at this stage that of overwhelming debts or are you right now only feeling mild indigestion? Perhaps you could work out of your debt problems on your own with just one or two strategies the Trustee will share with you at the no-cost consultation stage.

The Trustee considers all of this to see if you have an unmanageable debt to determine the best options available to you, including having you file for bankruptcy. You don’t want to do a consumer bankruptcy filing for yourself or have your company filing bankruptcy if it is not necessary to fix the debt problems.

How to file for bankruptcy – How the bankruptcy process starts

Alright, now for getting to answering the question I posed in the title and at the beginning of this Brandon Blog. Can a Canadian file for bankruptcy from the luxurious Caribbean? Can Canadian bankruptcy filings start from outside of Canada? To answer this question, we must look at what are the requirements of both the debtor, be it a person or company, and the Trustee, for a bankruptcy file to begin? All of my comments below, with appropriate amendments for context, will apply to:

an individual filing a debt settlement consumer proposal;
a person filing for personal bankruptcy;
either a person or a company filing a debt settlement financial restructuring proposal under Part III Division I of the Bankruptcy and Insolvency Act (Canada) (BIA); or
a company filing an assignment in bankruptcy.

Before the COVID-19 pandemic, the debtor and Trustee met in-person at the Trustee’s office in order for the Trustee to assess the debtor’s financial situation. If an insolvency process was required to help fix the debtor’s financial problems, then there was also an in-person meeting at the Trustee’s office to sign up the filing documents. Since the pandemic began, the Office of the Superintendent of Bankruptcy Canada (OSB) Messages to LITs concerning COVID-19 gave Trustees the authority to hold meetings by video conference. This is how the whole world has been operating for almost 1 year now. So this is how the insolvency process begins.

In addition to the initial consultation and signup. other meetings are also held via video meetings. Examples are a Meeting of Creditors and the two credit counselling sessions. Although the OSB’s guidance does say that Trustees can use methods other than in-person…..” for those areas where they have an approved resident or non-resident office…” keep in mind that a Trustee is licensed to act within an entire province! I won’t get into the semantics of the apparent conflict between the OSB’s guidance and its licensing approval process in this Brandon Blog.

Who can file for bankruptcy?

Any insolvent person can file for bankruptcy. Section 2 of the BIA defines an insolvent person as:

“insolvent person means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and

(a) who is for any reason unable to meet his obligations as they generally become due,
(b) who has ceased paying his current obligations in the ordinary course of business as they generally become due, or
(c) the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due;”
So to file for bankruptcy, amongst other requirements, the person or company must reside, carry on business or have property in Canada.

The locality of the debtor

Once all the documents are signed up to file for bankruptcy, the Trustee has to file them with the OSB in the “locality of the debtor“. Section 2 of the BIA defines “locality of the debtor” as:

“locality of a debtor means the principal place

(a) where the debtor has carried on business during the year immediately preceding the date of the initial bankruptcy event,

(b) where the debtor has resided during the year immediately preceding the date of the initial bankruptcy event, or

(c) in cases not coming within paragraph (a) or (b), where the greater portion of the property of the debtor is situated;”

If the debtor has been living in the Caribbean for 4 months immediately preceding the date of the filing of the assignment in bankruptcy, do they qualify? The answer is yes. Court decisions have determined that the word “during” means “at some time” during the year preceding the date of bankruptcy. It does not mean continuously. So during these pandemic days where we meet with everyone online, it is possible for the Canadian person to be in the Caribbean, meet with the Trustee for the initial consultation, decide on an insolvency process, in this case, bankruptcy and then initiate the bankruptcy proceedings, all from the luxury of a Caribbean vacation spot.

Let’s not delve into how a debtor who needs to file for bankruptcy can afford to live in the Caribbean or whose villa it is. That is beyond the scope of this Brandon Blog.

What about the Trustee?

The same way the debtor, or a judge, can transact business by video meeting from outside Canada, the same is true for the Trustee. As long as the Trustee can access all his or her office documents and systems online from outside of the office, there is no reason why the Trustee could not operate from the Caribbean as well to handle the person or company that wants to file for bankruptcy.

I am not advocating for this position, especially when you consider both the danger of and the appropriateness of travelling during these times of hardship and sacrifice. But since the question was “Can a Canadian file for bankruptcy from the Caribbean or anywhere else in the world?”, the answer is YES.

So whether you are a judge in the Ontario court, an insolvent debtor or a Trustee, I do not see any legal reason why someone could not file for bankruptcy from the Caribbean or anywhere else in the world.

File for bankruptcy summary

I hope you enjoyed the file for bankruptcy Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags avoid bankruptcy, Bankruptcy, Bankruptcy and Insolvency Act, Consumer Proposal, debt assessment, debt collectors, debts, file for bankruptcy, filing bankruptcy, insolvency, insolvent person, Ira Smith Trustee, licensed insolvency trustee, locality of the debtor, Office of the Superintendent of Bankruptcy Canada, student debt, Toronto-area court cases, unsecured debt

Brandon Blog Post

RACHEL UCHITEL: Her Astonishing Story on Seduction, Addiction, Celebrity Rehab & Bankruptcy

Post author By Brandon Smith
Post date February 15, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon’s Blog, please scroll to the bottom and click on the podcast.

The Rachel Uchitel story

Rachel Uchitel was an American night club manager. She gained popularity for her involvement in the Tiger Woods sex scandal. Currently, she is making news for a different reason – bankruptcy. Her father died when she was only 15 years old. She lost her fiance in the 9/11 tragedy.

She has been quoted as saying that her dad’s fatality had a big impact on her life. Maybe that can describe her as “looking for love in all the wrong places“. But a lot more on that particular later.

In reading about her background, you could reach the conclusion that she was just a pillow-lipped party girl. It may feel like she has actually committed her adult life to arrive on the social scene and in show business. Nonetheless, she does have a college degree in communications. In 2002, Rachel Uchitel was a Bloomberg television producer. But it is clear that she turned away from Bloomberg news to seek her fame and fortune as a star celebrity.

I think you will find this Brandon Blog is very different from most of the others. I tell a bit of the Rachel Uchitel story. I tell her story not to be salacious, but to highlight how real addictions can lead to a person’s downfall. Even a famous celebrity type and how their troubles can lead to bankruptcy.

Rachel Uchitel and the Bottle Girls

Starting in 2008 in Las Vegas, a team of young women called the “Bottle Girls” began to appear on the scene. It wasn’t long before these ladies were creating a great deal of enthusiasm from the public as well as the financial investment community. Before the coronavirus pandemic, Bottle Girls were a typical sight at some of the most preferred clubs and bars in Las Vegas. They are young, gorgeous women that stand outside of the bar or casino and try to people to go into the establishment to partake in all that it has to offer.

While they may be scantily clad to stand out, they are the friendly girl next door type. Rachel Uchitel was a bottle girl.

Nightclub hostess and NHL Rangers good luck charm

Rachel Uchitel was one of the most famous people hosting in New York, and her links with nightclub managers had been invaluable to the New York Rangers. Soon after she started dating then-Ranger Sean Avery, the team started winning. So it’s reasonable that the Ranger players and then-coach Tom Renney held her in high regard.

Her grandparents owned the Manhattan El Morocco supper club in the 1960s. Famous people like President John F. Kennedy and Cary Grant frequented the place on a regular basis. She held on to her family’s memorabilia, and her dream has always been to one day re-create a contemporary version to be a nightclub owner.

What Rachel Uchitel is most famous for

As the story has it, Rachel Uchitel and Tiger Woods first met at the Griffin, a former club in New York’s Meatpacking District. The American nightclub manager was the director of VIP services. In interviews, she would often stress that it was her duty to greet important patrons such as Tiger and also ensure that they were having fun. After that, she met Tiger a number of times more before they hooked up with each other.

When the news came out concerning Tiger’s extramarital relations, Rachel Uchitel was caught up in the media storm and the face of one of the greatest celebrity cheating scandals. She was called an “alleged mistress” and dealt with public scrutiny over this.

When Tiger Woods drove his vehicle into a fire hydrant in November 2009, the headlines weren’t regarding the accident itself. They were about Rachel Uchitel, the American model and one of the most notorious women connected to the pro golfer. She came to be the face of his affairs regardless of dozens of allegations from women of sexual affairs with Tiger that appeared shortly thereafter.

As you may remember, the fling notoriously finished when Woods’ angered his better half Elin Nordegren who chased him from their Florida home brandishing a golf club after discovering saucy messages from Rachel Uchitel on his phone. Horrified Woods then banged up his car backing up into a fire hydrant and his neighbour’s tree. Nordegren later got an estimated $100 million in their divorce. It was not a pretty picture.

Rachel Uchitel was paid $10 million in 2010 after signing a non-disclosure contract meant to acquire her silence over the affair. Yet a year later, she was forced to hand most of the money back by her then-lawyer Gloria Allred after discussing her fling with Tiger when she appeared on Celebrity Rehab.

The Rachel Uchitel Addiction

Nowadays, it feels like lots of people are addicted to something. The one-way ticket to dependency seems to be love. The love of money, love of sex, love of liquor, even the love of food. Addiction has actually brought about a lot of issues in our society. The concern is, what’s the dividing line between addiction and a healthy and balanced relationship?

Rachel Uchitel says she had a love addiction. Looking back on her affair with Tiger Woods, she says that she didn’t think she was a love addict. Rather, she said the affair with such a famous person wanting to have sex with her was her way of validating her own self-worth. She did not lump herself in with drug and alcohol addicts. Yet her striving to prove her own self-worth was through a love addiction.

She may not be alone. According to an American survey, one in 10 Americans claims to be head over heels in love with someone who does not love them back. This is a statistic that appears to support the claim that love dependency is an actual, diagnosable condition. The study, conducted by the American Psychiatric Association, also discovered that 7% of Americans made love with a person they understood had not been helpful for them, just because they felt they could not quit the relationship.

Rachel Uchitel really did not include herself in with drug addicts, alcoholics and those with gambling issues. However ultimately, she did come to the realization that she did need to go to rehab. She got assistance to understand and overcome her sex addiction.

Rachel Uchitel is now bankrupt

Rachel Uchitel has recently been making more headlines not in a good way. The 45-year-old-woman at the time filed for Chapter 7 bankruptcy protection last July. She has since turned 46. She listed her main creditors like American Express and Deutsche Bank, both of whom are owed more than $595,000.

She additionally owed more than $10,000 in an unsettled lease on her Manhattan home and racked up a bill of $164,770 on a 2nd Manhattan residence. Rachel Uchitel says she has not worked since her children’s clothing shop closed in 2019.

She described herself as jobless in her Chapter 7 bankruptcy filing. She is likewise on the hook for another $17,339 in tax debt in addition to $23,694 due to a New York law firm. rachel uchitel

Rachel Uchitel on the HBO documentary talks about Tiger, boyfriends and marriage

Rachel Uchitel is currently showing up in the HBO documentary Tiger, where she discusses her affair with him in detail for the very first time. It is unknown whether she was paid to be on the program.

Ms. Uchitel asserts that the huge majority of her financial obligations to be discharged were directly related to her kids’ clothes shop business which proved to be not financially viable. She stated she had directly guaranteed debts of the business, leaving her no choice but to go into bankruptcy.

When asked if her connection with Woods was to blame for her financial troubles, Rachel Uchitel reacted saying, “No, I don’t think so. There’s no correlation between golf and bankruptcy.“

Is Chapter 7 one of the types of bankruptcies in Canada?

No. Chapter 7 bankruptcy is one of the bankruptcy Chapters under the US Bankruptcy Code. It is the most common type of bankruptcy in the United States. This chapter of the Bankruptcy Code is for the liquidation of the debtor’s non-exempt property and then distributing the funds realized to the creditors in priority. It is not meant as a restructuring tool or to implement a debt settlement plan.

In Canada, there is no such thing as Chapter 7. Here in Canada, it is just called either personal bankruptcy or consumer bankruptcy. As in the US, this is not one of the types of bankruptcies in Canada that would be used to do a restructuring to implement a debt settlement plan. Rather, personal bankruptcy in Canada is also for the liquidation of the debtor’s non-exempt property so that funds can be distributed to the creditors. In Canada, the bankruptcy system is operated under the provisions of the Bankruptcy and Insolvency Act (Canada) (BIA).

Bankruptcy and addictions

The Canadian insolvency process is geared to deal with debts resulting from any kind of addiction. It does not only deal with the debts caused by borrowing money to feed an addiction. The insolvency process is uniquely positioned to deal with the person’s total rehabilitation. When the person hits rock bottom with debts they cannot repay and no more credit to keep borrowing to feed the addiction, a licensed insolvency trustee (formerly called a bankruptcy trustee) is positioned to help not only with the debt issues but also the rehabilitation issues.

My firm has been involved in helping many people out of their debt problems arising from addiction issues. The most common are gambling, alcohol and drug addictions. But a love addiction can be just as troublesome. Professionals have referred their family members suffering because of an addiction to me.

In my January 31, 2018 blog, GAMBLING DEBT BANKRUPTCY: CAN GAMBLING DEBT BE DISCHARGED IN BANKRUPTCY?, I discussed from a procedural view the issue of gambling debts and bankruptcy. In my January 30, 2019 GAMBLING DEBTS HELP blog, I focussed on how the insolvency process, especially bankruptcy, can deal with overall rehabilitation.

The addict is not an awful person but they do have an awful problem. They need the support of their family, family friends and medical professionals. If addiction has led to unmanageable debt, that is where a licensed insolvency trustee fits in to be part of the team helping the honest but unfortunate person. If Rachel Uchitel was living in Canada, a proceeding under the BIA would help her get rid of her debts.

The Rachel Uchitel story summary

I hope you enjoyed the Rachel Uchitel Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags addiction, American night club manager, bankruptcy trustee, Bottle Girls, celebrity cheating scandals, Celebrity Rehab, Chapter 7, Chapter 7 bankruptcy, consumer bankruptcy, El Morocco, Elin Nordegren, HBO documentary Tiger, Ira Smith Trustee, licensed insolvency trustee, personal bankruptcy, pillow-lipped party girl, rachel uchitel, Tiger Woods, Tiger Woods sex scandal

Brandon Blog Post

PROBATE ONTARIO: Properties, Debts, Estate Trustee Rules and more

Post author By Brandon Smith
Post date February 10, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

probate ontario

Afer reading this blog, also check out our Brandon Blog

HOW LONG DOES PROBATE TAKE IN ONTARIO? 7 QUESTIONS NEWBIE ONTARIO ESTATE TRUSTEES ARE EMBARRASSED TO ASK

What is Probate Ontario?

Yes, you just found a blog site on the topic of wills and probate Ontario. It is a complex legal treatment that is typically not totally comprehended by lots of people. It is usually a requirement of the passing away of an individual. It is the start of certain actions to ensure the deceased’s wishes are performed.

In July 2019, we set up a companion business to our insolvency Firm. This new business is acting as an Estate Trustee. It is called Smith Estate Trustee Ontario. As we are asked many times about the intersection of death and debts and have acted as the licensed insolvency trustee in the bankruptcy of an insolvent deceased estate, I thought it would be a chance to write about deceased estate matters, including probate Ontario.

It is important to understand that the choice of and the actions of the Estate Trustee (previously known as the executor or executrix) will certainly make all the difference in exactly how the probate process will go. An excellent Estate Trustee will be able to help you comprehend the entire process. The Estate Trustee is the person in charge of seeing to it that whatever needs to be done pertaining to the estate, its property, and the distribution to the estate beneficiaries are all done properly.

Probate is a legal process that comes after the death of an individual that has left a legitimate will. It is used to accomplish the directions laid out in the will. It starts with the death of the testator and finishes when the Estate Trustee of the will certainly disperse the estate to the beneficiaries as stipulated in the will. If there is no will, various rules apply. If a person dies without a will, it is said that they have died “intestate“.

In this Brandon Blog, I go over many of the matters involved in taking the estate to probate Ontario.

What assets are subject to probate Ontario?

Property that is bequeathed to people in a will may have to go through the application for probate Ontario. It normally includes cash, land, as well as other physical possessions. The probate process involves the Estate Trustee named in the will, seeking the court to:

give that person (or group of individuals) the authority to act as the Estate Trustee of an estate; or
validate the authority of an individual named as the Estate Trustee in the deceased’s will;
officially authorize that the deceased’s will is their legitimate last will.

This individual, or group of people if greater than one is named in the will, is accountable for administering the estate as well as ensuring that the wishes and directions that are written in the will are accomplished as the dead person meant them to be.

***Probate Ontario: What is a Certificate of Appointment of Estate Trustee?***

If you’ve ever read the official documents of a deceased’s estate, you’ve probably heard the phrase “Certificate of Appointment of Estate Trustee“. As well if you’re like most people, the term may have appeared a little mystical and confusing. However, for those of us who are managing an estate as an executor or administrator, a Certificate of Appointment of Estate Trustee is a necessary part of the probate process.

A Certificate of Appointment of Estate Trustee is a paper that is issued by the Government of Ontario and provided to the assigned Estate Trustee to prove that the individual has actually been selected to the function of the Estate Trustee. It shows that he or she has the legal authority to deal on behalf of the estate.

The certificate is not a legal necessity in the province; it’s simply a document provided by the government that verifies that the individual called the Estate Trustee has actually been assigned. It makes things a great deal easier when verifying to financial institutions and also other third parties that you have the authority to act concerning the estate property. To acquire the certificate, you need to provide the provincial government with a certified copy of the death certificate as well as a duplicate copy of the will.

If there is no will, the court will issue an order upon the probate application of an interested party approving the choice of Estate Trustee. This would certainly be in addition to any other death court forms the province needs the Estate Trustee to submit for probate Ontario.

Probate Ontario: What does an estate trustee have to disclose to beneficiaries?

A well-written will is the cornerstone of proper estate administration. The Estate Trustee is the one who oversees the distribution of the estate. In his/her function, the person in charge of the estate must manage a number of legal and financial issues. The Estate Trustee should be neutral and act in an impartial way to all stakeholders, especially the beneficiaries.

The Estate Trustee is well advised to report on a regular basis, preferably in writing, to the beneficiaries to ensure that they will be up to date on all issues of significance. For instance, beneficiaries need to understand the extent of the estate’s debts. They also must be told of any kind of litigation the estate is or might about to be associated with. This is specifically so if that implies a loss of value of the assets to reduce the estate’s worth. Nothing good will come from surprising the beneficiaries. Especially if it is bad news about a reduction of value in what they expected from the estate.

Probate Ontario: What is this Estate Information Return?

Typically, any individual who gets a Certificate of Appointment of Estate Trustee (likewise referred to as an Estate Certificate or Probate) after January 1, 2015, is required to file an estate information return.

This return is to be completed in addition to an application for a Certificate of Appointment of Estate Trustee submitted to the Courthouse (Ministry of the Attorney General). It will be used by the Ministry of Finance to impose compliance with the Ontario Estate Administration Tax Act, 1998. This return should be filed with the Ministry of Finance within 180 calendar days after the appointment certificate is issued to deal with the provincial estate tax owing.

If not all the estate tax issues are solved within the 180 day period, an amended return can always be filed later. The estate trustee would either pay any additional tax owing or request a refund of any overpayment. The estate administration tax estate administration matters must be taken care of in the administration of any estate.

What are the ways to avoid probate Ontario for an estate?

To avoid probate Ontario, you need to ensure for your assets that can avoid probate, are either owned jointly with the person or individuals you wish to inherit them, or are named as a designated beneficiary.

The most reliable preparation strategy to employ prior to death to minimize probate tax is making use of “twin wills“. This is where assets that require probate pass under one will, and other property that regularly do not call for probate (such as the shares of a family-owned private company) pass under a separate will.

Properties that can be omitted from probate Ontario are:

Jointly held assets with a right of survivorship.
RRSPs, RRIFs, TFSAs with a named beneficiary apart from ‘Estate’.
The life insurance policy proceeds paid to a named recipient besides ‘Estate’.
Real property owned outside of Ontario.
Gifts to people made throughout your life.

How long does probate take in Ontario?

How long probate will take for probate Ontario varies depending on where in the province the departed person lived and exactly how complex the will and the estate is. In Ontario, and specifically in the Toronto area as a result of how backed up the courts are, it can take numerous months just to obtain the Certificate of Appointment. The procedure starts after the Estate Trustee files the request for probate with the court in Ontario.

Probate Ontario: How does my estate (assets) get transferred after I die?

As you age it’s essential to prepare for what will certainly take place in your estate after you die. When you have children and grandchildren, it is specifically important to set up a will or living trust. Without one, your assets (residence, automobile, and also financial savings) will require to pass through the court system, which might be costly and also take a long time. The court system is likewise raging with possible issues, such as opposed wills, family arguments, and unintentional disinheritance.

If you have a will, your assets will get distributed to your beneficiaries by the Estate Trustee according to your wishes, barring any type of court challenge.

What happens if someone dies without a will in Ontario

When an individual dies without a legitimate will, it is called intestate. Ontario’s Succession Law Reform Act (the Act) lays out exactly how the estate assets are distributed.

According to the Act, unless a person that is financially dependent on the dead individual makes a claim, the first $200,000 of value is given to the departed individual’s spouse if she or he has chosen to claim his/her entitlement. This is called the preferential share. The other possibility is to claim half of the net family assets under the Family Law Act (Ontario). Lawyers will be really handy in helping the spouse choose which is the better selection.

Anything over $200,000 is shared between the spouse and the offspring (e.g. children, grandchildren) according to particular policies. If there is no partner, the departed individual’s children will certainly acquire the estate. If any among them has actually died, that youngster’s offspring (e.g. the dead individual’s grandchildren) will inherit their share.

Assuming there are no lawful challenges to rights to the property, this is what occurs if you pass away without a will in Ontario. Where there are a spouse, children, and grandchildren, this is not a good place to leave them in.

Probate Ontario: Do I have to file taxes for the deceased?

We are often asked the question, “Do I have to file taxes for the deceased?” Your loved one has passed away and now you are trying to settle their estate, and you wonder about the taxes. Let’s start with the basics of what taxes you may owe for the estate of your loved one.

When a person dies, the estate has to pay several types of taxes. The first is the amount of estate administration taxes calculated on the Estate Information Return. The Estate Administration Tax is billed on the value of the estate of a departed person if an estate certificate is requested and is provided. The estate tax obligation is paid as a deposit when looking for an estate certificate from the Ontario Superior Court of Justice. Once the estate certificate is released, that deposit comes to be the estate administration tax.

The estate administration tax is paid on the value of the assets in the estate. The return provides for an estate administration tax calculator on the form. So, it is a pretty easy thing to calculate. If an estate certificate is neither gotten nor issued, no Estate Administration Tax applies.

The second is income taxes. If the deceased has any years for which an income tax return was not filed, the Estate Trustee must gather up the pertinent information and file those returns from prior years. Then, there is the income tax return for the year of death. That is called the terminal return. Finally, the Estate Trustee has to make sure that any tax arising out of the sale of assets of the estate are also accounted for and any income tax paid.

The Estate Trustee must make sure that all outstanding amounts, be it to the Province of Ontario or to Canada Revenue Agency are fully paid. Ideally, the Estate Trustee should also request and receive from Canada Revenue Agency a clearance certificate. This certificate shows that all amounts owing have been paid. It is important for both the personal liability of the Estate Trustee and for the estate to have this clearance.

In Ontario, there is no such thing as a death tax.

Probate Ontario: If your parents die with debt who pays it in Canada?

Generally, nobody can inherit debt. But there are exceptions.

In general, what happens to debt when you die in Canada is that the Estate Trustee needs to understand all of the deceased’s assets and liabilities. The Estate Trustee needs to make sure that all debts are paid off before making any distribution to the beneficiaries. Unless you have co-signed for or guaranteed someone else’s loan, you are not responsible for your spouse’s or parent’s debts upon their death. There are generally three exceptions.

The first is credit card debt where usually a spouse has a supplementary credit card on the same account. In that case, you need to look at the credit card agreement because the supplementary cardholder might be responsible for the debt. So if there are insufficient assets in the estate to pay off the credit card debt, the supplementary cardholder is liable.

The second way is through being entitled to inherit an asset, such as real property or a vehicle. That asset may have financing registered against it; a mortgage or a vehicle financing loan. If you accept the asset, then you must also be responsible to make the payments for interest and principal. If the secured loan is not kept current, the lender has the ability to seize the asset and sell it as part of their enforcement rights.

The third example is Canada Revenue Agency for unpaid income tax. Section 160(1) of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)) (Income Tax Act), and its equivalent, S. 325 of the Excise Tax Act (Canada), can be utilized by Canada Revenue Agency to assess a tax obligation liability to those who received a transfer of property from persons with tax obligations at the time of the transfer.

This deals with if a person offers you something of value (virtually anything), while they have a tax debt, Canada Revenue Agency can and will certainly pursue you. Their view is that the original tax obligation debtor ought to have sold whatever was transferred, and the funds used to pay off the tax debt.

This section of the Income Tax Act (or Excise Tax Act) especially comes into play during the administration of a deceased Estate or in an insolvency filing. As a matter of fact, if a deceased estate is insolvent, the Estate Trustee has the ability to get an order from the court allowing the Estate Trustee to place the deceased estate into bankruptcy. Then the licensed insolvency trustee will deal with selling assets and distributing the funds in priority of ranking, as established under the Bankruptcy and Insolvency Act (Canada).

My other probate Ontario blogs you might find interesting

I have written on a variety of matters regarding a deceased estate, debt and probate that you may find interesting. They are:

WILLS AND ESTATES: SELLING DECEASED ESTATE PROPERTY

FREE E-BOOK – TRUSTEE OF DECEASED ESTATE – WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS

TRUSTEE OF DECEASED ESTATE: WHAT A TORONTO BANKRUPTCY TRUSTEE KNOWS

WHAT HAPPENS IF YOU DIE WITHOUT A WILL IN ONTARIO? READ OUR INTENSE ANALYSIS

WHAT HAPPENS TO MORTGAGE WHEN YOU DIE CANADA: DEBT PHILOSOPHY EXPLAINED

WHAT HAPPENS TO DEBT WHEN YOU DIE CANADA: ARE YOU FREE OF DEBT

CREDIT CARD DEBT AFTER DEATH IN CANADA: WHO IS RESPONSIBLE?

DO YOU INHERIT DEBT IN CANADA: CRA SAYS YES TO PROPERTY TRANSFERS

TRUSTEE OF PARENTS ESTATE: DO I REALLY HAVE TO?

Probate Ontario summary

I hope you enjoyed the probate Ontario Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags do i have to file taxes for the deceased, estate trustee, how does my estate get transferred after i die, how long does probate take in ontario, if your parents die with debt who pays it in canada, insolvent, intestate, Ira Smith Trustee, probate, probate in ontario, probate ontario, smith estate trustee ontario, what are the ways to avoid probate ontario for an estate, what assets are subject to probate ontario, what does an estate trustee have to disclose to beneficiaries, what happens if someone dies without a will in ontario, what is a certificate of appointment of estate trustee, what is probate ontario, what is this estate information return

Brandon Blog Post

LAURENTIAN UNIVERSITY FACING INSOLVENCY MAKES STARTLING CCAA NEWS FILING FOR CREDITOR PROTECTION

Post author By Brandon Smith
Post date February 8, 2021

We hope that you and your family are safe, healthy, and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the bottom and click play on the podcast.

UPDATE MAY 5, 2021: SEE OUR UPDATED BLOG PUBLISHED TODAY ON THE LAURENTIAN UNIVERSITY INSOLVENCY CREDITOR PROTECTION PROCEEDINGS STATUS – CLICK HERE FOR THE UPDATE

Laurentian University introduction

Laurentian University is facing a cash crisis and has filed for creditor protection. The Ontario university states that the application under the federal Companies’ Creditors Arrangement Act (CCAA) is intended to permit the university to continue running day-to-day operations during restructuring.

The Sudbury, Ontario school is not shutting down and will continue to provide services for students. It states it will keep normal operations and keep classes running. In this Brandon Blog, I talk about what creditor protection in the Canadian context is and why Laurentian University did so.

***Laurentian University: What is creditor protection***?

In its simplest terms, creditor protection is the protection you get when you start a proceeding with a filing under either the Bankruptcy and Insolvency Act (Canada) (BIA) or the CCAA. Under the BIA, an individual or company gets that protection in either a consumer or corporate bankruptcy. This safeguard is also obtained by filing under the restructuring proposal provisions of the BIA. A company safeguards itself when it files for restructuring under the CCAA.

Once a filing is done, without getting special permission from the court, none of your creditors can start or continue legal action against the person or the company for the repayment of a debt or for any enforcement action against its assets.

Laurentian University, therefore, received its sheltering once it made its filing under the CCAA. When using this statute, it can also be called CCAA protection.

Below is the section titled “How the Laurentian University restructuring story begins”. I discuss its particular issues leading up to the need to file.

Laurentian University: What is a stay period?

The “time out” that a person or business gets from its creditors is called a stay period (Stay of Proceedings). Upon the agreement of the court to the initial filing, the result is that the court will issue an Order giving the company an initial 30 days of protection from creditors to allow for the preparation of the restructuring proposal called a Plan of Arrangement.

This initial stay can be extended by the court, as long as the judge is convinced that the company is acting in good faith and working expeditiously in sorting through the myriad of issues stopping it from putting together its Plan of Arrangement.

Laurentian University: What does CCAA mean

The CCAA is a Canadian federal law that helps companies in financial difficulties emerge from its difficulties. The company begins its reorganization proceeding with its application to the court and files for creditor protection to avail itself of the process for a company and its creditors to come to an agreement on how to reorganize the company’s debt, while the company continues to operate normally and pay amongst other things, wages to its employees.

One of the biggest advantages of the CCAA is that it allows a business to “hold the fort” while the creditors and the company work out an agreement that will hopefully get the company back on its feet. While operating in this fashion, company management remains in control of running the business. The company does not hand over its assets to a licensed insolvency trustee (Trustee). Rather, the Trustee is appointed by the court to act as Monitor.

As the title sounds, the role of the Monitor is that of the neutral court officer working with the company. The duties of the Monitor include:

overseeing and providing supervision of the company’s affairs;
assisting in the negotiations with creditors;
helping with the drafting of the Plan of Arrangement for describing what the restructuring process will be;
report regularly to the court on the progress and details of the restructuring administration, and ultimately,
conducting the meetings of the various classes of creditors where voting on the Plan of Arrangement takes place.

Although the CCAA is unique to the country of Canada, other countries have similar restructuring legislation. The most famous is probably Chapter 11 of the US Bankruptcy Code. This is when you normally hear the term “bankruptcy protection“.

Laurentian University files to reorganize university finances

Last Fall, Laurentian University recognized it was in financial trouble. On October 1, 2020, it issued a press release advising that it has financial challenges brought on by the global COVID-19 pandemic and its pre-existing structural deficit. It also announced at that time that it hired Ernst & Young as financial advisors to assist in a further review of its detailed financial results, budgets, and our various initiatives to help identify and analyze any additional opportunities for cost savings or improvement.

On February 1, 2021, facing insolvency, Laurentian University took the step to begin its insolvency proceeding under the CCAA in order to come up with a formal restructuring plan. Since it is in the early stages of the insolvency administration, the actual plan has not yet been developed as Laurentian University needs time to come up with the proper plan. It will be one of many future events I will keep my eye on for you.

From my review of the filing documents, I can tell you what the story is so far.

How the Laurentian University restructuring story begins

“We are working with all stakeholders to ensure a smooth process for students,” said Peter Baxter, the university’s provost and vice-president, academic.”

Who would’ve thought that universities, which are supposed to be institutions of higher learning, would actually run into financial problems and put their stakeholders at risk? But that’s exactly what happened and is the current situation with the Laurentian University insolvency in Sudbury, Ontario. I guess the place was not run by any of the finance profs! It is obviously a stressful time for all students, staff, faculty, and creditors.

Dr. Robert Haché, the President and Vice-Chancellor of the Laurentian University of Sudbury, swore the necessary affidavit on January 30, 2021, in support of Laurentian’s court application for an Initial Order to commence CCAA proceedings. In his affidavit, Dr. Haché stated:

Laurentian’s financial issues were first determined as early as 2008-09 when a prior administration gave a budget to the Board that would not be balanced for the 2008-2009 academic year and showed little to no improvement for the future financial prospects of the university absent any revised processes. The budget was approved, but the Board expected the financial situation to be fixed as a top priority item.
A Plan for Regaining Sustainability at Laurentian was presented to the school’s Board on December 18, 2008, and again on February 20, 2009. The Board approved the implementation of the plan, expecting to regain financial health over a three-year period.
Starting in 2014, Laurentian undertook a $64 million Campus Modernization Project for the construction of approximately 250,000 sq. ft. of classrooms, research, study as well as a public area.
The Campus Modernization Project involved Laurentian incurring a substantial amount of long-term debt (approximately $40 million) to pay for the construction of buildings and facilities to modernize the campus in order to accommodate its historical growth and fuel the projected enrolment growth. The university elected to defer repayment of the principal amounts borrowed until after construction was completed, leading to the accrual of further interest.
When the Board approved the 2016-17 operating budget, LU forecasted operational deficits continuing through 2021-22 leading to an accumulated operational deficit of greater than $43 million.
With the exception of the modest growth experienced in 2020, enrolment has declined each year from 2015 to 2018 and tuition fees remain low, while labour and debt servicing costs have grown substantially.
The 10% tuition reduction and tuition freeze ordered by the Province of Ontario beginning in 2019.
Laurentian’s academic costs are generally higher as a percentage of total costs than other Ontario universities.
Not re-evaluating over the last decade its programs to make sure it is focusing on those the marketplace of students deem relevant and required.
The COVID-19 pandemic has made all these issues worse.

From reading his sworn affidavit, I would use one simple word to describe what has led to the Laurentian University insolvency – MISMANAGEMENT! Dr. Haché joined Laurentian University in July 2019. So he has only been involved in this mess for the last 19 months.

What Laurentian University reports its immediate plans are by making this CCAA filing

Laurentian University reported that as at April 30, 2020, it had $358.5 million in assets based on generally accepted accounting principles. Of that total, only $33.2 million is either liquid or near-liquid. As at the same date, its liabilities are:

Line of credit $14.4 million
Short-term loan $1.4 million
Accounts payable and accrued liabilities $22.4 million
Accrued vacation pay $1.8 million
Deferred revenue $1.0 million
Current portion of long-term debt $2.7 million
Long-term debt $89 million
Employee future benefits liabilities $20.8 million
Deferred contributions $38.6 million
Deferred capital contributions $129.9 million

This adds up to $322 million. The balance sheet balances because the remainder represents either restricted capital or special purpose endowments.

Laurentian University advised the court that it intends to come back requesting an Amended and Restated Initial Order. Right now, Laurentian has the benefit of the Stay of Proceedings and will not be making any payments on any outstanding amounts owing as of February 1, 2021.

Among other things, the motion in respect of the Amended and Restated Initial Order will seek the following additional relief:

extending the Stay of Proceedings to April 30, 2021;
suspending Laurentian’s requirement to make certain special payments in respect of its defined benefit pension plan, pending further Order of the Court;
suspending Laurentian’s need to reply to requests for information received under the Freedom of Information and Protection of Privacy Act (Ontario) during the Stay of Proceedings, nunc pro tunc to February 1, 2021;
the appointment of a mediator, as an officer of the Court and a neutral third party to undertake a mediation of various issues under the supervision of this Court, on an urgent basis;
approving Laurentian’s request for a debtor-in-possession credit facility (the “DIP Facility”) borrowing authority up to the principal amount of $25 million to finance its working capital requirements and other general corporate purposes, post-filing expenses and costs during the Stay of Proceedings.

The court has now declared that Laurentian University is insolvent. I will be following this CCAA administration and will write more blogs on material points of special interest as this restructuring winds its way through the court.

Laurentian University summary

I hope you enjoyed the Laurentian University Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

The tension put upon you in such a time of uncertainty is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy, and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags bankruptcy and insolvency act canada, bankruptcy protection, CCAA, classes of creditors, Companies’ Creditors Arrangement Act, covid-19 pandemic, Dr. Robert Haché, Ernst & Young, initial order, Laurentian University, licensed insolvency trustee, plan of arrangement, protection from creditors, restructuring proposal, stay of proceedings, what does ccaa mean, what is a stay period, what is creditor protection

Brandon Blog Post

6 DISADVANTAGES OF CONSUMER PROPOSAL ARE NOT ENOUGH TO STOP A HEALTHY RETURN TO ENJOYING LIFE

Post author By Brandon Smith
Post date February 3, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Disadvantages of consumer proposal: What is a consumer proposal?

As regular readers of Brandon Blog know, I have written many blogs about consumer proposals. I normally focus on the advantages of a consumer proposal. As I have never written about the disadvantages of consumer proposal, I thought I would do so now. There are many more advantages than there are disadvantages; however, there are a couple of points you should know. Some people may see them as drawbacks or disappointments. It depends on your unique situation.

Consumer proposals can be called an individual’s insolvency debt settlement agreement in Canada. It is a proposal to your unsecured creditors to pay off a portion of your frustrating unsecured debts over a set period of time. If you successfully complete the consumer proposal by making all the needed payments, the total amount of your unsecured financial obligations are forgiven at the end of the settlement period. Consumer proposals are created to get the debt freedom to consumers who cannot afford to pay off their total debt. It is a legally binding contract between the debtor and the unsecured creditors to eliminate debt carried out under the Bankruptcy and also Insolvency Act (Canada).

So consumer proposals are the best alternative to bankruptcy. To find out about all the advantages of consumer proposals, I recommend my recent blog post, CONSUMER PROPOSAL FAQ: ANSWERS TO 10 TANTALIZING CONSUMER PROPOSAL QUESTIONS.

Disadvantages of consumer proposal: When is a consumer proposal appropriate?

Consumer proposals are appropriate for individuals that:

Have a secure income flow, such as from full-time employment.
Are insolvent.
Are serious about getting rid of all of their unsecured financial obligations by paying only a portion of the total owed.
Wish to stay clear of bankruptcy.

To discover if a consumer proposal is an appropriate selection for you, set up a no-cost conference with a licensed insolvency trustee (formerly called a bankruptcy trustee or a trustee in bankruptcy) (LIT or Trustee) to discuss your personal scenario. The LIT will examine your monetary situation and see if you have the economic capacity to efficiently complete a consumer proposal. The Trustee will certainly describe the pros and cons of the various options that might assist you to resolve your financial troubles.

If you choose to submit a consumer proposal, the LIT will work with you to develop a proposal that benefits both you as well as your unsecured creditors. If you file a customer proposal, you have to:

give the LIT a complete list of your assets and liabilities;
attend the first meeting of creditors, if one is requested by your creditors;
participate in 2 counselling sessions;
keep the LIT updated of any change of address; and
help the LIT in administering the proposal.

Disadvantages of consumer proposal: When is a meeting of creditors held?

The first disadvantage to talk about is when is a meeting of creditors held? The only time a meeting of creditors is called in consumer proposals is if creditors representing 25% or more of the proven claims filed request it. This would mean that at that point, you do not have a great relationship with creditors. They do not like the original consumer proposal you have submitted for their consideration.

A request for a meeting must be made by the creditors within 45 days of the filing of the proposal. The Office of the Superintendent of Bankruptcy Canada (OSB) can also direct the LIT to call a meeting of creditors at any time within that same period.

The meeting of creditors must be held within 21 days after being called. At the meeting, the creditors vote to either accept or refuse the proposal, or any amended proposal tabled at the meeting.

If no meeting of creditors is requested within 45 days of the filing of the proposal, the proposal will be deemed to have been accepted by the creditors regardless of any objections received.

Disadvantages of consumer proposal: How will a consumer proposal affect my credit rating?

The disadvantages of consumer proposal include the fact that it will have a negative impact on your credit rating. Generally, a person who declares bankruptcy is assigned the lowest possible credit score. Normally, with proposals, you are assigned a rating of R7. With bankruptcies, it is a worse rating of R9, the lowest possible. With proposals, The record of your consumer proposal will show up on your credit report. It will certainly be there for possibly 3 years after you have actually fully finished making all the payments. This is less than how long it will stay on your credit report because of bankruptcy.

Your ability to obtain and make use of credit after a consumer proposal relies on encouraging lenders of your personal financial maturity as well as the capability to repay the credit you are requesting. There are no guarantees and nobody is required to extend credit to you.

Once you have fulfilled the terms of your consumer proposal, you will receive a “certificate of full performance.” To make sure your credit record is updated, send a copy of that document to the major credit-reporting agencies, TransUnion Canada and Equifax Canada. Be sure to keep all of your proposal-related documents for reference by future lenders.

Disadvantages of consumer proposal: Why are consumer proposals rejected?

Adding to the disadvantages of consumer proposal is the possibility that the creditors will decline it. Consumer proposals are commonly the last option for creditors, other than for consumer bankruptcy. In most cases, creditors accept a well thought out debt settlement plan since they wish to recuperate some of the funds that would otherwise be lost forever. Consequently, LITs who prepare well-drafted and properly explained consumer proposals get them approved by creditors.

Nevertheless, creditors can reserve their right to reject them. When consumer proposals are rejected, it’s commonly a result of the belief of the creditor that the proposal is in reality, not a better realization than in a bankruptcy process. Conversely, creditors see that they may need to wait as much as 5 years to receive what they deem a paltry reward. They prefer to finish the pain now and get nothing in the individual’s bankruptcy than have to carry holding and administering the account for 5 years to get next to nothing, notwithstanding it is a better outcome than the borrower’s filing for bankruptcy.

Disadvantages of consumer proposal: What happens if you miss a consumer proposal payment?

As long as you are following the agreed terms of your proposal, your creditors cannot take any further action against you. If you fail to meet the agreed terms of your proposal and/or miss three months of payments, the proposal will be deemed annulled. If this happens, you are barred from filing another consumer proposal.

However, there is a temporary COVID-19 special accommodation now allowed for by the OSB. A Trustee can explain what the special rules are.

So, subject to certain temporary COVID-19 accommodation, one of the disadvantages of consumer proposal is that if you default by missing 3 months of payments, your proposal is deemed annulled. The only thing left would be a bankruptcy filing.

How long does it take to rebuild credit after a consumer proposal?

Another one of the disadvantages of consumer proposal is that you will need to rebuild your credit. Although it is difficult and takes time, it is not impossible. To begin rebuilding your credit after a consumer proposal, work with your Trustee to make sure that everything you do is reported to the credit bureaus. The more positive reports that you have on file with TransUnion and Equifax, the better your credit score will be.

I always advise clients that the first thing they should do is get a secured credit card. Not the kind you buy at the drug store. Rather, it is a credit card from one of the banks. You put up a sum of money that the bank will keep as a security deposit, They then issue you a credit card with a limit equal to the deposit you put up. Each month, when you pay the credit card off in full on time, the bank reports this to the credit bureaus. Every month they report favourably is another month that you are working on improving your credit score.

The next thing you can do is take out a small loan to invest the funds in an RRSP. Use your tax refund or the extra tax you did not have to pay, to pay down the loan. Make sure that you pay off the balance of the loan within 1 year. Make your monthly payments on time. Again, your proper use of this credit will be reported to the credit bureaus and will work in your favour.

It will take a few years, and initially you may pay a higher rate of interest than if you didn’t need to file a consumer proposal. After a few years of using credit properly, you will find that your credit is now rebuilt.

***Disadvantages of consumer proposal*: Are consumer proposals bad?**

In my view, the disadvantages of a consumer proposal are not enough to ever stop anyone from entering into the only government-approved debt settlement plan. To summarize, I see the disadvantages as:

The possibility that it may take a lot longer and be more expensive than you hoped for to reach a deal with your creditors if 25% or more of the dollar value of the proven claims vote against your initial offer.
Negative impact on your credit rating.
Rejection by your creditors and no agreement on an amended proposal forcing you into bankruptcy.
You miss 3 payments causing you to default on your consumer proposal. Again, if this happens, your only real option is to file for personal bankruptcy, which is what you tried to avoid.
It will take you time to rebuild your credit.
It only allows you to wipe away your unsecured debt. If you have secured debt that you cannot afford to continue paying, your LIT will counsel you on the best way to deal with that secured debt BEFORE you file.

Disadvantages of consumer proposal summary

I hope you enjoyed the disadvantages of consumer proposal Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags are consumer proposals bad, avoiding bankruptcy, Bankruptcy, Consumer Proposal, consumer proposals, disadvantages of consumer proposal, filing for bankruptcy, how long does it take to rebuild credit after a consumer proposal, how will a consumer proposal affect my credit rating, Ira Smith Trustee, licensed insolvency trustee, meeting of creditors, what happens if you miss a consumer proposal payment, what is a consumer proposal, when is a consumer proposal appropriate, when is a meeting of creditors held?, why are consumer proposals rejected

Brandon Blog Post

CANADA INSOLVENCIES EXPECTED TO JUMP SAYS EVERY AUTHORITATIVE PUNDIT AND INSOLVENCY INSIDER

Post author By Brandon Smith
Post date February 1, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of the Canada insolvencies Brandon blog, please scroll to the bottom and click play on the podcast

Canada insolvencies introduction

Ideally, if the debt was free as well as limitless, most of us would certainly be able to spend for whatever we wanted with a couple of swipes on our credit card. Companies would be able to buy supplies and also pay salaries simply by borrowing a lot more from their lender. There would be no Canada insolvencies and I guess I would be out of work!

But when the credit crisis struck at the start of this century, it revealed simply how much complimentary and limitless credit there really was, and also the number of people who had been living beyond their means with massive huge debt loads for years.

In 2020, the coronavirus pandemic struck the globe. Every country’s health system has been exhausted to the max. Governments initiated widespread lockdowns and strove to maintain their respective economies afloat. Canadian workers lost their jobs or otherwise having their income considerably decreased because of stringent lockdown measures. This required the federal government to bring in several assistance programs for individuals as well as businesses under the banner of Canada’s COVID-19 Economic Response Plan. Household support measures were imperative.

Every pundit, economist and insolvency insider forecast that Canada insolvencies would jump in 2020. They didn’t. I discuss why and what it means.

What Canada insolvencies mean

As I have written many times in the past, the word insolvency refers to a financial condition in which a person or business is not able to pay its financial obligations. The sensation of being in debt can be an extremely frustrating scenario. The thought of being not able to settle your debts is impending darkness that can seem impossible to get rid of.

As I have promoted many times in my blogs about Canadian households and family budgets, your charge card must continue to be securely in your pocket most of the time. You only should utilize it to acquire things you’ve budgeted for. Nonetheless, if you find yourself not able to pay your credit card bill, you might run the risk of dealing with a scenario known as insolvency. If you have a large amount of debt or restricted earnings, the concern of insolvency needs to be a large motivator for you to do something about it. It causes strains in households.

Limited, lowered or no revenue, whether you are an individual or a company, has actually been the result for lots of Canadians due to the coronavirus pandemic. The provinces, including Ontario, implementing lockdowns of differing degrees has also been a cause. The federal government had no choice but to generate its economic response plan to make aid payments to individuals and companies. Pundits had actually been anticipating a rise in insolvency volumes since the 2nd quarter of 2020.

Global insolvency insider forecasts said there would be a rise in Canada insolvencies and elsewhere in 2020

Insolvencies in the UK were anticipated to leap to record levels by 27% in 2020. That was exposed in a financial study called the Atradius Insolvency Report. Atradius is a leading trade credit insurance firm. It also forecasted that every major economy in all countries, except for China, was anticipated to enter an economic downturn in 2020 with international GDP forecast to contract by 4.5%. This would make it a much more intense recession in magnitude than the Great Recession of 2009. Naturally, COVID-19 was the reason.

Euler Hermes, a trade insurance firm, reported that it predicted that governments around the globe are clambering to save companies battered by coronavirus lockdowns. They said the world is nonetheless encountering a huge rise in insolvencies by one-third in 2020 and also 2021.

In Canada, increased food prices, loss of income and a cost of living have many individuals struggling monetarily. Credit card debt is surging and that is what might push numerous people over the edge. Statistics Canada just released a preliminary estimate that 2020 GDP reduced by 5.1% over year-earlier levels which is the worst year in over 6 decades. The federal government will certainly be presenting a new budget to try to kickstart Canada into an economic recovery. Predictions for later in 2020 also had Canada insolvencies rising.

What really happened in 2020 Canada insolvencies

Nonetheless, as 2020 finished, Canada insolvencies including personal bankruptcies went to a 24-year low. The 2020 trend in insolvencies was a continuing descending pattern. There’s been no spike in personal and business bankruptcies notwithstanding lots of financial difficulty in our country. There was no surge in Canada insolvencies. The opposite was true.

I have previously written on the decrease in Canada insolvencies. In my view, the main factors for the record low Canadian personal insolvencies and corporate insolvencies, including bankruptcy filings in 2020 were:

federal and provincial government support measures including the Canada Emergency Response Benefit (CERB), Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Business Account (CEBA), which had an increase from $40,000 to $60,000
mortgage debt payment deferrals
the courts having been closed for many months so nobody could get sued

So the predictions for 2020 regarding the level of insolvencies did not come true as there was a continuing decline in insolvencies. So now, each economist and all the pundits have just kicked their signs of increases in insolvencies predictions down the road and claim that 2021 will be the year for the big jump in corporate and Canadian consumer insolvencies. The main reason cited for these 2021 insolvency forecasts is that as far as we know now, the COVID-19 relief programs will wind down. Canada, like most other nations, is not expected to return to a pre-pandemic level for some time.

How do you prove insolvency?

Canada’s insolvency laws are fairly straightforward. The two main options for an individual who cannot pay all their debts are also straightforward under the Bankruptcy and Insolvency Act (Canada) (BIA). You either file for an individual consumer proposal or personal bankruptcy.

For insolvent corporations, there are options for them under the BIA too. They can restructure and reduce their debts through a Division I Proposal. Alternatively, a company can file for bankruptcy. For companies with debts greater than $5 million, they could choose to restructure by filing under the Companies’ Creditors Arrangement Act (CCAA).

I have also written before about the tests for Canada insolvencies. They are:

the debtor has stopped paying debts as they generally become due
your liabilities are greater than your assets
if you liquidated all of your assets, there would not be enough money to pay off all your debts in full

***Canada insolvencies*: What happens during insolvency?**

When a person or company finds themselves not able to pay their costs, they are insolvent. Insolvency is an economic problem. This typically indicates that they cannot pay their present expenses in a prompt way. There are a number of choices for dealing with your debt when you go into insolvency. What you need is the insolvency advice of a licensed insolvency trustee (Trustee). The Trustee will certainly examine your scenario, establish your insolvency level and discuss your sensible alternatives with you.

As an individual, you can try to use the proposal provisions of the BIA to keep your assets, while you negotiate with your creditors with the help of the Trustee. The objective is to come up with a plan to pay a portion of what you owe to eliminate all of your financial obligations. This allows you to attempt to reorganize your business or personal situation to avoid bankruptcy. It is important to understand your choices.

Lots of people are afraid of declaring bankruptcy or perhaps even owing money. Not many individuals understand what happens throughout insolvency. People assume bankruptcy is a quick fix to all of their financial problems. They think they will never ever need to fret about cash ever again. They are wrong. When you file for bankruptcy, you have simply taken a massive step in the direction of economic liberty.

Nonetheless, there are duties and responsibilities on the person that declares bankruptcy. The process is developed to work with you using counselling to ensure, as best as feasible, that your financial troubles will no longer rule your life. The ultimate objective is that when you have actually successfully completed your debt settlement proposal or have your bankruptcy discharge, you will not once more be tempted to have additional debt that is going to drag you back into insolvency.

It is very important to remember that just because you owe money does not imply that you ought to give up. Rather it suggests that you require to find among the realistic options that a Trustee can help you with to work you out of financial trouble.

***Canada insolvencies*: What happens when you file insolvency?**

At some point in life, you may find yourself in an economic scenario that you do not recognize exactly how to get yourself out of. You’ll be stuck in a situation where you owe more money than you can ever pay back. Remember that insolvency is a financial situation. You can become insolvent, but you cannot file insolvency.

What you can do is search for an option to settle your financial debts, leave them behind as well as move forward with confidence and no tension in your life. It is not your fault that you cannot do it yourself. You have only been taught the old ways. A Trustee can help you using new ways. That is what we are trained to do.

The options, in order of seriousness and urgency, within the Canadian insolvency framework are:

Devise a realistic family household budget to see where you can divert the money you are currently spending away from certain items to unpaid debt until it is all paid off. Household finances must be studied to make sure that there is a balanced budget.
Reaching an informal arrangement with your few creditors to get deferrals from creditors and/or pay them less than the total amount owing on each in order for them to write off the balance.
Reaching a formal debt settlement plan through a Trustee in order to extend the time you have on an interest-free basis and agreements with creditors that you will pay less than the total owing in order to wipe away all of your unsecured debt. This process is called either a consumer proposal or a Division I Proposal, depending on whether you owe more or less than $250,000. To read more about consumer proposals, please click to read my consumer proposal faq blog.
Filing for bankruptcy in order to eliminate your debt and start again fresh, Starting Over, Starting Now.

This is what the BIA is designed for. For corporations owing less than $5 million, they too can take advantage of either debt settlement or bankruptcy using the BIA. If a corporation owes more than $5 million, they can also consider a debt settlement plan under the Companies’ Creditors Arrangement Act (CCAA).

You can deal with your own form of insolvency through the BIA if you can’t pay your bills and you can’t find a way to get out of your situation. You can do one of the consumer insolvency filings available to avoid being harassed by debt collectors. Consumer filings are available to individuals to get a fresh start. Your car breaks down and you can’t afford to fix it. Your debt through mortgages payments are too high. You can’t pay your rent. Why would you not want a no-cost consultation with a Trustee? You literally have nothing to lose.

Canada insolvencies summary

I hope you enjoyed this Canada insolvencies Brandon Blog post. Will there be an increase in insolvencies around the globe in 2021? What will the insolvency figures end up being? I don’t know. But rather than worrying about the whole world, what about you?

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this Covid-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags canada insolvencies, canada insolvencies expected to jump, Canada's COVID-19 Economic Response Plan, consumer insolvencies, consumer proposal faq, corporate insolvencies, how do you prove insolvency, increases in insolvencies, insolvencies, insolvency advice, insolvency insider, insolvency volumes, Ira Smith Trustee, licensed insolvency trustee, personal bankruptcies, trend in insolvencies, what happens during insolvency, what happens when you file insolvency

Brandon Blog Post

CONSUMER PROPOSAL FAQ: ANSWERS TO 10 TANTALIZING CONSUMER PROPOSAL QUESTIONS

Post author By Brandon Smith
Post date January 27, 2021

consumer proposal faq

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

consumer proposal faq

Consumer proposal faq introduction

If you’re struggling with financial obligations, you’ve probably thought about declaring bankruptcy. You may have listened to advertisements or people saying that a consumer proposal or bankruptcy is basically the exact same, however, there are some essential distinctions. That confusion has actually led me to create this consumer proposal faq.

Under a consumer proposal, you bargain a repayment strategy with your creditors (individuals you owe money to), yet you don’t lose your assets. Depending on exactly how rapidly you can pay it off, you can be discharged a whole lot quicker from a consumer proposal than from a bankruptcy. While bankruptcy will certainly remain on your credit record for 7 years after discharge, a consumer proposal can be gotten rid of in about half that time.

In this Brandon Blog, I answer the most usual questions concerning consumer proposals which is why I call this blog the consumer proposal faq blog.

Consumer proposal faq: What are the common benefits of filing a consumer proposal?

Filing a consumer proposal in Canada is a great way to help manage your overloaded financial situation. A consumer proposal is a legal alternative to bankruptcy that helps you work out a payment plan for your creditors. It allows you to pay back a portion of your debt, eliminate the rest of your debts while keeping the remainder of your possessions and giving you a fresh start.

consumer proposal faq

Consumer proposal faq: What does a consumer proposal cost?

A consumer proposal is an official arrangement to pay off your financial debts over a specific time period. While there are different kinds of consumer proposals, the basic idea remains the same. Consult with a licensed insolvency trustee (previously called a bankruptcy trustee) (Trustee) who will certainly analyze your scenario and figure out whether a consumer proposal is a good fit for your situation.

The Trustee will also prepare a consumer proposal that takes into account the settlement plan for the creditors that you can afford to make the monthly payments on. The estimation of the minimum amount to offer your creditors is determined by the Canadian bankruptcy law laid out in the Bankruptcy and Insolvency Act (Canada) (BIA). The BIA states that your creditors must be offered something better than they would get in your bankruptcy.

To do that computation, the Trustee will identify if, in a bankruptcy, you would have to make any kind of surplus income payments. The Trustee would additionally find out the value of any of your assets that would be non-exempt and would have to be turned over in bankruptcy to the Trustee.

Once the Trustee has actually made those determinations, the Trustee can then tell you the minimum dollar value you need to offer your creditors. When you and the Trustee agree on the regular monthly payments and the length of time you require to make them (no greater than 60 months), the Trustee can prepare your consumer proposal and related filing documents.

The Trustee’s fee is regulated by the BIA. That guideline of the statute entitles the Trustee to what is called the tariff. That tariff is paid from the amount you pay to the Trustee as Proposal Administrator. The Trustee is able to deduct the tariff fee from the total payments you made. Because the amount you pay is calculated without any connection to the Trustee fee, that implies the services of the Trustee are free!

Consumer proposal faq: What debts can be included in a consumer proposal?

If you need to submit a consumer proposal, you can include the majority of your debt, however, there are exceptions. For example, secured debt, such as mortgages and auto loans, cannot be included. Financial debts that are the outcome of fraud and unpaid court fines or traffic fines, can additionally be excluded. The reason for this is since such debts are not discharged by a discharge from bankruptcy.

So it is most likely that the creditors that are owed cash from such types of financial debt would possibly vote against your consumer proposal. My assumption is that a judgement against someone for fraud will be huge enough that their vote will swamp the various other votes. However, that does not suggest you should not try.

Overdue income tax owing to Canada Revenue Agency (CRA) is a debt that can likewise be included in your consumer proposal. For that reason, tax debt forgiveness can be completed via a successful consumer proposal.

consumer proposal faq

Consumer proposal faq: What happens when you file a consumer proposal?

As already mentioned, the Trustee prepares a consumer proposal that lays out the terms of the repayment plan showing the creditors what will be paid. The calculation of the minimum to offer your creditors is determined by the Canadian bankruptcy law laid out in the BIA. The BIA states that your creditors should be supplied something better than they would if you entered bankruptcy.

To do that calculation, the Trustee will identify if, in a bankruptcy, you would have to make any kind of surplus income payments. The Trustee would likewise figure out the liquidation value of any of your non-exempt assets. The Trustee will take the total amount of the called for bankruptcy payments and add it to the approximated liquidation value of your non-exempt assets, to come up with that minimum amount you must offer.

As soon as the Trustee has actually made that assessment, the Trustee can then tell you the minimum amount you are required to offer your creditors. Once you and the Trustee settle on the monthly payments and the time you need to make them (no more than 60 months), the Trustee can prepare your consumer proposal and associated filing documents.

Consumer proposal faq: What happens if creditors reject consumer proposal?

This is where the Trustee truly earns his or her money. If it appears that your creditors are going to vote down your consumer proposal, the Trustee will advise that you amend your consumer proposal. The reason for modifying it is to look for an amount that both satisfies your creditors and that your budget permits you to be able to manage.

So, there are 2 most likely outcomes: either you’ll come up with a brand-new debt settlement plan that pleases them, or the proposal will entirely go down. The latter result suggests you’ll probably be filing bankruptcy.

Consumer proposal faq: What percentage do you pay in a consumer proposal?

The amount you pay in a consumer proposal depends on your financial obligation level, income as well as expenses, and which province you reside in. The plan can be either one where you make one lump sum payment (if there is someone ready to set up that cash for you) or a regular stream of monthly payments that will be made to the Trustee as the Proposal Administrator.

The overall amount is your proposal fund where all your creditors will be paid their pro-rata share. The most essential point to bear in mind is that once your consumer proposal is approved by your creditors, and you have made all the payments, you will receive your Certificate of Full Performance.

This means you’ll not have to pay anything more to your unsecured creditors.

Bear in mind, you are paying a fraction of your total financial debts in order to remove all of your unsecured debt. I find that in general, an individual who ends up offering around 25% of their total unsecured financial debts can have an approved and effective consumer proposal.

Consumer proposal faq: Can you keep a credit card with a consumer proposal?

You are allowed to maintain a credit card with a consumer proposal. The actual question is, will it work? Let me discuss.

A consumer proposal is actually a debt settlement plan: the financial institution, lending institution and your other creditors agree to forgive a specific amount of your debt and you consent to pay back a specific percentage of the debt. If you owe money to a credit card issuer that is caught in your consumer proposal, it is very unlikely that they will continue extending credit to you and allow you to continue using their card.

On the other hand, if you have a bank card that you owe nothing on at the time of filing your consumer proposal, AND you have actually not made any type of unusual payments to them in the 90 days immediately before your consumer proposal filing, you can probably maintain using that credit card under the existing credit agreement.

Worst situation, if all your credit cards are cut off as a result of your filing, you can always get a secured charge card to make use of. In this consumer proposal faq, I don’t explain how to get one. It is easy to find online.

Consumer proposal faq: Does a consumer proposal ruin your credit?

Of all the consumer proposal faq, this is probably the one that bothers people the most. The alternative is bankruptcy. The proposal is a plan with your creditors. The proposal is binding as quickly as it is accepted, but it does not eliminate your financial debt. It reorganizes it. You pay your Trustee as I discussed above. But you pay at a reduced amount than the total you owe.

The record of your consumer proposal will show up on your credit report. It will certainly be there for possibly 3 years after you have actually fully finished making all the payments. It does also adversely affect your credit rating. However, the notation on your credit history and the adverse impact on your credit score is not as damaging as in a bankruptcy.

Having a poor credit score might sound like a negative. But you can’t make your current payments on your debt any longer. If you cannot stay up to date with your debts, a consumer proposal will at first stop repossession or foreclosure and also will completely stop wage garnishment. It will give you a fresh start.

With all those advantages contrasted to a lower credit score, I believe it is well worth it, especially over bankruptcy. When people ask me “What are the pros and cons of a consumer proposal“, this is what I describe to them. After that, the option is theirs, consumer proposal vs bankruptcy.

Is a consumer proposal worth it? I certainly think so.

consumer proposal faq

Consumer proposal faq: Can consumer proposal affect employment?

If you have stable earnings and can make payments under a consumer proposal, bankruptcy will not be required. You cannot lose your job just because you file a consumer proposal. If you do not carry out a full and complete consumer proposal debt management programme, a creditor can try to garnish your wages. How will you feel when your employer gets the wage garnishment notification?

Consumer proposal faq: What are the main differences between a consumer proposal and bankruptcy?

A consumer proposal is a legal option for people that owe no more than $250,000 (other than for any debts registered against your primary residence) in consumer debt. If you owe more than $250,000, you can file a debt settlement plan called a Division I Proposal.

Unlike a consumer proposal, bankruptcy is a choice for individuals that owe any amount. It is necessary to note that bankruptcy is much more difficult and can impact your credit score ranking for virtually 10 years. In a consumer proposal, you do not need to turn over your non-exempt assets to the Trustee. You also do not have to report your monthly income and expenses in a consumer proposal like you do in a bankruptcy.

These are the main differences between a consumer proposal and bankruptcy.

Consumer proposal faq summary

I hope you enjoyed this consumer proposal faq Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We would be pleased to answer any other questions you may have about this Consumer Proposal FAQ Brandon’s Blog or any other matter of interest to you.

Tags Bankruptcy, bankruptcy trustee, Can consumer proposal affect employment, Can you keep a credit card with a consumer proposal, Consumer Proposal, consumer proposal faq, consumer proposal in canada, Debt, Does a consumer proposal ruin your credit, financial debts, Ira Smith Trustee, licensed insolvency trustee, What are the common benefits of filing a consumer proposal, What are the main differences between a consumer proposal and bankruptcy, What debts can be included in a consumer proposal, What does a consumer proposal cost, What happens if creditors reject consumer proposal, what happens when you file a consumer proposal, What percentage do you pay in a consumer proposal

Brandon Blog Post

SMALL BUSINESS IN CANADA: MUST A STAGGERING 200,000 CANADIAN SMALL BUSINESSES DECLARE BANKRUPTCY DUE TO THE PANDEMIC?

Post author By Brandon Smith
Post date January 25, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version of the small business in Canada Brandon Blog, please scroll to the very bottom of the page and click play on the podcast.

Small business in Canada introduction

The Canadian Federation of Independent Business (CFIB) is the country’s champ of small business in Canada. CFIB is Canada’s biggest non-profit organization devoted to producing and sustaining an atmosphere where your small business in Canada can succeed.

CFIB promotes small business in Canada issues with political leaders as well as decision-makers. As a non-partisan company, it influences public policy based upon its members’ views. It tries to ensure that small business owners have an opportunity to impact the regulations and policies that impact Canadian business.

A member survey was performed by CFIB and the results were announced on Thursday, January 21, 2021. The results suggest that greater than 200,000 organizations could shut permanently because of and during the pandemic.

The federation states that it could throw greater than 2.4 million people out of work. The study suggests 1 in 6, or about 181,000 small companies, are currently seriously considering closing down. That’s up from 1 in seven or around 158,000 last summer.

The CFIB is contacting provincial and federal governments to try to help small businesses by presenting secure pathways to re-open and end lockdowns that may kill off these businesses.

The question I wish to explore with you today is if a small business in Canada needs to shut down, does it have to become one of the statistics of Canadian business bankruptcies? Must it file for corporate bankruptcy? For this small business in Canada Brandon Blog, I will assume that the small business is a corporation.

Small business in Canada: When is a corporation bankrupt, or insolvent?

As I have discussed with you in previous blogs, a company is insolvent under the BIA if:

it is not able to satisfy its debts as they generally come to be due; or
it has ceased paying current debts in the normal course of business as they end up being due; or
the company’s property is not enough, at a fair valuation, to permit settlement of all debts (significance that even if all the property was to be sold, the proceeds would not provide sufficient cash to pay all financial obligations which are owed, or will certainly soon end up being due).

A company is bankrupt under the Bankruptcy and Insolvency Act (Canada) (BIA) if it has made an assignment in bankruptcy, or if a bankruptcy order has actually been made against it. Bankruptcy is a legal process to eliminate debts if the small business in Canada is unable to pay them.

To be bankrupt, in the case of an assignment, the company, and in the case of a court order, the applicant creditor would have engaged the services of a licensed insolvency trustee (formerly called a bankruptcy trustee or a trustee in bankruptcy). Licensed insolvency trustees are the only professionals allowed to administer bankruptcies in Canada and are licensed and supervised by the Office of the Superintendent of Bankruptcy (OSB).

Every corporate bankruptcy is what is called an “ordinary administration“. Unlike in personal bankruptcy, there is no streamlined method for corporate bankruptcy. Remember this point as it serves as the basis for answering the question “Must a small business in Canada declare bankruptcy in order to close down due to the pandemic“?

***Small business in Canada*: Is small business bankruptcy the right choice?**

One of the most difficult decisions that an entrepreneur owner of a small business in Canada ever needs to make is whether or not to put his/her business into bankruptcy. Obviously, every entrepreneur goes into business hoping for success, so thinking about bankruptcy isn’t just an economic decision; it is a psychological emotional one too. It’s very crucial to understand the truths regarding local business bankruptcy and also the various other options that may be available to you before you make that decision. This will aid you to avoid making a rash choice that could be the wrong one.

The reality is that, for many companies, there are choices besides small business in Canada bankruptcy. One possible choice is a proposal to creditors. In a proposal, you make a deal to your unsecured creditors to pay off a percentage of what is owed to them and/or stretch out (commonly lower) monthly payments over a longer amount of time. This ensures that creditors receive either some or all of what is owed to them in a way the company can afford. This enables small business in Canada to avoid bankruptcy and remain in operation.

The whole concept of a proposal is that you have a corporate entity that is insolvent, but, the underlying business is viable. If you can cut away the layers of debt, the business could continue to operate and employ people. You may even need to transition the business assets to a new corporation. All of this is possible under a Division I Proposal under the BIA. A proposal under the BIA is the same as the term you hear in the news all the time – bankruptcy protection. The company ultimately comes up with a plan of reorganization to tell its unsecured creditors what the company can do for them because it does not have the necessary money to pay them 100%.

If the business is not that complex and there are only a few creditors, possibly an informal proposal would work. The entrepreneur would discuss his company’s problems with each creditor and make an offer to them that is both appropriate and something the company can pay. If successful, the company can avoid formal restructuring proceedings. If there are too many creditors to do it on an informal basis, or if the restructuring is too complex, the small business can restructure under the BIA.

A proposal can be an excellent option for a small business that has actually encountered recent economic issues while having had success in the past. It can also be useful for a small company that was profitable but is now having a hard time due to the fact that past issues are weighing it down. A proposal is one of the alternatives to bankruptcy that I implement to save a company by allowing it to develop its plan of reorganization to emerge healthy to stay in business and to save jobs.

However, for some organizations, filing for small company bankruptcy is the choice that makes the most sense. A Trustee can help you recognize the alternatives available to ensure that you can decide if a bankruptcy filing is a proper alternative for your small business.

***Small business in Canada*: Is just closing the door an alternative?**

Over the years we have consulted with many entrepreneurs about their small businesses in Toronto or other small business Ontario locations. Many times we end up advising them that it does not make sense to spend the money on any of the various types of bankruptcy proceedings. The size of the company and the nature of its assets makes either a proposal in bankruptcy or any bankruptcy process unnecessary. None of the forms of bankruptcy make sense. Let me explain.

Most small business opportunities in Canada started by entrepreneurs are funded using a variety of methods including:

investment by the owners;
small business start up grants Canada; and
small business loans.

More recently, the small business loan covid 19 Canada ($40000 Canada Emergency Business Account (CEBA) loan which has now been increased to $60,000) has also been used. The combination of owners taking stock in exchange for cash, loaning money to the small business and having a small business bank loan, perhaps even the official government-guaranteed Canada small business loan is pretty standard.

The bank will take security over all of the assets of the small business in Canada. By the time the business needs to shut down, there are not many assets left. Whatever assets there are, they are all fully secured by the bank. If the business is no longer viable, then although it is insolvent, it cannot be restructured as the business itself does not work anymore. If the assets are all fully encumbered, then there is no restructuring that can take place.

So a Division I Proposal under the BIA is not possible. Bankruptcy is a remedy for the unsecured creditors. If there are not many assets left, and what is left is fully secured by the bank, then the bank will suffer a shortfall and there are no assets available for the Trustee to use to make a distribution to the unsecured creditors. So why have any type of bankruptcy or any bankruptcy proceeding? It does not make sense to spend that money.

In this situation, it just makes sense to tell the bank that the business is shutting down, turn the key in the lock to the front door and give the key to the bank.

***Small business in Canada*: So what happens if I just close the door and lock it?**

I call this the self-help remedy. There are too many problems with the business that it is not viable anymore. Perhaps the COVID-19 lockdown is just too tough to recover from and the small business cannot survive. Perhaps the assets are not worth much – think restaurant equipment where the cost of the leasehold improvements may be as much as the cost of the equipment. Because of this, the only choice is to walk away.

As a director of the company, you have a responsibility to make sure that all final government returns are completed and filed. If the company’s books and records are stored on-site. Perhaps the accounting information is stored on a computer hard drive. The directors should make sure that the books and records, be they electronic or physical, are safeguarded by taking them off the business premises.

You may need them not only to prepare final returns but also in case Canada Revenue Agency or any other regulatory authority has any questions or wishes to perform an audit. The directors will also want to make sure that all final employee records are completed and distributed to the former employees.

Next comes the bank. In Canada, the bank loan would have been either fully or partially guaranteed by the entrepreneur. The entrepreneur may have also personally guaranteed the premises lease of the business. The entrepreneur may also have personal liability for director obligations such as unremitted source deductions, unpaid HST and outstanding employee wages and vacation pay.

If the individual does not have sufficient personal assets or other resources to make good on their personal guarantee, then rather than focussing on bankruptcy for the business notwithstanding all the business debts, we need to focus on the person’s situation. Perhaps they will need to look at the various bankruptcy options, be it a consumer proposal, Division I Proposal or as a last resort, bankruptcy.

It will be much more productive for the entrepreneur to retain me to help them with their personal financial problems arising out of the closure of the small business in Canada rather than on the business itself that has little in the way of assets and no viable business left to salvage.

Must 200,000 Canadian small businesses declare bankruptcy due to the pandemic?

So given the above, the answer to the question is no. If the small business in Canada is viable, then perhaps it can be restructured to avoid bankruptcy, maintain operations and save jobs. If it is not viable, then, bankruptcy may be necessary depending on the complexity of the business and the issues facing it.

If it is not complex and there are no free assets, then just closing the doors of that small business in Canada is all that needs to happen. The individual will then have to deal with their personal liabilities arising from that.

Small business in Canada summary

I hope you enjoyed this small business in Canada Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of this seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tags Bankruptcy, bankruptcy trustee, business debts, canada emergency business account (ceba), canadian federation of indepdent business, cfib, Corporate Bankruptcy, Division I Proposal, Ira Smith Trustee, licensed insolvency trustee, small business, small business canada, small business in canada, small business loan covid 19 Canada 40000, small business Ontario, small business start up grants, small businesses in Toronto, when is a corporation bankrupt

Brandon Blog Post

NATIONAL RIFLE ASSOCIATION FILES FOR BANKRUPTCY ANNOUNCES PLAN TO MOVE TO TEXAS FOR FREEDOM

Post author By Brandon Smith
Post date January 20, 2021

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

National Rifle Association introduction

The National Rifle Association is America’s champion gun right protector of Second Amendment legal rights. They are protectors of US patriots – advocating the right to keep as well as bear arms, advancing shooting sports and also championing weapon safety, education and training.

On January 15, 2021, at 2:48 PM, the National Rifle Association of America made its voluntary petition bankruptcy filing under Chapter 11 of the United States Federal Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas in Dallas.

In this Brandon’s Blog, I look at the reason why the National Rifle Association filed for bankruptcy protection and what it means.

Attorney General James Files Lawsuit to Dissolve National Rifle Association

On August 6, 2020, New York Attorney General Letitia James filed a lawsuit looking to dissolve the National Rifle Association, the largest most significant pro-gun organization in the USA. Attorney General James claims the organization with unlawful conduct as a result of their:

diversion of millions away from the charitable mission of the organization for personal use by senior management;
granting contracts to the economic gain of close associates and their families; and
appearing to hand out lucrative contracts to previous employees apparently requiring them to do nothing, in order to purchase their silence and loyalty.

The lawsuit specifically makes the claim that the National Rifle Association or NRA, as well as senior leader Executive Vice-President Wayne LaPierre and 3 other senior officials with financial mismanagement, improperly managing the organization’s funds and failing to follow various state and federal regulations, contributing to the loss of more than $64 million in simply three years for the National Rifle Association.

Allegations against the National Rifle Association

In the complaint, Attorney General James sets out numerous instances where the four specific accused stopped fulfilling their fiduciary duty to the National Rifle Association and made use of millions upon millions from its reserves for personal use and illegal self-dealing, including:

trips for them and their families to the Bahamas;
private jets;
costly meals; and
other personal travel.

In addition to shuttering its doors, Attorney General James was looking to get back millions of dollars in restitution and to prevent the four individual offenders from ever again acting as board members of any not-for-profit philanthropic organization in the state of New York.

The coronavirus pandemic has likewise negatively affected the National Rifle Association. It had to terminate its national convention. Cancelling the annual convention ended up harming fundraising. Still, the NRA declared in revealing the move that the company was “in its strongest financial condition in years.”

What led to the New York State National Rifle Association lawsuit?

The National Rifle Association chaos began with a power battle in 2019 between North and LaPierre, which included claims of self-dealing. After former NRA President Oliver North (for those of you who may be too young to know who Oliver North is, check out the Iran-Contra affair) accused the National Rifle Association‘s senior management of financial misconduct.

As a result, Wayne LaPierre pushed him out of his unpaid position. The National Rifle Association filed a claim against North to try to silence him. North counterclaimed. That is what led Attorney General James to first conduct an investigation resulting in her filing the State’s suit in August.

Another previous National Rifle Association insider exposes information about one of the most powerful lobbyists in the US. Joshua Powell was discharged from the NRA and has made strong accusations in his book titled “Inside the NRA: A Tell-All Account of Corruption, Greed, and Paranoia within the Most Powerful Political Group in America“. The book was released on September 8, 2020.

In his book, he charges Wayne LaPierre of a number of the very same allegations of mismanagement included in the New York State lawsuit. He states that the NRA has blood on its hands due to the many mass shooting cases in the United States. He charges LaPierre as well as other executives of misleading dues-paying members. He takes great care to say that some transactions fall into the classification of fraud. Powell is also named in the legal action filed by Attorney General James.

This situation immediately posed one of the biggest dangers the NRA faced since it started in New York in 1871. The National Rifle Association counterclaimed. In its counterclaim, the NRA denies the self-dealing claim and accused her of tampering with its First Amendment rights. He also claimed it is merely a “political witch hunt” (does that sound familiar?).

In response to the Chapter 11 filing, Attorney General James said she will continue to pursue the NRA in spite of the situation in Texas. “We will continue our effort because this organization has gone unchecked for years and it’s critically important that we continue to hold them accountable, even in bankruptcy court”, she said.

The National Rifle Association Chapter 11 bankruptcy filing

According to Wayne LaPierre, in filing for bankruptcy protection, the National Rifle Association states that:

“The plan can be summed up quite simply: We are DUMPING New York and we are pursuing plans to reincorporate the NRA in Texas “

In their filing, a standard question asked is: Are any bankruptcy cases pending or being filed by a business partner or an affiliate of the debtor? They answered that question by saying yes, there is a separate bankruptcy filing for Sea Girt LLC. The NRA is the single member, owner and manager of Sea Girt. Sea Girt, a limited liability corporation, was incorporated in November 2020. Wayne LaPierre signed the voluntary petition on the same day that it was filed, January 15, 2020.

This Chapter 11 filing is the opening document to get bankruptcy protection. In this first filing, the National Rifle Association estimates that it has assets of $100 million to $500 million. It estimates its liabilities as in the same range. The reason for the range is not because they don’t know, it is the standard format of an initial filing on a pre-printed form.

This initial filing is merely a summary document to gain the protection of Chapter 11 of the United States Bankruptcy Code until the debtor files the actual restructuring proposal. It is very much analogous to the filing of a Notice of Intention To Make A Proposal before filing a Division I Proposal under the Canadian insolvency regime.

As part of the Chapter 11 filing, the National Rifle Association set up a special litigation committee “to oversee the prosecution and defense of certain litigation”.

As Wayne LaPierre has stated, the real reason for the filing is to dissolve the organization and leave all of its debts behind. They plan to incorporate a new entity in Texas and then continue. Time will tell as to what transactions come under scrutiny, what will happen with the New York State litigation and the attempt to recoup millions of dollars.

National Rifle Association bankruptcy summary

Time will tell how the National Rifle Association Chapter 11 filing will proceed. It is only at its initial stage. I hope you enjoyed this Brandon Blog post. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need, Contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We will get you or your business back up driving to healthy and balanced trouble-free operations and get rid of the discomfort factors in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Sharia law in Canada introduction

Judaism: The Wedding Ceremony, Religious Divorces and Getting a Get

Sharia Law in Canada: The Mahr

Sharia Law in Canada: A Religious Ceremony Marriage Agreement Payment Can Be A Claim Under Ontario Law

Sharia Law in Canada: Is a Mahr An Enforceable Obligation In An Ontario Divorce Situation?

Religion-Based Mahr Agreements: Validity and Status Under Canadian Law

Answers to the Top 5 Divorce and Bankruptcy Questions – Secular stuff

What happens to spousal and child support payments during bankruptcy?

Who is responsible for joint debt when separating or divorcing?

What happens to joint debt if you file for bankruptcy?

What Happens To Joint Debts After Bankruptcy?

Do Support or Alimony Payments Affect Surplus Income?

Sharia law in Canada summary

File for bankruptcy introduction

You owe money: Considering bankruptcy?

How to file for bankruptcy Canada: Let the licensed insolvency trustee no-cost consultation happen first

How to file for bankruptcy – How the bankruptcy process starts

Who can file for bankruptcy?

The locality of the debtor

What about the Trustee?

File for bankruptcy summary

The Rachel Uchitel story

Rachel Uchitel and the Bottle Girls

Nightclub hostess and NHL Rangers good luck charm

What Rachel Uchitel is most famous for

The Rachel Uchitel Addiction

Rachel Uchitel is now bankrupt

Rachel Uchitel on the HBO documentary talks about Tiger, boyfriends and marriage

Is Chapter 7 one of the types of bankruptcies in Canada?

Bankruptcy and addictions

The Rachel Uchitel story summary

What is Probate Ontario?

What assets are subject to probate Ontario?

Probate Ontario: What is a Certificate of Appointment of Estate Trustee?

Probate Ontario: What does an estate trustee have to disclose to beneficiaries?

Probate Ontario: What is this Estate Information Return?

What are the ways to avoid probate Ontario for an estate?

How long does probate take in Ontario?

Probate Ontario: How does my estate (assets) get transferred after I die?

What happens if someone dies without a will in Ontario

Probate Ontario: Do I have to file taxes for the deceased?

Probate Ontario: If your parents die with debt who pays it in Canada?

My other probate Ontario blogs you might find interesting

Probate Ontario summary

Laurentian University introduction

Laurentian University: What is creditor protection?

Laurentian University: What is a stay period?

Laurentian University: What does CCAA mean

Laurentian University files to reorganize university finances

How the Laurentian University restructuring story begins

What Laurentian University reports its immediate plans are by making this CCAA filing

Laurentian University summary

Disadvantages of consumer proposal: What is a consumer proposal?

Disadvantages of consumer proposal: When is a consumer proposal appropriate?

Disadvantages of consumer proposal: When is a meeting of creditors held?

Disadvantages of consumer proposal: How will a consumer proposal affect my credit rating?

Disadvantages of consumer proposal: Why are consumer proposals rejected?

Disadvantages of consumer proposal: What happens if you miss a consumer proposal payment?

How long does it take to rebuild credit after a consumer proposal?

Disadvantages of consumer proposal: Are consumer proposals bad?

Disadvantages of consumer proposal summary

Canada insolvencies introduction

What Canada insolvencies mean

Global insolvency insider forecasts said there would be a rise in Canada insolvencies and elsewhere in 2020

What really happened in 2020 Canada insolvencies

How do you prove insolvency?

Canada insolvencies: What happens during insolvency?

Canada insolvencies: What happens when you file insolvency?

Canada insolvencies summary

Consumer proposal faq introduction

Consumer proposal faq: What are the common benefits of filing a consumer proposal?

Consumer proposal faq: What does a consumer proposal cost?

Consumer proposal faq: What debts can be included in a consumer proposal?

Consumer proposal faq: What happens when you file a consumer proposal?

Consumer proposal faq: What happens if creditors reject consumer proposal?

Consumer proposal faq: What percentage do you pay in a consumer proposal?

Consumer proposal faq: Can you keep a credit card with a consumer proposal?

Consumer proposal faq: Does a consumer proposal ruin your credit?

Consumer proposal faq: Can consumer proposal affect employment?

Consumer proposal faq: What are the main differences between a consumer proposal and bankruptcy?

***Sharia Law in Canada*: The Mahr**

***Sharia Law in Canada: A Religious Ceremony Marriage Agreement* Payment Can Be A Claim Under Ontario Law**

***Sharia Law in Canada: Is a Mahr An Enforceable Obligation* In An Ontario Divorce Situation?**

***Probate Ontario: What is a Certificate of Appointment of Estate Trustee?***

***Laurentian University: What is creditor protection***?

***Disadvantages of consumer proposal*: Are consumer proposals bad?**

***Canada insolvencies*: What happens during insolvency?**

***Canada insolvencies*: What happens when you file insolvency?**

***Small business in Canada*: Is small business bankruptcy the right choice?**

***Small business in Canada*: Is just closing the door an alternative?**

***Small business in Canada*: So what happens if I just close the door and lock it?**