Tag: meeting of creditors

PROOF OF CLAIM FORM 31: ESSENTIAL TIPS TO SUCCESSFULLY COMPLETE THE NEW CANADIAN BANKRUPTCY FORM 31

Post author By Brandon Smith
Post date June 24, 2024

Form 31 Proof of Claim Introduction

The Office of the Superintendent of Bankruptcy (OSB) published several amended Forms under the Bankruptcy and Insolvency Act (Canada) (BIA) to promote a more efficient and effective insolvency system, removing some outdated elements and ensuring better data integrity for all stakeholders. These amended Forms were originally set to come into force on July 15, 2024. One of those new forms is the Form 31 proof of claim. This morning, the OSB announced that the effective date has now been pushed back to September 16, 2024.

In this Brandon’s Blog, given the new proof of claim form coming into use effective July 15, I feel I need to update my October 2018 blog titled: FORM 31 PROOF OF CLAIM: HOW TO PROPERLY COMPLETE THE PROOF OF CLAIM. I will compare the new form to the old one as there are substantial changes and advise on how it should be properly completed as we walk through the new form.

Background Information on Form 31 Proof of Claim

Purpose of Form 31 Proof of Claim

Claims of creditors in bankruptcy or restructuring proposal cases are made on a very specific proof of claim form. The purpose of the form is to furnish information about the claim by the creditor against the debtor. It asks for such things as the contact details of the creditor and permission to represent it if it is a corporate body. Additionally, there are interrogatives on debt aspects like the amount due and supporting papers.

The types of claims section encompasses unsecured claims, lessor claims, secured claims, farm or wage earner claims, plan administrator’s claims, director’s liability claims and client claims against their bankrupt securities dealer.

It also inquires whether or not there has been any relationship between the debtor’s recent transactions with the creditor such as recent payments.

One can obtain information regarding an insolvent person’s financial condition and their application for discharge from bankruptcy. There is a caution at the end of this document concerning penalties for making fake claims or giving false statements. The creditor must sign it himself or through the representative. If an affidavit is attached thereto, then it must be sworn by a person who is authorized by law to administer oaths.

Importance of Properly Completing Form 31

The proper completion of Form 31, Proof of Claim, is crucial in the claims process for creditors with substantiated claims. This form serves as a critical document for creditors looking to assert and potentially recover owed debts. Providing accurate and thorough information on this form is essential for creditors to establish a strong foundation for their claims.

Failure to provide complete or accurate information on Form 31 can lead to delays, rejections, or the disqualification of the claim. Therefore, it is imperative for creditors to closely follow the instructions and guidelines stipulated in Form 31. By doing so, creditors can ensure that their claims are accurately documented and processed efficiently within the specified timelines.

Section 1: Understanding the Basics of Form 31 Proof of Claim

Definition of Provable Claim

Section 2 of the BIA contains the definitions. In that section, a provable claim is defined:

“includes any claim or liability provable in proceedings under this Act by a creditor“

What does this mean? it means that a provable claim refers to a debt or obligation owed by a debtor that can be verified and substantiated through documentary evidence. For a claim to be considered provable, it must meet certain criteria established by the Act, including an amount that can be determined, is due and payable at the time of the bankruptcy or within a reasonable period after that, and not be contingent on some other event or unliquidated.

Difference Between Provable and Unliquidated Claims

An unliquidated claim under the BIA refers to a claim for a specific amount of money that has not yet been determined or quantified. This type of claim typically arises when the exact amount owed to a creditor is uncertain or requires further investigation to establish.

In the context of bankruptcy proceedings, unliquidated claims present a challenge as they may complicate the distribution of assets to creditors. To address this issue, mechanisms for resolving unliquidated claims include negotiations, mediation, a disallowance of the claim by the licensed insolvency trustee (formerly known as a bankruptcy trustee) (the “Trustee”) or court proceedings to determine the appropriate amount owed.

Properly handling unliquidated claims is essential for ensuring fair and efficient bankruptcy proceedings under Canadian law.

Identifying False Claims

Ensuring the validity of claims in Canadian bankruptcy proceedings is a crucial element in safeguarding the integrity of the bankruptcy system. Baseless claims hinder the fair distribution of assets to rightful creditors and undermine confidence in the process. The proliferation of meritless claims can result in delays, increased expenses, and potential financial harm to creditors.

It is essential for Trustees to thoroughly evaluate the authenticity of claims to prevent manipulation and dishonesty. Implementing rigorous verification procedures and penalties for unsubstantiated claims are essential strategies for upholding the fairness and transparency of Canadian bankruptcy proceedings.

Section 2: Required Information for Completing Form 31 Proof of Claim

Completing and returning a Form 31 proof of claim is an important phase in the bankruptcy process. They are one of the documents included with the notice of bankruptcy documents sent out by the Trustee to formally notify the creditors of the bankruptcy.

Personal Details of the Creditor

For proof of claim to be properly completed, the creditor must furnish their contact information, encompassing their mailing address, fax number, and email address. Moreover, the creditor must substantiate their legitimacy as a creditor of the debtor and exhibit a thorough understanding of all pertinent details related to the claim. This takes you from the top of the new Form 31 proof of claim down to numbered paragraph #2.

Details of the Claim

It is incumbent upon the creditor to clearly outline the total sum of the outstanding debt owed by the debtor, in addition to any potential counterclaims, accompanied by relevant documentation or substantiating evidence. The new proof of claim form now requires a creditor to verify that the debt remains within the statutory limitations stipulated by the pertinent provincial laws and regulations. In other words, the claim is not statute-barred.

Those details are covered by paragraphs 3 through 5 of the form.

Priority of the Claim

Paragraph 6 is where, as an unsecured creditor, you need to insert the amount for what you believe to be your claim provable in the actual restructuring proposal to creditors or bankruptcy of the person or company. You must also declare whether you do or do not claim a right to a priority. If you do not, this means that you are an ordinary unsecured creditor.

If you are claiming a right to a priority claim as an unsecured creditor, you are stating that you are entitled to a priority of payment ahead of the ordinary unsecured creditors. The new Form 31 proof of claim requires you to identify what type of priority you are claiming.

The various types of unsecured claims that can have priority over ordinary unsecured claims, which are called preferred claims, are, in order of priority:

For a deceased bankrupt, reasonable funeral and testamentary costs.
The claims for wages by a wage earner employee for unpaid wage claims and certain other amounts treated like remuneration for services rendered during the period beginning on the day that is six months before the date of the initial bankruptcy event or the first day on which there was a receiver. This claim is limited to a maximum payment of $2,000, less any amounts paid for their services by the licensed insolvency trustee.
Any shortfall to a secured creditor as a result of the claim for employees’ priority above.
Any shortfall to a secured creditor as a result of the claim of employees paid out for unpaid amounts regarding prescribed pension plans.
Alimony or support payments payable by the bankrupt person under either a court order or an agreement made before the date of the initial bankruptcy event.
municipal taxes levied against a bankrupt’s real property within the two years immediately preceding the bankruptcy not registered as a lien against the property. This preferred claim cannot exceed the value of the bankrupt’s interest in the property.
A lessor for rent arrears for no more than 3 months before the date of bankruptcy and only if stipulated in the lease, a claim for accelerated rent for no more than an additional 3 months. This claim is limited to the amount realized by the Trustee from the property of the bankrupt on those premises. Further, any payment made by the licensed insolvency trustee for accelerated rent shall be credited against any amount the Trustee may owe the landlord for the Trustee’s occupation of those leased premises.
One bill of costs of a lawyer for a judgment creditor who is the first to have garnished or otherwise executed against the property of the bankrupt, but only to a maximum of the amount obtained by the Trustee from the realization of assets from the sale of such property.
Certain government debts.
Claims from injuries to employees of the bankrupt where workers’ compensation legislation does not apply, but only if there is an insurer or surety guaranteeing damages from injuries and up to the maximum guaranteed.

Section 3: Additional Considerations for Completing Form 31 Proof of Claim

There are also specialized claims that a creditor may qualify for.

A Claim of Lessor For Disclaimer of a Lease

In a corporate restructuring under the Proposal provisions of the BIA, the insolvent company can disclaim or resiliate a commercial lease. The insolvent debtor must be able to show that it cannot successfully restructure if it still has to be responsible for that commercial lease. Upon the disclaiming or resiliation of the commercial lease, the landlord is allowed to calculate its claim using the formula and provisions laid out in the BIA.

Valuing a Secured Claim

Secured creditors have the option, though not a mandatory requirement unless stipulated by the licensed insolvency trustee, to file their claim. This process involves the secured creditor completing the proof of claim form, where they estimate the value of the assets linked to their security. Any outstanding amount owed to the creditor beyond the assets’ value is also specified on the proof of claim, thereby converting it into an unsecured claim.

Secured creditors must exercise caution when determining the value of their secured claim. As per subsection 128(3) of the BIA, a Trustee may opt to redeem a security by reimbursing the secured creditor with the security’s assessed value, as indicated by the secured creditor in the proof of claim. A licensed insolvency trustee would only proceed with redemption if they ascertain that the actual value of the assets surpasses the value assigned by the secured creditor to its security.

Moreover, a Trustee must seek an independent legal opinion on the security documents. That is why a Trustee will always ask for proof of security.

*Claim by Farmer**, Fisherman or Aquaculturist*

Claims of farmers, fishermen, and aquaculturists are granted specific privileges for claims under the BIA legislation. This particular category of creditors is entitled to certain rights. In addition to the standard revindication rights, farmers, fishermen, and aquaculturists have a 30-day window following the initiation of bankruptcy proceedings or the appointment of a receiver to submit their claim for products supplied within 15 days before the bankruptcy event. Once the claim is successfully filed, these creditors are granted a primary lien on all the inventory of the insolvent debtor, excluding any inventory that may be subject to another party’s repossession rights.

Claim by Pension Plan for the unpaid amount

I alluded to claims in respect of an unpaid pension amount above. In 2008 the BIA was amended in reaction to several high-profile corporate restructurings and bankruptcies where there were pension payment amounts deducted from employee wages but not remitted to the pension plan. When the employer went bankrupt, the employees’ pension entitlement was negatively affected (think Sears Canada). Pension entitlement is an important component of the overall employees’ remuneration.

Therefore, Parliament mandated a reform where a super-priority is created for claims for unremitted pension contributions outstanding when an employer becomes bankrupt. The kinds of amounts given this super-priority are pension payments deducted from an employee’s wages but not remitted to the pension plan administrator, amounts owed by the employer for the cost of benefits paid by the pension plan and employer contributions to a defined benefit pension plan. What is excluded from this super-priority is any amount needed to reduce an unfunded pension liability.

Claims Against Directors

This kind of claim comes into play when a BIA corporate restructuring proposal provides for the compromise of claims against directors. The kind of claims against directors that a corporate proposal can compromise must have a very specific set of characteristics:

A claim against directors is being compromised in the corporate Proposal.
Arose before the filing of the Notice of Intention To Make A Proposal or the Proposal itself.
Relate to corporate obligations that are director liabilities by operation of law.

They do not include any corporate liabilities that one or more directors may have personally guaranteed as individuals.

Claim of a Customer of a Bankrupt Securities Firm

The BIA delineates precise protocols for the allocation and distribution of cash and securities within a securities firm customer pool fund. The intricacies of this process are highly technical and exceed the purview of this blog post on completing a Form 31 proof of claim. It is essential to understand that distinct provisions are in place for companies of this nature that have filed for bankruptcy.

Complicated or Contingent Claims

There are a variety of claims that by their very nature, produce complications. Just because a claim might be complicated, it does not mean the proof of claim should not be fully completed and filed with the Trustee. It also does not mean that the licensed insolvency trustee does not have to review it to determine if it is admissible or not.

Examples of complicated claims are unliquidated claims discussed above and contingent claims. In a Canadian insolvency case, a contingent claim is a claim that is not yet due and payable but may become due and payable in the future. Contingent claims are often referred to as “contingent debts” or “contingent liabilities.”

A contingent claim may arise in various situations, such as:

A lawsuit or legal action that has not yet been resolved, but may result in a payment or settlement in the future.
A contract or agreement that provides for payment or performance in the future, but only if certain conditions are met.
A guarantee or indemnity that may become payable in the future if a specific event occurs.

When a contingent claim is filed in a bankruptcy or proposal case, the licensed insolvency trustee must handle it in a specific manner. Here are the key steps:

Initial Review: The Trustee reviews the contingent claim to determine its validity and the likelihood of it becoming due and payable in the future.
Assessment of Likelihood of Payment: The Trustee assesses the likelihood of the contingent claim becoming due and payable, considering factors such as the strength of the underlying legal claim, the likelihood of a settlement or judgment, and the potential for future payments or performance.
Valuation of the Claim: The Trustee values the contingent claim, taking into account the likelihood of payment and the potential amount of the payment.
Inclusion in the Statement of Affairs: The Trustee should include a contingent claim in the sworn Statement of Affairs, which is the document that outlines the insolvent debtor’s assets, liabilities, and financial affairs. The creditor would be listed as a contingent creditor. Because at this stage the Trustee has not received a proof of claim to review, it is wise to list the amount of this contingent debt either as “unknown” or with a value of just $1.
Monitoring and Follow-up: The Trustee monitors the contingent claim and follows up with the creditor to ensure that any future payments or performance are made following the terms of the agreement or contract.
Distribution of Funds: If the contingent claim becomes due and payable in a specific amount and the creditor has filed the proof of claim properly, the Trustee needs to include the valued claim in calculating a distribution to the unsecured creditors.

Creditors are required to furnish the licensed insolvency trustee with all essential documentation and information to substantiate their contingent claim. Subsequently, the Trustee will work with the creditor to ensure the appropriate handling of the claim.

Section 4: Procedural Requirements for Submitting Form 31 Proof of Claim

As a creditor, it’s crucial to understand the procedural requirements for submitting a Form 31 Proof of Claim in a Canadian insolvency case. In this section, we’ll delve into the key issues that creditors should be aware of when submitting their Proof of Claim.

Deadline for Submitting Proof of Claim

The deadline for submitting a proof of claim is a critical aspect of the insolvency process. In Canada, creditors have a specific timeframe to file their proof of claim. Until a creditor files a proof of claim with the Trustee, the creditor cannot participate in the insolvency process. Creditors should ensure they submit their proof of claim well within the deadline to avoid any potential issues.

The First Meeting of Creditors in bankruptcy or the Meeting of Creditors in a restructuring proposal takes place 21 days after the date of filing. If a creditor who has a provable claim wishes to vote at the meeting of creditors, then it is important to have filed the fully completed proof of claim, with all supporting backup documentation, in time for the Trustee to be able to review it.

At the meeting of creditors, it is up to the meeting chair to admit or disallow any claim for voting purposes. In a bankruptcy, the creditors vote on several matters, including the appointment of Inspectors. The Meeting of Inspectors normally immediately follows the meeting of creditors. So if a creditor wishes to nominate an Inspector, it has to have filed its claim to be able to vote. To be able to vote for or against a consumer proposal or corporate restructuring proposal, the proof of claim must be filed.

The only other real deadline to file a proof of claim is before the Trustee is going to make a distribution. A Trustee must send each creditor listed on the Statement of Affairs who has not yet filed a proof of claim notice to file a claim before making a final distribution. That notice will have a deadline in it. If the creditor misses that deadline then they are not entitled to receive any dividend from the insolvency estate.

Properly Filing the Form 31

Properly filing the Form 31 proof of claim is a critical step. Creditors must ensure they complete the form accurately and thoroughly, providing all necessary information, including the amount of the debt, the date the debt was incurred, and any relevant documentation. It’s also essential to sign and date the form, as well as attach any supporting documentation. Creditors should also ensure they file the form with the correct office, as specified in the bankruptcy notice.

*Notice of Intention**To Make A Proposal*

In some cases, the insolvent individual or corporation may file a Notice of Intention To Make A Proposal, which provides creditors with advance notice of the impending restructuring proposal. At the Notice of Intention stage, there is not a specific deadline for submitting a proof of claim. A proof of claim is not sent out at this notice stage. After the Proposal is filed and the Trustee sends out the Proposal package to the known creditors, in that package the proof of claim form 31 is provided. Creditors should carefully review the Proposal package and ensure they submit their proof of claim by the specified deadline.

I was involved some time ago in a corporate restructuring case where a financial institution creditor filed a proof of claim and a voting letter using their form at the notice of intention stage. The form was improperly completed and I warned the creditor that its proof of claim was not being accepted and that they must file a new one, properly and fully completed, after they receive the Proposal package from our Firm.

They ignored my warnings and did not do so. I therefore disallowed their claim which meant their vote did not count. They appealed my decision to the Court. The Court agreed with the Trustee. Not only did their vote not count, but because they lost the appeal, they also had to pay our lawyer’s costs!

Notice of Bankruptcy Process

The bankruptcy notification is a crucial document that provides creditors with essential information about the bankruptcy proceedings, including the timeline for submitting a proof of claim. This notification is distributed by the licensed insolvency trustee managing the bankruptcy process and offers creditors a detailed overview of the procedures involved, including the deadline for submitting proof of claims.

To ensure the accurate and complete submission of the claim form, it is advisable to follow the guidelines outlined below in Section 5. Submitting a Form 31 proof of claim is a critical aspect of the bankruptcy process. Creditors must meet the submission deadline, correctly file the form, and provide all necessary information. Understanding the procedural requirements for submitting a proof of claim helps creditors protect their rights and ensure their interests are properly represented throughout the process.

Section 5: Ensuring Accuracy in Completing Form 31 Proof of Claim – A Step-by-Step Guide to Filing a Proof of Claim

As a creditor, it’s essential to know how to complete Form 31, also known as the Proof of Claim, when dealing with bankruptcy or proposal proceedings. The only way for creditor claims to be registered properly is through the filing of a properly and fully completed proof of claim form.

Let me walk you through the step-by-step process of filling out this crucial document.

Step 1: Gather Required Information

Before starting to fill out Form 31, make sure you have the following information readily available:

The name of the bankrupt individual or corporation
The amount of the debt owed to you
The date the debt was incurred
Any relevant documentation, such as invoices or contracts

Step 2: Complete the Header Information

Begin by filling out the header section of the form, which includes:

The name of the bankrupt individual or corporation
The file number assigned to the bankruptcy proceeding

Step 3: Furnish Creditor Details

In this step, kindly provide the following details as the creditor:

Your full name and mailing address
Your business name and registered address (if applicable)
Your contact information, including phone number and email address

Step 4: Specify the Debt

Specify the debt you’re claiming:

The amount of the debt owed to you
The date the debt was incurred
A brief description of the debt, including any relevant details
Completing whether or not you are a secured, claiming a priority or an ordinary unsecured creditor
Make sure that you include the entire claim

Step 5: Provide Supporting Documentation

Attach any relevant documentation to support your claim, such as:

Invoices or receipts
Contracts or agreements
Bank statements or other financial records

Step 6: Sign and Date the Form

Once you’ve completed the form, including completing the proxy form section if the creditor is a corporation, sign and date it in the designated areas.

Step 7: File the Form

Submit the completed Form 31 to the professional trustee administering the bankruptcy, along with any supporting documentation. You can submit the proof of claim by fax, email, snail mail or delivery. The most important reason of course is that if there is going to be a distribution to the creditors, you want to make sure that you have submitted your claim for dividend purposes.

Additional Tips and Reminders

Ensure to maintain a copy of the completed form for your records.
If you’re unsure about any part of the process, consider consulting with a bankruptcy lawyer or the Trustee handling the bankruptcy case . In case of any uncertainties regarding any aspect of the process, it is advisable to seek advice from a bankruptcy lawyer or the Trustee overseeing the bankruptcy case.
File your claim on time to safeguard your rights as a creditor.

By adhering to these guidelines and furnishing precise information, you will complete Form 31 and safeguard your creditor rights throughout the bankruptcy or restructuring proceedings.

Section 6: Common Mistakes to Avoid when Completing Form 31 Proof of Claim

When engaging in the intricate process of submitting a proof of claim to the Trustee, it is imperative to steer clear of common errors that may result in delays, rejections, or potential dismissal of your claim. This section will outline three crucial errors to avoid when completing Form 31 for the proof of claim.

Providing incomplete or inaccurate information on your proof of claim: This can significantly hinder the processing of your claim or result in its rejection. To mitigate this risk, it is crucial to take the following steps:

- Thoroughly review your claim amount to ensure it aligns with your records.
- Verify the accuracy of creditor information, including names, addresses, and account numbers
- Organize your documents coherently and logically to facilitate efficient processing and evaluation.

By paying close attention to these details, you can enhance the accuracy and efficiency of your claim submission process.

Failure to include supporting documentation: This is a significant oversight that can result in the rejection or delay of your claim. To mitigate this risk, it is imperative to adhere to the following guidelines:

- Attach all pertinent supporting documents, including invoices, receipts, and contracts.
- Ensure that all documents are clear, legible, and easily readable.
- Organize your documents in a clear and logical order

Missed Deadlines for Submission: Be sure to allocate extra time for any unforeseen delays or complications when submitting your proof of claim before the deadline. To minimize last-minute stress, make sure to submit your claim well ahead of the due date. By being proactive and avoiding these typical errors, you can streamline the filing process and increase your chances of a successful outcome. Remember to thoroughly review your details, attach all necessary documentation, and submit your claim with ample time to spare. Finally, missing deadlines for submitting your proof of claim can have severe consequences, including dismissal of your claim.

To ensure a successful filing process, it’s important to avoid these common mistakes. Make sure to thoroughly review your information, attach all necessary supporting documents, and submit your claim with ample time before the deadline.

Section 7: Form 31 Proof of Claim FAQs

In this section, we’ll address some frequently asked questions about completing Form 31 proof of claim.

Q1: What is Form 31 Proof of Claim?

A1: Form 31 Proof of Claim is a prescribed form that creditors use to indicate their claim against a bankrupt estate or in a formal restructuring under the BIA. It is a crucial step in the process, as it allows creditors to assert their rights and receive a portion of the available funds.

Q2: Where can I find Form 31 Proof of Claim?

A2: Form 31 Proof of Claim may be obtained from the office of the Trustee or downloaded from the official website of the Office of the Superintendent of Bankruptcy Canada. Make sure you get the most up-to-date version of the form as the new one goes into effect on July 15, 2024.

Q3: What information should I include in Form 31 Proof of Claim?

A3: When completing Form 31 Proof of Claim, you should provide accurate and detailed information, including your name and address, the debtor’s name, the amount of your claim, and any supporting documentation.

Q4: Are there any specific formatting guidelines for completing Form 31 Proof of Claim?

A4: While there are no strict formatting guidelines, it’s important to ensure that your form is neat, legible, and organized. Use clear and concise language, and avoid any unnecessary details. Attach supporting documents in a logical order and label them appropriately.

Q5: Can I submit multiple claims using Form 31 Proof of Claim?

A5: Yes, you can submit multiple claims using Form 31 Proof of Claim. However, you must separate each claim clearly and provide all the necessary information and supporting documentation for each claim.

Q6: Can I make changes to my submitted Form 31 Proof of Claim?

A6: Once you have submitted your Form 31 Proof of Claim, it depends on the change. If it is something very minor, like your phone number, the Trustee will make that change for you. If it is a major change, like the amount you are claiming, it is recommended that you file an amended claim. Therefore, reviewing your form carefully before submission and ensuring its accuracy is crucial. If you need to make corrections or updates, contact the Trustee’s office immediately.

Remember, completing Form 31 Proof of Claim accurately and on time is essential to assert your rights as a creditor and receive a fair distribution from the estate. By following these tips and guidelines, you can navigate the process successfully.

Conclusion

Completing Form 31 Proof of Claim is crucial for creditors seeking to assert their rights in a bankruptcy case. By avoiding common mistakes, including providing inaccurate information, failing to include supporting documentation, and missing submission deadlines, creditors can enhance their chances of a smooth filing process. Remember to double-check all information, attach relevant supporting documents, and submit your claim on time. By doing so, you can ensure that your claim is properly considered and increase your chances of a successful outcome.

Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation. We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

The information provided in this Brandon’s Blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content of this Brandon’s Blog should not be relied upon as a substitute for professional guidance or consultation. The author, Ira Smith Trustee & Receiver Inc. as well as any contributors to this Brandon’s Blog, do not assume any liability for any loss or damage resulting from reliance on the information provided herein.

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WHAT HAPPENS WHEN YOU FILE FOR BANKRUPTCY IN CANADA BUT CANNOT SPEAK BASIC ENGLISH?

Post author By Brandon Smith
Post date July 31, 2023

what happens when you file for bankruptcy

What happens when you file for bankruptcy? Introduction

Canada has two official languages: English and French. Canada’s cultural diversity means that our citizens speak a wide range of languages as their native tongue. In Ontario, the majority of the people’s mother tongue is English. That is the language throughout this Brandon’s Blog site, however, if French is your native tongue, you can conveniently substitute the two languages wherever I speak of English, one for the other.

What happens when you file for bankruptcy in Canada when English or French isn’t your native language? In this Brandon’s Blog site, I will certainly discover the unique obstacles faced by non-English speakers in this process and also overview you on exactly how to get rid of language barriers, access necessary sources, as well as seek emotional support throughout this hard time.

Declaring bankruptcy is already a tough as well as stressful trip, and it becomes a lot more intimidating for people that do not speak English. Navigating the Canadian insolvency system needs a comprehensive understanding of the process and paperwork, all as explained by the licensed insolvency trustee, making language effectiveness paramount. Unfortunately, the lack of English can prevent those people from completely understanding their situation.

This Brandon’s Blog about what happens when you file for bankruptcy but cannot speak English reviews a BC court case as well as the resulting policy statement from the Office of the Superintendent of Bankruptcy on this exact subject.

What happens when you file for bankruptcy? Importance of understanding the bankruptcy process in Canada

Trying to understand the Canadian insolvency regime and what happens when you file for bankruptcy is difficult for every layman and particularly for people facing language obstacles due to their limited English. Navigating the ins and outs of insolvency can prove to be an overwhelming job, and language obstacles can worsen the difficulties. Nevertheless, equipped with a thorough understanding of the process, those that talk languages other than English or French can properly tackle their financial dilemma, access necessary resources, and discover the essential emotional support.

What happens when you file for bankruptcy? Declaring bankruptcy is a legal process that grants individuals and even enterprises a fresh start when they can no longer fulfill their financial obligations. In Canada, the insolvency procedure is overseen by the Bankruptcy and Insolvency Act (BIA). This intricate course of action entails various stages and specific regulations for addressing a multitude of concerns. Grasping the ins and outs of the insolvency process is vital for any individual or business seeking to restructure or entirely absolve their debt because they cannot afford to make the debt payments they are obligated to make.

The journey through insolvency can be overwhelming, particularly for an individual who lacks proficiency in English, but there’s no need for it to be so. Armed with the right information and supported emotionally and linguistically, both individuals and companies can make well-informed decisions about their financial future.

what happens when you file for bankruptcy

What happens when you file for bankruptcy? Requirements and eligibility criteria for filing for bankruptcy in Canada

To launch an insolvency filing in Canada, it is necessary to satisfy certain requirements. It is critical to have a comprehensive understanding of these criteria, no matter your mother tongue.

Eligibility for a declaration under the BIA needs the person or company to be insolvent. The BIA uses three main criteria to identify the insolvency condition of a specific person or business:

Does the person or company owe $1,000 or more?
Are they incapable to satisfy their liabilities as they end up being due?
If they were to sell off all their assets, would the cash not be able to fully pay off their liabilities?

If you are able to answer “yes” to the very first inquiry as well as “yes” to either or both of the 2nd and 3rd questions, you or your company meet the standards for insolvency under the BIA and are eligible to proceed with an insolvency declaration.

Language barriers can complicate this procedure, making it important to overcome them in order to access the Canadian insolvency system. Utilizing an interpreter is an effective strategy for resolving the language obstacle and efficiently accessing the Canadian insolvency system. By fixing the linguistic divide, individuals are able to completely be involved with the system, make informed choices, and obtain the necessary assistance throughout the insolvency process.

What happens when you file for bankruptcy? Language barriers and their implications

Challenges faced by individuals who cannot speak basic English

When people who are not skilled in English seek help from Canada’s insolvency system legal process, they come across a wide range of challenges, especially when involving their creditors and the licensed insolvency trustee. Language barriers can greatly impede their ability to properly describe their financial difficulties, understand what happens when they file for bankruptcy, understand the insolvency process, and properly complete the needed documents. This interaction space can trigger misconceptions, delays, and also legal issues that are beyond their control. As we look into the conversation below, it comes to be evident that getting expert support, such as working with interpreters or translators, is crucial for non-English speakers to assist in reliable communication throughout the insolvency process.

Types of insolvency process people and companies can access

In the consumer market, the available insolvency processes are:

Consumer proposal to restructure debts and avoid bankruptcy.
Division I proposal to restructure debts and avoid bankruptcy.
Bankruptcy – summary administration or ordinary administration.

For the corporate market, the insolvency processes under the BIA are:

Division I proposal to restructure debts and avoid bankruptcy.
Receivership.
Bankruptcy – ordinary administration.

If you use the search function in the top right corner of this Brandon’s Blog and type in any of the above terminologies, you will find previous Brandon’s Blogs covering all these insolvency topics.

As you will see from the discussion of the court decision and the OSB’s position paper, the licensed insolvency trustee is responsible for hiring a qualified interpreter for a person who cannot speak English in specific situations. The cost of the interpreter in a Division I proposal, receivership or ordinary bankruptcy is not an issue as the cost is an allowable expense. Where the issue comes into play to pay for the cost of interpreter services is in both a summary administration bankruptcy or a consumer proposal.

what happens when you file for bankruptcy

What happens when you file for bankruptcy? Access to language support services

The OSB, in response to the British Columbia Supreme Court’s ruling in Ali (Re) 2022 BCSC 169, has lately revealed its position paper that emphasizes the critical value of diversity and also language inclusivity in our society. This document presents comprehensive guidelines for interpreter services, aiming to level the playing field and make sure equal accessibility to these important services, all the while adhering to the BIA and relevant case law.

This July 24, 2023 position paper explores the pivotal functions taken on by Licensed Insolvency Trustees in working with interpreter solutions for debtors during OSB examinations or meetings of creditors. Additionally, it clarifies the step-by-step process whereby Trustees can look for repayment of interpreter expenses from the estate. By promoting practical and also fair access to interpreter services, we can foster an all-encompassing and also inclusive culture that celebrates as well as appreciates the uniqueness of every individual’s voice.

The OSB maintains that if a debtor is unable to communicate fluently in the official language used during an OSB examination or the meeting of creditors, the Trustee must engage the services of an approved interpreter. The OSB’s position paper states that the Trustee has the responsibility of arranging and paying for the services of the interpreter.

As stated above, this really is a non-issue in every insolvency administration other than for a summary administration consumer bankruptcy or a consumer proposal. This is where the Ali (Re) case comes in.

What happens when you file for bankruptcy? The Ali (Re) case

This case before a judge in the BC Supreme Court was a result of an appeal from a decision of a Registrar sitting in bankruptcy court. The issue is who is responsible for paying the cost of an interpreter in a summary administration bankruptcy estate. In a summary administration bankruptcy, the Trustee’s fee is calculated by a government-set tariff and the Trustee’s disbursements, as part of the tariff, are fixed as an allowance of $100. As an aside, in a consumer proposal, the Trustee’s fee is a tariff calculation also and other than for the filing fee and court fee, there is no allowance for disbursements.

In this summary administration consumer bankruptcy estate, the Registrar determined that the Trustee was not responsible for paying for the cost of the service of an interpreter for an examination of the bankrupt as required by the OSB The Registrar, however, did not specify whether the bankrupt or the OSB was required to pay this expense.

In this case, The bankrupt is originally from Lebanon and her first language is Arabic. She came to Canada as a refugee in 2000. She is functional in English but did not feel comfortable with technical or business English, so she requested an interpreter. The Trustee found several individuals who spoke Arabic and were willing to translate for the bankrupt during the examination. However, they were not certified interpreters. The OSB insisted that at its examination, only certified interpreters were acceptable. The cost of retaining a certified interpreter for this duration ranges from $190 to $305.

The Trustee applied to the court to determine who is the responsible party for paying for a certified interpreter. The Registrar concluded that the Trustee was not responsible for the cost of the interpreter, as the Trustee had fulfilled their duty of arranging for the services of an OSB-approved translator. However, the issue of expense responsibility remained unresolved. As a result, both the Trustee and the OSB appealed the Registrar’s decision to a judge in the BC Supreme Court.

The OSB wants the Registrar’s order set aside. It seeks declarations that the Trustee is required to pay the cost of an approved interpreter and will be compensated out of the general remuneration from the bankrupt’s estate provided by the tariff.

The Trustee submits that the Registrar erred in failing to find that the government levy it receives pursuant to s. 147 of the BIA whenever a Trustee distributes funds and was set up to pay for the cost of the government administering the Canadian bankruptcy system is to be used to pay for the expense of having a certified interpreter attend the bankrupt’s examination by the OSB.

Our national association, the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), sought and obtained intervenor status. CAIRP’s position was that the Trustee of the bankruptcy estate usually paid the cost, with correspondingly lower distribution to creditors. It recognizes that, on rare occasions, the Trustee will have to pay this expense where an estate has no assets. However, it submits that a general “trustee pays” rule skews incentives and access to the bankruptcy system by vulnerable groups.

The judge reviewed the BIA legislation and available case law and determined that the Registrar’s order should be set aside. The judge further ruled that the Trustee is entitled to the expenses it incurs, from the bankrupt’s estate, for the services of an interpreter for an examination requested by and to be conducted by the OSB.

what happens when you file for bankruptcy

What happens when you file for bankruptcy? The OSB position

Abiding by the court’s decision, the OSB now recognizes that the cost of interpreter services used for an examination conducted by the OSB or for a meeting of creditors is a reimbursable expense in a summary administration consumer bankruptcy (or in a consumer proposal). However, rather than just saying that the OSB will now approve it in those circumstances, it forces Trustees to go for taxation just like in ordinary administrations. In an ordinary administration, the Trustee is entitled to recover its time and disbursements in going for taxation or as the court may otherwise determine.

I can only imagine that if a Trustee goes for taxation in a summary administration or consumer proposal because of interpreter services costs, the OSB very well may take the position that the fee and disbursements of the Trustee in going for taxation are non-recoverable. What leads me to that conclusion is that in the position paper, the OSB states that the Trustee may just decide to:

“Consider the expenses incurred for the services of an interpreter as encompassed under their fees chargeable under section 128 of the Rules, not claim to recover the specific expenses, send their final statement of receipts and disbursements, and proceed to deemed taxation and discharge under sections 62 and 65 of the Rules.”

In other words, what happens when you file for bankruptcy and require an interpreter for those special situations, don’t bother trying to claim the cost of the interpreter, file your summary administration final statement of receipts and disbursements without including that cost, and you won’t have to get your fee and disbursements taxed as it will be in accordance with the tariff. If the Trustee decides to go for taxation to claim the interpreter cost, and perhaps the cost of going for taxation, then it is open for the OSB to issue a negative comment letter and oppose the taxation in court.

What happens when you file for bankruptcy? Conclusion

What happens when you file for bankruptcy is a challenge for all debtors, particularly for those who do not speak English or French. Language barriers can complicate the already difficult financial situation faced by non-English speakers.

However, it is crucial to recognize that language should not hinder individuals from seeking help and relief. Various resources are available to assist non-English speakers in navigating the bankruptcy process and overcoming language barriers. As seen from the above case and the OSB position paper, the Trustee must engage an approved interpreter for all OSB examinations or for a meeting of creditors.

I hope you enjoyed this what happens when you file for bankruptcy Brandon’s Blog. Problems with making ends meet are a growing concern in Canada, affecting individuals of all ages and income levels.

Creating a solid financial plan can be the key to unlocking a brighter and more prosperous future. By taking control of your finances, you can prioritize your expenses, set clear financial goals, and build a strong foundation for your dreams to come true. With the right mindset and approach, financial planning can empower you to regain control, eliminate this issue as a source of stress in your life and find peace of mind.

Individuals must take proactive measures to address financial difficulties and promptly seek assistance when necessary. It is crucial to recognize that financial stress is a prevalent concern and seeking help is a demonstration of fortitude, rather than vulnerability. Should you encounter challenges in managing your finances and find yourself burdened by stress, do not delay in pursuing aid.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses that are in financial distress. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own and it does not mean that you are a bad person. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team uses innovative and cutting-edge methodologies, to adeptly navigate you through the intricacies of your financial challenges, ensuring a resolution to your debt-related predicaments without resorting to the rigours of the bankruptcy process. We can get you debt relief now!

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a Trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

*what happens when you file for bankruptcy*

Tags bankruptcy estate, bankruptcy process, British Columbia, Canadian Association of Insolvency and Restructuring Professionals, debt payments, financial difficulties, financial distress, interpreters, Ira Smith Trustee, legal process, meeting of creditors, Supreme Court, what happens when you file for bankruptcy

Brandon Blog Post

RECEIVERSHIP IN CANADA: THE COMPLETE STORY OF WHOSE HAPPY RECEIVER IS IT ANYWAY?

Post author By Brandon Smith
Post date November 21, 2022

receivership in canada

Receivership in Canada: What does receivership mean?

I have just read a decision of the Ontario Superior Court of Justice Commerical List dealing with an important aspect of receivership in Canada. The case is concerned with what happens when two equally applicable provincial laws appear to be working at cross purposes in the context of the receivership in Canada process.

I will explain the case and the process of company receivership in Canada. By understanding the process, the case will make more sense.

Secured lenders may enforce their security to recover loans from borrowers who have defaulted. This remedy available to secured creditors when a borrower, usually a company defaults, is known as receivership.

What does going into receivership in Canada mean?

A receivership is a legal process available to secured creditors, whereby a company’s affairs, business and property are entrusted to a receiver to manage and eventually sell the assets. Secured lenders may enforce their security to recover loans from borrowers who have defaulted. This remedy available to secured creditors is known as receivership.

If a business debtor does not make payments or otherwise defaults on a secured loan, the secured creditor would have the right to appoint a receiver to collect the money owed. Before appointing a receiver, a secured creditor must first issue a “Section 244” notice of intention to enforce security. This is a notification that secured creditors must send to defaulting debtors before appointing a receiver. Section 244 refers to that section number in the Bankruptcy and Insolvency Act (Canada) (BIA).

The notice states that the security covers certain assets, that the company in default owes a specified amount to the secured creditor, and that the creditor may enforce the security after 10 days. The company in default may waive the notice period and consent to the appointment of the receiver.

Under the BIA, only a licensed insolvency trustee (formerly called a trustee in bankruptcy) can be a receiver. No other party is licensed to administer a receivership in Canada.

receivership in canada

Receivership in Canada: What is the difference between a court-appointed receiver and a privately appointed receiver?

A privately-appointed receiver is a licensed trustee who is appointed by a contract between the insolvency trustee and the secured creditor. A private receiver is typically used when there is no dispute to ranking among secured creditors or various claims to ownership of the company’s assets. The powers of a receiver listed in the security document give the privately appointed receiver more limited powers than a court-appointed receiver gets under a court order.

A receiver is court-appointed when the secured creditor makes an application to the court for the appointment of a receiver with more expanded powers. Like a privately-appointed receiver, a court-appointed receiver takes control of a company’s property because of financial distress and when there is a dispute among secured creditors and others as to the ranking of secured claims and ownership of property.

Both kinds of receivers are tasked with protecting and preserving the value of the company or property and are certainly given broader powers by the court to do so.

How is receivership in Canada different from bankruptcy proceedings?

Many people mistakenly use the terms “receivership” and “bankruptcy” interchangeably. However, bankruptcy and receivership are two distinct legal proceedings with different implications.

Bankruptcy vs. receivership can be confusing, but once you understand the key differences between the two, it is fairly straightforward. Whether it is a private appointment or a court-appointed receiver, the differences between bankruptcy and receivership in Canada are the same.

A receivership is a legal remedy available to secured creditors to enforce their security rights against a defaulting debtor. A receiver is appointed to manage the debtor’s property and assets and sell them under a properly run and fair sales process.

The Canadian bankruptcy process is a distinct legal process. An insolvency trustee does not represent secured creditors in bankruptcy proceedings. Instead, under the bankruptcy regime, they represent the unsecured creditors of the bankrupt estate. A corporate debtor may be subject to both bankruptcy and receivership proceedings simultaneously.

One of the major differences has to do with the creditors. In a bankruptcy administration, the bankruptcy trustee must call a meeting of creditors. This is where the insolvency trustee provides its report on the affairs and conduct of the bankrupt debtor and unsecured creditors get to vote on any matters of importance. In receivership, there is no such requirement to hold a meeting of creditors.

receivership in canada

What are the key distinctions between receivership in Canada and liquidation?

So you know what receivership is by now. The federal BIA doesn’t govern liquidation, that’s done under the provincial Business Corporations Act or Wind-Up Act.

A liquidation is for a solvent company where the shareholders, Officers and directors decide to cease business operations. The company puts up its assets for sale and uses the proceeds to pay off its creditors with cash. Any funds left over are then distributed to the shareholders.

A liquidator can be appointed either privately by the company’s directors or by a court order. Liquidation is therefore different from both bankruptcy and receivership in Canada.

Can individuals be placed into receivership in Canada?

The answer is yes. When a secured creditor wishes to take enforcement action upon the security agreement they have against a debtor’s property, as indicated above, they have the remedy of receivership in Canada. This remedy allows them to collect as much of their secured debt as possible.

There are no restrictions as to who can go into receivership in Canada. One of our more famous (infamous?) receivership cases over the years has been the receivership of the assets, property and undertaking of Norma and Ronauld Walton.

receivership in canada

Receivership in Canada: Whose receiver is it anyway?

Now for the court case where two different provincial laws caused a fight amongst secured creditors over the appointment of a receiver. The case is Canadian Equipment Finance and Leasing Inc. v. The Hypoint Company Limited, 2618905 Ontario Limited, 2618909 Ontario Limited, Beverley Rockliffe and Chantal Bock, 2022 ONSC 6186. The two competing provincial statutes are the Mortgages Act and the Personal Property Security Act.

The business is conducted through two affiliated entities. One owns the property and the other operates the business. This is quite a typical arrangement.

One creditor funded the purchase of equipment and took PPSA security over it. Another creditor funded the acquisition of the real property and has a traditional mortgage security. The security agreements extend over different assets, and the outcome is usually uncomplicated.

However, when equipment that has been purchased is attached to real property, there is disagreement about whether and how it can be removed, and whether such removal will negatively affect the value of both the equipment and the real property. The question is now more complicated: which creditor’s rights should take priority over this matter?

Both the equipment lender and the mortgagee are seeking to enforce their security. The equipment lender has filed a motion with the court to appoint a receiver over both the operating company (Opco) that owns the pledged equipment and the holding company (Holdco) that owns the real estate. This would allow the receiver to manage and sell the assets of both companies in order to repay the outstanding debt.

In this case, Opco was a commercial marijuana operation that was unable to get off the ground due to its heavy debt load and startup problems.

Although the mortgagee began power of sale enforcement proceedings, they do not object to a receiver being appointed over the equipment only. The mortgagee wishes to continue its power of sale proceedings and opposes the receiver being appointed over the building. The mortgagee in possession is of the opinion that the equipment is attached to the building and cannot be removed.

The mortgagee concurred that the court has the power to assign a receiver over the property of both Opco and Holdco according to section 101 of the Ontario Courts of Justice Act. They stated that, if a receiver is appointed, the receiver needs to be a firm chosen by them.

Both the licensed insolvency trustee firm preferred by the mortgagee and the firm nominated by the equipment lender filed a consent to act with the court.

What are the conditions under which a receiver may be appointed?

The court looked at numerous factors in order to make a decision on whether or not to appoint a receiver, and if so, which one, including those that have historically in receivership in Canada cases been taken into account in such determinations:

Although it is not essential for a creditor to establish irreparable harm if a receiver is not appointed where the appointment is authorized by the security documentation, the court considered if no order is made, will irreparable harm be caused?
The size of the debtor company’s equity in the assets and the need for protection or safeguarding of assets during litigation are important factors to consider when assessing the risk to the security holder.
The kind of property it is.
The potential for the assets to be wasted or dissipated.
The need to safeguard the property until a legal ruling is made.
The parties’ respective balance of convenience needs to be considered when making the decision.
Pursuant to the loan documentation, the creditor has the right to an appointment.
Enforcing the security instrument when the security holder experiences or anticipates difficulties with the debtor.
The principle of appointing a receiver should be approached with caution.
The court will determine whether appointing a receiver is necessary to enable the receiver to carry out its duties efficiently.
The effect a receivership order will have on the parties.
The parties’ conduct.
How long a receivership may last.
The financial impact on the parties.
The likelihood of maximizing return to the parties is increased.
The goal of ensuring the smooth running of the receiver’s duties.

As everyone agreed that all assets of both Opco and Holdco should be sold to maximize recovery for all creditors, but cannot agree on the process by which that should be undertaken, resulting in the entire process being stalled, the judge was satisfied that it is just and convenient to appoint a receiver.

The court found that either proposed receiver was acceptable and decided that the receiver nominated by the mortgagee would be appointed by the court to administer all assets. The receiver would eventually come back to court with a sales plan to maximize the value of all the assets subject to the security of all stakeholders.

receivership in canada

How the entrepreneur can avoid receivership in Canada

As a business owner, the way to avoid the receivership process is long before financial difficulties ever become serious financial problems. Here are a few tips on how to do just that:

Keep a close eye on your finances. This means regularly reviewing your income and expenses, and making sure you have a good handle on your cash flow.
Stay current on your bills. This includes not only making timely payments but also staying on top of any changes in your billing terms or amounts.
Keep good records. This means having up-to-date financial statements and documentation for all of your income and expenses.
Make a plan. If you do find yourself in a financial bind, have a plan in place for how you’ll get out of it. This may include negotiating with creditors, seeking new financing, or making cuts to your expenses.
Seek professional help from a licensed insolvency trustee with commercial insolvency experience. If your business is viable and you seek help early enough, there may be many options. The most common ones are refinancing with or without financial restructuring. Reviewing your business allows us to make restructuring recommendations allowing your viable company to become healthy and profitable once again.

Receivership in Canada summary & speak with a licensed insolvency trustee

I hope you enjoyed this receivership in Canada Brandon’s Blog.

Revenue and cash flow shortages are critical issues facing entrepreneurs and their companies and businesses. Are you now worried about just how you or your business are going to survive? Those concerns are obviously on your mind. Coming out of the pandemic, we are now worried about its economic effects of inflation and a potential recession.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now.

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Tags assets for sale, assets subject, bankrupt estate, bankruptcy and receivership, bankruptcy proceedings, bankruptcy process, bankruptcy regime, bankruptcy trustee, Bankruptcy vs. receivership, business operations, business owners, Canadian bankruptcy, commercial insolvency experience, company defaults, company in default, company receivership, court appointed receiver, creditors in bankruptcy, debtor company, differences between bankruptcy, financial difficulties, insolvency trustee, insolvent companies, legal proceedings, legal process, licensed trustee, meeting of creditors, notice of intention, outstanding debt, private appointments, private receiver, real estate, receivership in Canada, receivership proceedings, receivership process, sales process, secured creditors, secured debt, secured lender, security agreement, security instrument, security rights, solvent company, Trustee and Receiver, trustee in bankruptcy, unsecured creditors

Brandon Blog Post

CCAA PROTECTION FAQ: 10 EASY THINGS YOU MUST KNOW TO BE FINANCIAL RESTRUCTURING SAVVY

Post author By Brandon Smith
Post date October 24, 2022

What is CCAA protection?

The Companies’ Creditors Arrangement Act (CCAA) allows insolvent companies owing creditors $5 million or more to seek CCAA protection. This can help them restructure their business and settle their debts over time. The CCAA gives such companies the ability to restructure their business affairs and financial obligations. In Canada, the CCAA operates under the authority of the federal government and is administered by the courts of each province.

If a debtor company owes less than $5 million, it can restructure under Part III Division I of the Bankruptcy and Insolvency Act (Canada). This federal insolvency statute has streamlined procedures for handling insolvency restructuring cases. There’s no prohibition against using this statute if the company owes $5 million or more. Those larger companies just have a choice as to which statute to restructure under. This kind of restructuring is done in order to avoid liquidation through the filing of an Assignment in Bankruptcy. By successfully restructuring, the company can avoid job losses, claims by employees and the other negative effects of bankruptcy.

In this Brandon’s Blog post, I’ll be discussing CCAA protection for companies needing to go through a financial restructuring by making the Initial Application to the court. I’ll also be talking about a recent court decision that will be of interest to companies needing to restructure when their bank is demanding that all loans be repaid and they are trying to enforce their security.

Is CCAA protection the same thing as chapter 11?

Bankruptcy protection is a term closely associated with a US company filing under Chapter 11 of the US Bankruptcy Code. In Canada, it most likely means that the Canadian company has applied to a Canadian court to make its application for CCAA protection under the CCAA.

What is CCAA protection in Canada and “The Stay”?

Creditor protection under the CCAA is a process that provides companies with some relief from their creditors. This process can help them to reorganize their affairs and continue operations.

CCAA protection can provide some much-needed breathing room for companies that are struggling to stay afloat. It can give them time to restructure their affairs and come up with a plan to repay their creditors. A debtor company files its application for creditor protection in order to obtain an Initial Stay from the court. This will allow the company to begin restructuring its financial affairs.

While the CCAA protection order is in place, creditors are not allowed to take any action to recover money owed to them. They can’t try to seize the company’s property or petition the court for its bankruptcy, without the prior approval of the court. This is called the CCAA protection “stay of proceedings”.

A CCAA Canada filing is typically made when a business is insolvent and seeking to restructure its debts. The goal of the business in CCAA protection is to reach a satisfactory agreement with its creditors, which can include both secured and unsecured creditors. I will talk more about the support of secured creditors when I discuss the court case below.

Comeback hearing: Can CCAA Canada protection be extended?

Yes. Initial Order applications are often submitted on an urgent basis with prior notice only to key stakeholders such as senior lenders. Initial orders usually contain a “comeback” clause allowing stakeholders who did not receive initial notice an opportunity to attempt to change the terms of the CCAA protection order. Under the CCAA, Section 11.02(1) states that the Initial Order cannot be effective for more than 10 days.

The Canadian court system requires that there must be a “comeback hearing,” where interested parties can challenge aspects of the initial order, or even request additional relief before the order is extended. This means that the comeback hearing must be scheduled for within those 10 days. This ensures that the process moves forward promptly while protecting the interests of those involved. At the comeback hearing, the court will then assess the evidence before making a decision on whether or not to extend CCAA protection. If the court decides to extend protection, it will only do so for a limited amount of time.

The amount of time given will be at the discretion of the court and is definitely not open-ended. The company and its Monitor will be required to provide regular reports to the court detailing this progress.

The court will determine the next reporting period based on the information provided, which will allow the debtor company to continue its restructuring. The court may also be asked to make other orders, such as borrowing authority for financing the debtor company’s operations.

CCAA protection: What is the role of the Monitor?

The Monitor is the Licensed Insolvency Trustee (LIT) appointed by the court to monitor the business and financial affairs of the debtor company in a CCAA proceeding. The LIT’s role is to ensure compliance with the law, court order(s), and terms of the debtor company restructuring plan.

The Court-appointed Monitor is responsible for assisting with the preparation of the restructuring plan, formally known as the Plan of Arrangement and sometimes referred to as a Plan of Compromise. Monitors act as financial advisors to the insolvent company and they also advise creditors on the claims process and oversee voting at each meeting of creditors.

A Monitor must submit regular reports to the court summarizing the debtor company’s activities and the progress of the case. This includes the claims process when they get to that point in the administration.

These reports are published online and are accessible to creditors and interested parties. One of the ongoing responsibilities of the Monitor in its reporting is to advise if, in the Monitor’s opinion, the debtor company under CCAA protection is continuing to act in good faith and carrying out its restructuring on a timely basis.

CCAA protection: The Plan of Arrangement or Compromise

The company usually begins talking with its creditors and investors right away after the initial order is made. To do this, it may end or give away unwanted and especially unprofitable contracts, fire employees, sell property, negotiate new credit terms, change its corporate structure, and take other restructuring steps to ensure the viability and profitability of the company.

The court will ultimately be asked to approve all major actions in order to allow the company to move towards a viable Plan of Arrangement it believes will garner the support of the necessary majority of creditors.

The Plan of Arrangement or Compromise is the proposal presented by a company to its creditors detailing how it intends to resolve the issues it is facing and how the amounts owed to creditors will be compromised, An arrangement is a broader term that encompasses any plan for reorganizing. The distinction between “compromise” and “arrangement” is in practice, immaterial.

Different creditors are often treated differently based on terms of priority. This affects the order and amount they will be paid under the restructuring plan.

The first step in a CCAA restructuring will be to prioritize any government claims that are considered trust claims. Next will be any new charges ordered by the court as part of the restructuring. Examples of such court-ordered charges are amounts owing under a Key Employee Retention Plan and the lender financing the company during the restructuring phase.

The pre-filing secured creditors are typically at the forefront next when it comes to recovering their funds. They may have security in the form of a general security agreement or mortgage.

Unsecured creditors are next in line for payment. These creditors have provided goods or services to the company on credit, without receiving any security in return. In retail insolvencies, the company under creditor protection has to decide as part of its business plan if it is going to treat customers who have paid deposits for items they have not yet picked up as unsecured creditors or if they will complete the sale providing value for the prior deposits.

Such differing priorities will influence how the Plan of Arrangement or Compromise is constructed.

CCAA protection and the financial statements of the debtor

When a company seeks CCAA protection from the court, they are required to submit a projected cash flow statement. This document projects the company’s expected revenue and expenses from ongoing business operations and any required financing over the next 12 months and is used to assess whether or not it can fund day-to-day operations and survive during the CCAA protection proceedings.

Furthermore, the company must provide copies of all financial statements issued during the one-year period prior to the date of the Initial Application. If none were issued during this time period, it should provide a copy of the most recent financial statement.

CCAA protection: Creditor approval of the Plan of Arrangement or Compromise

A company can establish separate classes of creditors to increase the chances of a favourable vote for the Plan of Compromise or Plan of Arrangement. There must be some form of shared characteristic or similarity amongst the creditors in each class in order to qualify for each such classification.

In addition to the simple majority test, the creditors in each class who are voting must vote in favour of it by at least 2/3 of the total value of the creditors voting in each class.

CCAA protection and court approval of the Plan of Arrangement or Compromise

The court may approve the Plan once they have been approved by each participating class of creditors. The Plan will include all negotiated compromises and arrangements that deal with any matter, including claims against directors and amendments to the articles of incorporation or letters patent incorporating the company,

A Plan cannot be approved by the court if a provision is not made for settling “super-priority” claims relating to:

compensation and reimbursement claims by employees other than officers and directors;
pension plan contributions (except where an agreement has been reached with the relevant pension regulator); and
unremitted employee source deductions from employee paycheques for taxes and other deductions.

Additionally, any equity claims cannot be authorized by the court through a compromise or arrangement until all other claims have been paid in full.

CCAA protection: You can access CCAA filing records and court documents through 2 sources

There are two ways to find CCAA filing records and court documents. The easiest way is to go to the Monitor’s website specifically set up for the CCAA case. All documents filed by the Monitor in court and all court orders will be there. The second source is the court file itself.

This leads us to the actual court case I mentioned at the very beginning of this CCAA protection blog post. It is a decision dated October 14, 2022, by the Honourable Justice MacDonald of the Supreme Court of Newfoundland and Labrador in Bankruptcy and Insolvency. The case is Edward Collins Contracting Limited (Re), 2022 NLSC 149.

It is an application by a group of companies in the construction industry seeking an Initial CCAA protection Order for the debtor company. The case is notable for one factor: the companies’ main secured creditor, the Royal Bank of Canada, is opposing the application.

The companies were operating under a forbearance agreement. However, Royal Bank claims that they were in breach of their forbearance agreement and that the Bank should be allowed to have a Court-appointed Receiver. Although they did not provide any evidence in their material, in argument, the Bank claimed the companies were not acting in good faith.

The court ruled that if the companies’ application for CCAA protection is approved, then the Royal Bank of Canada’s application for a Court-appointed receiver is moot.

The court’s entire decision and His Honour’s thought process in considering all issues can be located online. Of specific relevance to me is His Honour’s thought process and careful consideration of all the points he must consider in deciding whether or not to grant the requested relief of CCAA protection.

The court considered the following:

Do the companies have proper standing under the CCAA?
Have the companies satisfied the test to allow the granting of grant an Initial Order?
If so, should the company’s conduct during the prior Consent Stay period cause it to refuse the Initial Order?

The court found that the CCAA applies to the debtor company and the affiliated debtor companies as they are all insolvent corporations or have committed an act of bankruptcy and owed their creditors in excess of $5 million. The court also found that the companies were entitled to CCAA protection from creditors and even the Royal Bank of Canada notwithstanding its opposition to the Initial Application and the granting of the Initial Order. The Initial Order was made.

You can read His Honour’s lengthy analysis if you wish, as it is very detailed and provides a great deal of insight.

You Owe Money—The CCAA protection

I hope you enjoyed this Brandon’s Blog on CCAA protection.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Brandon Blog Post

WHAT DOES A LICENSED INSOLVENCY TRUSTEE DO TO HELP IN YOUR MANAGING DEBT FOR A PROFOUND QUALITY OF LIFE?

Post author By Brandon Smith
Post date March 21, 2022

what does a licensed insolvency trustee do

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

What does a licensed insolvency trustee do?: What is a licensed insolvency trustee?

Frequently I am asked what does a licensed insolvency trustee do? How is it different from a bankruptcy trustee? The answer is it isn’t different. The term bankruptcy trustee is dated.

The new title is Licensed Insolvency Trustee. The Office of the Superintendent of Bankruptcy (OSB) changed it in 2015. Among the reasons for the name change were the submissions made by the Canadian Association of Insolvency and Restructuring Professionals. As the name suggests, a licensed insolvency trustee can offer a wider array of financial solutions.

This Brandon’s Blog is intended to describe what does a licensed insolvency trustee do and to provide useful information for you to help you better understand the debt relief advice that a Trustee provides to people, entrepreneurs, and their companies experiencing financial trouble.

What does a licensed insolvency trustee do?: Licensed insolvency trustees are professionals who are federally regulated

There are many terms in the insolvency field that the average person isn’t familiar with, which is why it’s important to understand what the licensed insolvency trustee does. Trustees are licensed and supervised by the federal government through the OSB to act as personal and corporate insolvency administrators. This means they act to protect the interests of all involved parties while assisting debtors, acting as a debt counselor, a restructuring advisor, and if required, overseeing the bankruptcy process.

Licensed insolvency trustees are professionals with a background in finance, law, accounting, and insolvency. They assist businesses and individuals who are struggling financially. Typically, licensed insolvency trustees meet with clients to discuss their financial situation and offer advice and recommendations to help get the client out of a financial bind.

What does a licensed insolvency trustee do?: The credit counselor or a debt management program as an alternative

Financial guidance is offered by licensed insolvency trustees, credit counselors, and debt management programs. These services differ greatly from each other.

A licensed insolvency trustee can simply offer you financial advice and help you plan on how to repay your debts if that is all you need. A trustee is also the only person who can file a bankruptcy or consumer proposal for you. A Trustee will provide you with an initial no-cost confidential consultation to see if there are alternatives to bankruptcy for you. Credit counselors, credit counselling companies, and debt management businesses can give you financial advice and information. They can help you make a budget and make plans to repay your debt.

What does a licensed insolvency trustee do when you have debt but do not need to resort to one of the insolvency processes? During the free initial consultation, if a consumer proposal or bankruptcy is not right for you, the Trustee will refer you to see a community organization-based credit counselor who will be able to help you and also will not charge you a fee.

What does a licensed insolvency trustee do?: The Consumer Proposal Process

Consumer proposals to creditors are made by debtors and are legally binding agreements. You group all your debts into a consumer proposal to creditors. This is a debt solution to avoid bankruptcy. Your creditors agree to accept a reduced amount as full payment. The consumer proposal is a legal alternative to bankruptcy. Only a licensed insolvency trustee can administer it.

The only consumer insolvency restructuring proceeding regulated by the Canadian government is referred to as a consumer proposal (which is the only one of the consumer insolvency government-regulated insolvency proceedings that allow debt consolidation, debt settlement, or debt adjustment). In the end, your creditors write off the remainder of your debt, and you are released from those legal obligations.

If you owe $250,000 or less (not including any personal mortgages) and are insolvent, then you can qualify for a consumer proposal. Month-to-month payments over no more than 60 months need to be made to the Trustee. You pay just a part (generally 25%) of your total financial obligations gradually to the Trustee and when ended up, the rest of the balance owing to your unsecured creditors is written off.

What does a licensed insolvency trustee do?: The bankruptcy process

Canadian bankruptcy is a process whereby a person or company can declare itself bankrupt. The bankruptcy process starts in the provincial or territorial office of the OSB where the debtor is located.

In Canada, personal bankruptcy entails a number of stages. The debtor must be insolvent, meaning that they cannot repay their debts with the assets that they own or the income they earn. With the help of the Trustee, they must file statements of affairs and a statement of current income and expenses. There are other obligations on an undischarged bankrupt but that is not the purpose of this blog.

Upon receiving their discharge from bankruptcy, that is the moment that the debtor’s debts are forgiven or discharged.

What does a licensed insolvency trustee do?: The assignment of assets

When people file assignments in bankruptcy, what does a licensed insolvency trustee do with the assets? Any assets not charged by a secured creditor are available for the Trustee to take possession of. Those assets are usually things like real estate, cash, and vehicles. When assets are seized in bankruptcy the proceedings usually lead to them being sold and the proceeds are shared with creditors.

This is the main difference between a consumer proposal and bankruptcy. In a consumer proposal, there is no assignment of assets to the Trustee like in a bankruptcy. The debtor in a consumer proposal keeps their assets and makes monthly payments. It is the total of the monthly payments that the Trustee distributes to the creditors in a consumer proposal. In a bankruptcy, it is the proceeds of the asset sales.

What does a licensed insolvency trustee do?: Opting for a consumer proposal

Many people I deal with have significant debt problems. However, a consumer proposal may not be the best option for everyone. Opting for a consumer proposal means not only do you qualify under Canadian insolvency legislation to use one. It also means that it is a better alternative for you than personal bankruptcy. It means that you are able to restructure and not need bankruptcy services from a licensed insolvency trustee.

A consumer proposal is a way to get out of debt without declaring bankruptcy. If you are having trouble paying back credit card bills, medical bills, rent payments, and you don’t want to declare bankruptcy, a consumer proposal might be right for you.

Before opting for a consumer proposal, you must meet the following requirements:

Total liabilities of $250,000 or less.
Monthly payments can be made to your creditors, but not 100% of the total amount due.
You cannot repay all of your debts with the money you have.
If you work and are able to budget, you can pay your budgeted monthly expenses and have money left over for regular monthly payments to the Trustee. Under a debt management plan, your creditors will agree to write off a portion of your debt if you pay a fraction of what you owe.
You may also be lucky enough to have a relative willing to put up a lump sum of money that represents a fraction of what you owe so that your unsecured creditors will accept it instead of all that you owe. This means that you can be in and out of your consumer proposal fairly quickly if you are in this fortunate position.

To summarize, consumer proposals are best suited to people with a sufficient disposable income. Consumer proposals offer the best way of restructuring, eliminating your unsecured debts, and avoiding bankruptcy.

There are restructuring provisions in the Bankruptcy and Insolvency Act (Canada) for people who owe more than they can discharge in a consumer proposal or in business insolvency. Despite some differences in the rules, the overall theme of restructuring remains the same.

What does a licensed insolvency trustee do?: Going the bankruptcy route

Given the above, what can a person do to eliminate their unsecured debt if they cannot qualify for filing a consumer proposal as an alternative to bankruptcy? Going the bankruptcy route will probably make the most sense.

Bankruptcy is when a person cannot pay their bills. They file Canadian personal bankruptcy to get a fresh start. Filing a consumer bankruptcy must be your last resort after exhausting all other options to avoid bankruptcy. Bankruptcy means debts are written off when the person receives their absolute discharge from bankruptcy. The bankruptcy law in Canada protects people from dishonest, unfair, or abusive practices by creditors.

However, in return for getting the relief of eliminating debts through bankruptcy, an undischarged bankrupt also has certain responsibilities.

These include:

Making full disclosure to the Trustee.
With the assistance of the Trustee, preparing the sworn Statement of Affairs and Statement of Income and Expenses.
Delivering all assets and properties to the Trustee to be sold (other than for certain provincial exemptions).
Attending the First Meeting of Creditors if one needs to be held.
Attending two financial counselling sessions with the Trustee or a member of the Trustee’s staff. Attendance at credit counseling sessions is also the case in a consumer proposal.
Providing monthly statements of income and expenses while an undischarged bankrupt.
Generally providing any assistance requested by the Trustee.

In providing debt-relief options, the Canadian bankruptcy system is designed to provide fairness to both debtors and creditors while allowing the person to financially rehabilitate themselves.

what does a licensed insolvency trustee do

What does a licensed insolvency trustee do?: Final thoughts

What does a licensed insolvency trustee do? Licensed insolvency trustees are insolvency practitioners. They are debt professionals who deal with and provide services to individuals and businesses with debt problems that are experiencing financial issues that can only be resolved through an insolvency process. Licensed insolvency trustees are professionals, offering affordable solutions to financial struggles.

I hope you found this what does a licensed insolvency trustee do Brandon’s Blog about helpful. Sometimes things are too far gone and more drastic and immediate triage action is required.

Do you have too much debt? Are you in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt. You are worried because you are facing significant financial challenges.

It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team. That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

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Brandon Blog Post

WHAT DOES THE BANKRUPTCY TRUSTEE INVESTIGATE? SIMPLE RULES EXPLAINED BY A TORONTO TRUSTEE

Post author By Brandon Smith
Post date July 14, 2021

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.

What does the bankruptcy trustee investigate – What is a bankruptcy trustee?

The new name for a bankruptcy trustee is a licensed insolvency trustee. I will use the terms interchangeably in this Brandon Blog. In this blog, I discuss what does the bankruptcy trustee investigate? But first, I want to go through a few basics.

The process of a bankruptcy trustee’s role in the Canadian insolvency system is a delicate one. The licensed insolvency trustee starts out by reviewing the debtor’s financial information and advises the debtor on whether a restructuring is possible to avoid bankruptcy or if filing for bankruptcy is their only realistic option.

The Trustee’s job is to help a debtor restructure his or her financial affairs and to do that, he or she must know what the debtor’s assets and liabilities are, the bigger picture of the debtor’s life and what transactions the debtor may have recently entered into. It is not just what he or she claims his or her debts are.

The Trustee collects all this information in order to advise the debtor on whether a bankruptcy protection financial restructuring filing is possible or if bankruptcy is their best option and why. The debtor then must choose what sort of insolvency process they wish to enter. Once filed, the Trustee also acts for the creditors and is required to perform an investigation.

Today I discuss what does the bankruptcy trustee investigate? Anyone contemplating a bankruptcy filing should know what they are in for before it is too late.

What does the bankruptcy trustee investigate – Tell your bankruptcy trustee everything

I thought of writing this blog topic because just yesterday, a lawyer friend called up with a question. The lawyer is a family law lawyer, representing a spouse who completed a consumer proposal. The lawyer, on behalf of his client, is making a claim as having a trust claim over his spouse’s home.

The judge asked if the client declared this claim as a potential asset in his sworn statement of affairs in the consumer proposal bankruptcy paperwork? The answer is no. Now the judge says, correctly, that the client had a duty to disclose that information at the time. The judge is correct. The judge then went on to ask how he can rely on the credibility of the client’s assertions now? What a jackpot they are now in!

That is why I say tell your bankruptcy trustee everything. If there is full disclosure in the initial interview before the period of time the bankruptcy process begins, I can then consider any troublesome issues and advise on the best course of action. Then you don’t need to worry about what does the bankruptcy trustee investigate. Nobody wants to have a nasty surprise like my lawyer friend’s client.

What does the bankruptcy trustee investigate? What if I fail to remember to divulge something?

It is fairly possible that you will accidentally neglect to divulge something in your bankruptcy documents or inform your Trustee about it. You do not want anyone thinking you are conducting the concealment of assets.

What does the bankruptcy trustee investigate? What can I do?

As quickly as you learn of your error, call your trustee right away and correct this mistake. You want to make sure the Trustee understands it was a simple error and not a case of you making a false claim.

What does the bankruptcy trustee investigate? What if I have outstanding tax returns?

If as an example, you forget to inform your insolvency trustee that you have unfiled tax returns, CRA can oppose your discharge and request that all outstanding returns be filed before you get to a discharge hearing. This will extend the time you remain in bankruptcy and puts your discharge into a court hearing.

It may turn out that the amount owing from those unfiled returns is not that large, and if you had filed the returns before going bankrupt and declared that additional liability, there would not have been a problem at all. Your Trustee actually should have caught that before you filed and got you to bring your tax filings current.

What does the bankruptcy trustee investigate? What happens If I overreported income?

Reporting earnings greater than you actually earn might set off a surplus income payment requirement that is either higher than it should be or where there would not have been one at all if you had properly reported your monthly income. Make sure you have documents to back up everything you are advising your trustee about so that such an error is not made.

The same holds true for underreporting. You may have a surplus income obligation that will not be caught and finding out at the end will hold up your discharge. Again, your Trustee should have asked for backup during your initial meeting and should have caught your error before filing for bankruptcy.

What does the bankruptcy trustee investigate? Suppose I am not divulging certain information?

If you fail to divulge particular information about your assets or give information that at some point complicates your insolvency, it is certain that this will complicate your discharge at the very least. It may also open you up to having committed a bankruptcy offence which will create worse penalties and headaches for you.

Recall that I mentioned at the beginning of this Brandon Blog that the reason I wrote on this topic today was because of a phone call received from a divorce lawyer friend of ours. The lack of disclosure was not caught in the consumer proposal administration. However, it may totally ruin the client’s chances for any meaningful recovery in his family law proceedings.

If the client had divulged the asset, which at the time was contingent, to the bankruptcy trustee acting as an administrator in the consumer proposal, the Trustee could have worked that into a successful outcome for the client AND the client would not now have his legal problems which could very well cost him big time!

What does the bankruptcy trustee investigate? – Collection of information by bankruptcy trustee also allowed under PIPEDA

A person filed a complaint after a bank, where she as well as her husband had gotten a mortgage from, revealed her personal information, especially regarding her financial situation, to the Trustee of the Bankrupt Estate of her spouse. There was no disagreement that this disclosure happened without the complainant’s understanding or permission.

However, the federal government ruled that it was allowable under the Personal Information Protection and Electronic Documents Act (PIPEDA) given that the financial institution was required to provide the information under another law, namely, the Bankruptcy and Insolvency Act (BIA).

PIPEDA paragraph 7(3)(b) specifies that a party may disclose personal information without the knowledge or consent of that party if the disclosure is for the purpose of collecting on a financial obligation owed by the person to that party.

Paragraph 7(3)(i) of PIPEDA specifies that an organization might disclose personal information without the knowledge or permission of the person if the disclosure is required by law. Trustees are licensed by the Office of the Superintendent of Bankruptcy (Canada) (OSB) under the BIA and also are held to requirements of practices or solutions established by the BIA.

The designated Trustee for her hubby’s insolvent estate wrote to the financial institution, requesting the complete financial institution file connected to the mortgage on the residence jointly had by the complainant wife and the bankrupt husband be disclosed, according to the provisions of S. 164(2) of the BIA.

The bank stated that it revealed the wife’s personal details without her understanding or permission, based on the PIPEDA sections I referenced above. The complainant thought that the Trustee did not have the right to access her individual info from the financial institution without her understanding or consent. The Privacy Commission ruled against her.

As long as the Trustee is asking for information from a 3rd party that will assist in the bankruptcy administration, that 3rd party can provide the information without worrying about what does the bankruptcy trustee investigate or a PIPEDA violation.

On the flip side, for every insolvency administration we perform, as part of the initial sign-up documents, we provide a PIPEDA disclosure statement to the debtor or designated officer of the company. Our PIPEDA disclosure says that in performing our duties we collect and store personal information which we may have to divulge to 3rd parties in performing our duties under the BIA, to the court or in assisting the debtor in reaching arrangements with their creditors.

What does the bankruptcy trustee investigate? – Can I sell my stuff before filing bankruptcy?

Bankruptcy is a fair and well-balanced treatment that considers the interests of all stakeholders. I always tell potential clients that any sale or transfer of property has to be done as if your creditors are evaluating your every move while you do it.

In Ontario, the Execution Act provides for certain personal exemptions, which also apply to anyone who does a bankruptcy filing in Ontario, up to a stated value. The exempt property consists of:

household furnishings and appliances – $14,180;
tools and other personal property used to earn an income:
- in the case of a debtor engaged solely in the tillage of the soil or farming, $31,379 for livestock, fowl, bees, books, tools and implements and other chattels ordinarily used by the debtor in the debtor’s occupation, or
- in any other case, $14,405;
motor vehicle – $7,117; and
principal residence – $10,783.

You might be liquidating assets that you don’t need to because they would be exempt. If you are thinking about liquidating nonexempt property to make financial settlements with certain of your creditors, this will be problematic. You could end up preferring some over others which will cause both you and them problems in your bankruptcy.

This is another factor to think about. My best advice is that you raise these issues with a Trustee before you do anything if you are contemplating bankruptcy. The Trustee will explain to you the ramifications of what you are thinking of doing so that you will have the smoothest time possible in your bankruptcy estate. The Trustee will also explain what does the bankruptcy trustee investigate so you will be informed.

What does the bankruptcy trustee investigate and look for in bank statements?

The personal bankruptcy trustee uses bank statements and other documents to discover errors or irregularities in your pre-filing personal bankruptcy paperwork. To start, you’ll list your creditors and the amounts you owe each of them; your assets, their values, and whether you can keep any of them as exempt property; your earnings for the last 12 months; as well your regular monthly expenditures. Not only will you disclose your income in several spots in the bankruptcy documents, but you’ll also give confirmation in the form of paycheque stubs and income tax returns, as well

The Trustee then goes over these anomalies with you to permit you to give better paperwork in support of your list of assets and liabilities. You’ll likewise have to send duplicates of your bank statements and also other documents that the Trustee asks for after you file for bankruptcy. Your licensed insolvency trustee makes use of the bank statements to validate your reported info.

If for some reason your historical financial institution deposits are dramatically different than your claimed earnings, you’ll need to be prepared to describe the disparity. If you approximated your bank accounts having a total of $100, yet it was, in fact, your deposit accounts had $1,500 on the day you filed, it will be nonexempt, and the Trustee will take it.

If you paid any type of huge expenses or transferred a large sum or an asset to someone right before you filed personal bankruptcy, the Trustee will have an obligation to report those transactions to your creditors, the OSB and the court and bring that cash back right into the personal bankruptcy estate for all creditors to share. If the cash is not recoverable from a third party, the Trustee will oppose your discharge and will look for payment of a minimum of that cash from YOU as a condition of your bankruptcy discharge.

If nevertheless, the Trustee thinks that you either lied or deliberately omitted details, the Trustee has to report that. The Trustee will certainly oppose your discharge and you will have a substantial issue on your hands needing you to retain a personal bankruptcy attorney.

What does the bankruptcy trustee investigate? All of that.

Red flags the bankruptcy trustee looks for at the meeting of creditors

Communicating with creditors and the meeting of creditors are very useful tools for the trustee in bankruptcy. The creditors have a much longer relationship with the bankrupt than the Trustee. They may very well have information that would be helpful to the Trustee in gaining a better understanding of the assets and liabilities of the bankrupt and of the bankrupt’s financial affairs not clear from the financial documents already reviewed by the Trustee.

At the First Meeting of Creditors in bankruptcy or the Meeting of Creditors in a Division I Proposal (or if required in a consumer proposal), the Trustee and creditor representatives can ask the debtor questions about their financial affairs. This is especially so for any type of discrepancies raised by your filing documents or financial records that indicates that you may be misstating assets or worse, the concealment of assets.

In any financial restructuring, including corporate reorganization plans, the value of the debtor’s nonexempt property really matters mainly because of the rule that entitles unsecured creditors to get a better outcome from such a repayment plan than would be the case in the debtor’s bankruptcy.

If your earnings don’t match your reported numbers, or if you improperly report side hustle business revenues, you can anticipate some sharp concerns and also possibly trouble getting your restructuring authorized or your discharge from bankruptcy.

What does the bankruptcy trustee investigate – When the bankruptcy trustee suspects fraud?

When allegations of bankruptcy fraud enter into bankruptcy administration, the next step normally includes obtaining information via an examination under oath. The BIA enables either the Trustee or the OSB to examine a bankrupt under oath. The BIA additionally permits the Trustee to put questions under oath to anyone that might have information, knowledge or documents concerning the affairs of the bankrupt. One of the key functions of the bankruptcy trustee is to protect the interests of unsecured creditors and to do so at every stage of the bankruptcy process.

As soon as the Trustee has gathered sufficient proof to support a case, the Trustee has 2 options, depending on the circumstances. If it is criminal activities or bankruptcy offences that the bankrupt person or the Directors of the bankrupt company have done, the Trustee can ask the OSB to review the proof. If they concur with the Trustee’s analysis, they can then call in the RCMP to check out.

If the RCMP has adequate evidence of a crime having been committed, or of bankruptcy offences, they will have the Crown lay bankruptcy fraud charges and then there will be a criminal trial. The result can be a fine, jail time or both. This will also give cause for the Trustee to have no choice but to oppose the person’s bankruptcy discharge.

If it is only about the recovery of money for creditors, the Trustee, if it has sufficient evidence and also funds, can launch a legal action against the appropriate party. The point of this kind of adversary case is to obtain cash for creditors (rather than prosecuting a criminal offence).

Such a proceeding resembles legal actions in various other courts yet generally, the matter in a bankruptcy administration will be heard in a shorter period of time in bankruptcy court than proceedings in various other courts. The obvious goal is for the Trustee to enter into settlement agreements with the offending parties. The goal of settlement agreements is to get cash for the creditors.

What does the bankruptcy trustee investigate summary

I hope that you found what does the bankruptcy trustee investigate Brandon Blog interesting and that you now have a better appreciation for the investigation aspect of an insolvency proceeding. Problems will arise when you are cash-starved and in debt. There are several insolvency processes available to a person or company with too much debt.

If you are concerned because you or your business are dealing with substantial debt challenges, you need debt help 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 with debt relief options as alternatives to bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

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 as we know the alternatives to bankruptcy. We help many people and companies stay clear of filing an assignment in 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 to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost bankruptcy consultation.

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.

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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.

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 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 CONSUMER PROPOSAL: SHOULD I IMMEDIATELY OPEN A HAPPY NEW BANK ACCOUNT

Post author By Brandon Smith
Post date November 9, 2020

The Ira Smith Trustee Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting. We hope that you and your family are safe and healthy.

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

Canada consumer proposal: Introduction

Subscribers to Brandon’s Blog know that I have written many blogs on the Canada consumer proposal process. When considering a consumer proposal, the insolvent person will many times ask me can I keep my bank account? That is a good question. But the better question is should I keep my current bank account?

In this Canada consumer proposal Brandon’s Blog, I will explain why.

Canada consumer proposal: A refresher

Before explaining why the bank account question should be the question, let me give a brief refresher of what a Canada consumer proposal is.

A Canada consumer proposal is a proceeding under the Bankruptcy and Insolvency Act (Canada). However, it is different from bankruptcy. Canada consumer proposals are available to people whose overall monetary commitments do not exceed $250,000, not including debts secured against their principal home.

Collaborating with a licensed insolvency trustee (Trustee) acting as the Administrator of the Canada consumer proposal, you make it to:

Pay your creditors a portion of what you owe them over a particular duration not surpassing 60 months.
Increase the time you need to work out those financial obligations.
Or a mix of both.

Payments are made to the Trustee, and the Trustee utilizes that money to pay each of your creditors their pro-rata share. The Canada consumer proposal shall be finished within 5 years from the day of filing. Also, the Canada consumer proposal must give the insolvent person’s creditors a better return than they would get under the person’s bankruptcy.

**When is a Canada consumer proposal appropriate?**

To figure out if a Canada consumer proposal, or a different option, is the ideal selection for you, set up a meeting with a Trustee to discuss your individual circumstances. The Trustee will evaluate your financial scenario and clarify the advantages and disadvantages of the various choices that are appropriate for your circumstances. If you choose to submit a consumer proposal, the Trustee will deal with you to establish a plan that helps you fully discharge your debts.

**What happens when you file a Canada consumer proposal?**

The Trustee will file the Canada consumer proposal with the Office of the Superintendent of Bankruptcy (OSB). Once your proposal is filed, you quit paying directly to your unsecured creditors. On top of that, if your creditors are garnisheeing your wages or bank account, or have begun legal action against you, these actions are stopped on the filing of the proposal.

The Trustee submits the Canada consumer proposal to your creditors. The proposal will include a report on your personal scenario as well as the root causes of your economic difficulties.

Creditors then have 45 days to either approve or deny the proposal. They can likewise do this either before or at a meeting of creditors if one needs to be held. A meeting of creditors is held if one is requested by enough unsecured creditors who in total are owed at the very least 25% of the overall value of the proven claims.

A meeting request needs to be made by the creditors within 45 days of the declaration of the proposal. The OSB can request the Trustee to call a meeting of creditors any time within that very same period.

The meeting of creditors needs to be held within 21 days after being called. At the meeting, the creditors vote to either approve or refuse the proposal. If no meeting of creditors is asked for within the 45 days of the filing of the Canada consumer proposal, the proposal will be considered to have been accepted by the creditors regardless of any objections received by the Trustee.

Keeping your bank account and other assets in a Canada consumer proposal

A Canada consumer proposal is an approach that is frequently utilized as an option to bankruptcy. It provides several benefits. A consumer proposal permits you to:

Pay an amount of cash every month you can afford to fully extinguish your debts based on your budget.
Pay back just a portion of your debts but get rid of them all.
Pay off your financial debts on an interest-free basis over 60 months (or less if you wish).
Keep all your assets that you can afford to keep.

The ability to keep your assets is the main feature that distinguishes a Canada consumer proposal from bankruptcy.

Canada Consumer Proposal: Who can freeze your bank account in Canada?

Having a frozen bank account is definitely discouraging as well as stressful. Freezing up an account is a tool that is frequently used to get your attention by those you owe money to. This is specifically true if various other methods of getting you to react and get a payment plan into place have actually not worked yet.

When your bank accounts are frozen, you are incapable to utilize the cash you have or move money from one of your accounts to another. As well, when your account is frozen, your bank will not honour any cheques written on the account when they hit your bank for clearing. This is regardless of whether the cheques were written before or after the account freeze. Frozen means frozen!

As a result of the stress and anxiety that a frozen bank account can place on your finances and life, it is necessary to understand who can freeze your account, why somebody might freeze your account, and also how you can get your account unfrozen.

Normally, only parties that you owe money to have the opportunity to freeze your bank account. Canada Revenue Agency (CRA) and the bank where your account is maintained, have more power over you when it concerns recovering debts via freezing accounts as opposed to unsecured creditors.

There are three generally three groups of financial institutions that could potentially freeze your account if you owe them money:

CRA – If you owe money to CRA and do not either pay off their demand or enter into a payment plan, they can freeze your bank account. They can issue a third party demand to your bank to freeze all accounts that you maintain with that bank. The bank will collect all available funds and send it to CRA while maintaining the freeze until CRA tells them they are fully repaid and the freeze can be lifted. CRA has significant powers that they can use without too much delay.
The bank where your accounts are – If you owe money to the bank where your accounts are, then your bank can freeze your accounts. It is a standard term of all credit card and loan documents that if you owe the bank money and are in breach of your credit card or loan agreements, the bank has the right to offset any positive cash balances on deposit with the bank against your debts to the same bank. So it is easy for your bank to turn your account to frozen and take your money.
Execution creditors – An unsecured creditor to who you owe money, can go to court and sue you for the amount owing. If you do not defend, or you defend but lose in court, the creditor then holds a judgment against you. They are now an execution creditor. They can then examine you to understand what assets you own and where they are located, including your bank accounts. The execution creditor can then file a request with the Sheriff to create your frozen bank account and garnishee your bank accounts.

These are the creditors that can freeze your bank accounts.

**Why you should move your bank accounts before filing a Canada consumer proposal or a Canada bankruptcy**

Why should you move your banker account before filing a Canada consumer proposal or a Canada bankruptcy? The reason is simple. You do not want an accident to happen where a creditor is able to withdraw funds from your accounts after you have filed. There is a stay of proceedings once you file your proposal or for bankruptcy. However, mistakes happen and sometimes funds can leak out of your accounts.

How can this happen? I will explain it. Many of us provide one or more vendors that provide goods or services to us with a pre-authorized debit (PAD) arrangement so that they can remove from our account automatically the monthly payment we owe them.

When you file a Canada consumer proposal, any vendor who is fully paid is not a creditor of yours. You may not wish to continue with the service and you may very well be in a long-term contract. So, you would want to cancel the service just before filing. But if you don’t cancel the PAD, the supplier may make a mistake, or not, and continue to pull funds from your account until you cancel the PAD. To avoid this error, it is best to move your bank account before filing so that there are no further funds to withdraw.

The same is true if you owe money to the bank where your accounts are. As soon as your bank gets notice of your Canada consumer proposal filing, they may try to offset the funds in your accounts against what you owe them. This will wreck your budget immediately because you were relying on those funds to pay your necessary monthly expenses and your first proposal payment. So to avoid that calamity, you need to set up new accounts at a bank you don’t owe any money to before filing.

I always advise people to move the accounts when they are contemplating filing. Do it in advance. That planning is important because they may have funds being deposited automatically into their account. Think of your wages, salary or any government amounts deposited into your account. You need time to advise them of your new account that you want your money deposited into. You need the time to make sure that it is being done correctly.

Finally, there are now many online banking choices that offer no-fee accounts and free cheque printing. You can manage everything online, including setting up the account in the first place. These are great choices for people who need to be watching every dollar.

Canada consumer proposal summary

I hope you have enjoyed this Canada consumer proposal Brandon’s Blog. Hopefully, you have better insight now into why anyone thinking about an insolvency filing should set up new bank accounts.

We know that people facing financial problems need realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team.

That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious in finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

Tags assignment in bankruptcy, bank account, bankrkuptcy, Bankruptcy, Bankruptcy and Insolvency Act, BIA, canada consumer proposal, Canada Revenue Agency, Consumer Proposal, CRA, Ira Smith Trustee, licensed insolvency trustee, meeting of creditors, Office of the Superintendent of Bankruptcy, OSB, trustee, who can freeze your bank account in Canada

Brandon Blog Post

OFFICE SUPERINTENDENT BANKRUPTCY CANADA – COVID-19 AND “THROWBACK THURSDAY”

Post author By Brandon Smith
Post date May 11, 2020

The Ira Smith Team is absolutely operational and both Ira, as well as Brandon Smith, are right here for a telephone appointment, conference calls and also virtual meetings.

Stay healthy and safe everybody.

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

Introduction

As issues about COVID-19 in Canada grows, insolvency practitioners are doing their part by having determined it is needed to take steps to reduce in-person contact. The Office Superintendent Bankruptcy Canada has helped Licensed Insolvency Trustees (formerly called bankruptcy trustees) (Trustee) in these initiatives while keeping all aspects of Canada’s insolvency system running.

In my April 29 Brandon’s Blog, CONSUMER PROPOSALS IN ONTARIO TEST POSITIVE FOR COVID-19, I described how the Superintendent of Bankruptcy went to Court in Ontario. They made a motion to have the Court direct how certain procedures would change during the state of emergency lockdown. Part of that will be how the government wants to have Trustees resurrect an old methodology in personal debt settlement plans and corporate restructuring plans not really been used in the last 25 years.

Since then the government has come out with additional information and clarifications on how they see the bankruptcy Canada process continuing to work during the coronavirus shutdown. In Brandon’s Blog, I talk about these issues.

There are many ways that the Office Superintendent Bankruptcy Canada has approved social distancing for Trustees.

Initial free strategy session – Most if not all Trustees will provide a no-cost consultation for a personal or corporate insolvency discussion. In the pre-coronavirus era, most of these were done in a face to face meeting. Trustees can and do use methods aside from in-person assessments. These methods were always reserved for extraordinary circumstances. Boy, are we in one now!

So, the Office Superintendent Bankruptcy Canada has reminded Trustees that the COVID-19 pandemic is such a phenomenal circumstance and Trustees can conduct assessments making use of approaches other than face to face. Where video-conferencing is not viable, assessments may be done using a mix of telephone conversations and e-mail.

Credit counselling in personal debt settlement or bankruptcy cases – Trustees can offer counselling through telephone conversations or videoconference. The government is updating its software to allow for Trustees to file confirmation of credit counselling done this way as before it was not available. I am finding that our “customers” like this way of being able to deal with credit counselling. They don’t need to travel to our office and appreciate that we are still checking in with them.

Meetings of Creditors – The Office Superintendent Bankruptcy Canada is encouraging Trustees as the Chair of the creditors’ meeting to hold the meetings on time using either telephone conference call or video methods. Trustees can rely on the oral representation from everyone on the call as proof of attendance. The notice and legal ad calling the meeting of creditors looks a bit different than we are normally used to seeing because of this change. At the top of this Brandon’s Blog is an image of the legal notice I ran in a local newspaper.

Signatures/Oaths – I am now circulating papers that call for signature by means of e-mail. I then supply debtors the necessary support to explain the papers via videoconference. I then ask the debtor over the Zoom meeting if they swear or affirm that what is in the document is true. When they respond affirmatively, I then ask them to sign in the space provided. I then commission the document on my end, ask them to email me a copy of the signed document and put the original signed paper in the mail to me. So far it has been working smoothly.

Closure of non-essential businesses

The provinces have ordered the closure of non-essential businesses. So far, the businesses of lawyers and accountants have been deemed essential. The Office Superintendent Bankruptcy Canada has confirmed to Trustees that it wants the Canadian insolvency system to continue operating smoothly. So, the Trustee business is considered to fall under these same categories as being essential.

As you are aware, creditors right now seem to be choosing to either explicitly or implicitly forbear on amounts owing to them. They are trying to be supportive of people by recognizing that with reduced or no income, they need some breathing room. Although there are media reports to the contrary, as of now, debtors seem to be getting a break. Trustees are also encouraged to do the same if someone is having trouble making a surplus income payment in their bankruptcy right now. In fact, Trustees will probably be held to a very high standard when their conduct is reviewed by the Court.

In my April 29 Brandon’s Blog, I spoke about the whole issue of a debtor in a consumer proposal who misses three payments. If that happens, the consumer proposal is considered annulled. In this case, the Order the Ontario Court issued essentially gives debtors up to the end of 2020, and in some cases, beyond that date, to make up the missed payments.

COVID-19 insolvency frequently asked questions

There are some frequently asked questions that are coming up. So, I want to give the questions and answers to help people better understand what is going on right now in the Canadian insolvency system.

Q: Do consumer proposal debtors need to make up all missed payments by December 2020?

Response: This was not previously well explained. The answer is No. As much as an extra three monthly payments can be missed between March 13, 2020, and December 31, 2020, before a consumer proposal is considered annulled. Missed payments will need to be made up by the end of the proposal or a modified proposal will certainly need to be authorized by creditors. I am advising debtors to carefully think about whether it is necessary to miss making payments. There is no guarantee that later on, debtors will be able to make up the missed payments. So I am telling debtors that if they can still afford to make the payments, they should. Don’t choose to miss payments you otherwise can afford to. What if you can’t catch up? Do you really want your consumer proposal to be annulled later on after potentially you have paid everything except a few payments? That would be terrible..

Q: If a proposal was deemed annulled before April 27, 2020, when does it need to be revitalized to be covered by the order?

Response: A proposal that is revived by the steps taken under the Bankruptcy and Insolvency Act (BIA) on or prior to June 30, 2020, will certainly be covered by the order.

Q: If three payments were missed on or before April 27, 2020, but the Trustee did not send notices of deemed annulment, does anything require to be done to be covered by the order?

Response: Yes. When three payments prior to April 27, 2020, are missed out on the BIA states that a consumer proposal is regarded annulled despite administrative actions that may or might not have been taken. Thus, where the equivalent of three or even more payments has been missed out on, the consumer proposal will certainly need to be revived according to the BIA on or before June 30, 2020, in order to be active under the order.

Q: Is the duration under which a consumer proposal can be automatically revived likewise extended?

Response: No. The order allows the equivalent of as much as three extra payment defaults or an added three months time during the March 13 to December 31, 2020 timeline, prior to a deemed annulment of a consumer proposal. After this happens, a notice of revival has to still be filed within 30 days of the deemed annulment.

Q: Will the five-year restriction on consumer proposals be lengthened in order to offer debtors the time required to make up the missed out on payments?

Response: The BIA says that a consumer proposal needs to say that it will be completed within 5 years. Consequently, all payments, including missed repayments, have to be made during this same timeline. The only thing that will change that is if an amended proposal is filed and approved. After saying that, the BIA does not offer instant repercussions for defaults that lead to non-performance during this 5 year time period. If a consumer proposal has exceeded the five-year period but has actually not been annulled, it remains in force and therefore, in my view, can be completed.

This assumes no interested party goes to Court to ask for a court-ordered annulment. The Office Superintendent Bankruptcy Canada has formally stated that where hold-up in completion is due to COVID-19 reasons, they will not be seeking an annulment.

Everything old is new again or “Throwback Thursday”

There is one area that has not yet been covered off by the Order obtained by the Office Superintendent Bankruptcy Canada. When a person who does not fit under the $250,000 debt limit of consumer proposals, and for all companies, debt settlement restructuring plans under the BIA are done under Part III Division I Proposal section.

If a restructuring proposal cannot be filed straight away, the BIA allows for the filing of a Notice of Intention To Make A Proposal (NOI). The BIA statute says that unless extended by the Court, a Proposal needs to be filed within 30 days after the filing of the NOI. The Court can extend the timeline for a period not exceeding 45 days for any individual extension. In total, extensions cannot be more than 5 months. So in total, a debtor who has filed an NOI can be operating under the NOI for a maximum of 5 months and 30 days.

The Court has to order the extension prior to the expiry of the earlier time period trying to be extended. But the Courts are currently closed. They are only hearing emergency applications via telephone conference call or videoconference. Are a bunch of businesspeople fighting over money with the debtor asking for more time to file a Proposal an emergency? I can’t answer that right now. So if they can’t get into Court, what is the answer?

The Office Superintendent Bankruptcy Canada has recommended an old method. In the “old days”, before 1992, there was no NOI provision. So what did a person or company who needed more time to formulate and file a Part III Division I Proposal debt settlement plan, but needed to hold off creditors right now, do? They filed what was called a “holding proposal”. A holding proposal is no more than a proposal that says I promise to file a debt settlement plan that will clearly say how I plan to settle my debts either by a certain date or when a specific set of events happen.

The benefit was that the debtor got help from the immediate stay of proceedings. If the debtor could, he, she or it filed an amended proposal at the meeting of creditors which really said how the debts would be settled and then paid. If not, the creditors could consider the issues holding up the filing of the real proposal. If they felt it was in their best interests, they voted in favour to give the debtor the necessary time. If not, they voted it down and the debtor was immediately deemed to have filed an assignment in bankruptcy.

Where the creditors gave the debtor more time under the holding proposal, the Court approved them as long as the requirements the Court had to review were met. It was ultimately the creation of the NOI that was made to make it easier for debtors who were not ready to file a definitive proposal but needed relief from creditors to get it.

So now, the Office Superintendent Bankruptcy Canada is recommending for those cases where you just can’t get into Court, file a holding proposal. I am glad that Ira has kept a copy of a holding proposal in our document template file!!

Summary

I hope you found this case review helpful. It should be of particular interest to contractors, developers and builders in Ontario.

The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are literally separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Revenue and cash flow shortages are critical issues facing entrepreneurs and their companies and businesses. This is especially true these days.

If anyone needs our assistance, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

Are you now worried just how you or your business are going to survive? Those concerns are obviously on your mind. This pandemic situation has made everyone scared.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

The Ira Smith Team is absolutely operational and both Ira, as well as Brandon Smith, are right here for a telephone appointment, conference calls and also virtual meetings.

Stay healthy and safe everybody.

Tags Bankruptcy, Bankruptcy and Insolvency Act, bankruptcy trustee, Consumer Proposal, coronavirus, corporate restructuring, covid-19, credit counselling, debt settlement, debt settlement plan, debt settlement restructuring, insolvency, Ira Smith Trustee, licensed insolvency trustee, meeting of creditors, office superintendent bankruptcy canada, part III division I proposal, social distancing

Brandon Blog Post

CREDITORS: ALARM BELLS RING WHEN FINANCIAL RESTRUCTURING HEADS SOUTH

Post author By Brandon Smith
Post date February 26, 2020

Introduction

The purpose of this Brandon’s Blog is to describe the final type of bankruptcy in Canada. I will describe it from the viewpoint of creditors. Previously I’ve blogged about the three types of bankruptcies in Canada. I also wrote about the personal bankruptcy process and the corporate bankruptcy process in Canada.

Personal bankruptcy and corporate bankruptcy in Canada

From the first two, the personal bankruptcy process and the corporate bankruptcy process, that was from the perspective of a person or company filing an assignment in bankruptcy. I also wrote about a person or company being pushed into bankruptcy by one or more creditors through a bankruptcy application and a bankruptcy order.

Today’s blog is to talk about the third type of bankruptcy and that is a deemed assignment in bankruptcy. The deemed assignment is most commonly associated with when a financial restructuring under the Bankruptcy and Insolvency Act (Canada) (BIA) heads south.

Creditors and a deemed assignment in bankruptcy

In Canada, very large corporate restructurings are done under the Companies’ Creditors Arrangement Act. A person or a company of any size can also restructure under the BIA. This blog is about restructuring under the BIA to illustrate the third way a person or company can go bankrupt through a deemed assignment in bankruptcy.

The reason people or companies would file for a financial restructuring is to get a time out from its creditors taking action against them trying to collect on debts. People who owe more than $250,000 and companies who have too much debt qualify to restructure under the financial restructuring debt settlement provisions of the BIA. A restructuring filing gives them the needed time out to formulate a plan for settling the debt.

If a person owes $250,000 or less, then there is a different restructuring provision of the BIA available. That provision is the consumer proposal restructuring debt settlement section. If a consumer proposal restructuring attempt fails, that ultimately does not end up in being a deemed assignment in bankruptcy.

The deemed assignment in bankruptcy, the third type of bankruptcy in Canada, is really the topic of this blog.

Financial restructuring under the BIA

So the BIA has a financial restructuring section. The debtor needing a timeout can either file their restructuring proposal straight away or first buy some extra time by filing a notice of intention to make a proposal. If a debtor first files a notice of intention to make a proposal, within 10 days after that, they need to file a cash flow statement in the prescribed form plus related extra documents (unless the time period is extended by the court). The restructuring proposal must be filed within 30 days after the filing of the notice of intention to make a proposal.

When a debtor files the actual restructuring proposal a cash flow statement has to be filed with it as well. It will be an original one if the debtor goes straight away to the filing of the proposal or an updated one if they first filed the notice of intention to make a proposal.

Meeting of creditors to consider the proposal

Once filed the Licensed Insolvency Trustee (formerly called a bankruptcy trustee) (Trustee) must notify the creditors of the filing of a notice of intention to make a proposal and the restructuring proposal. The Trustee must call a meeting of creditors within 21 days of the filing of the restructuring proposal.

The creditors get to vote to approve or not approve the restructuring proposal creditor acceptances by voting and must be in the requisite majority calculated as a simple majority in number and at least 2/3 of the dollar value of all claims voting either in person at the meeting or by proxy and voting letter delivered to the trustee prior to the start of the meeting.

The need for Court approval

After creditors accept the Proposal, the Trustee must get the restructuring proposal approved by the court. For the court approval process, the court considers if:

the restructuring proposal, are the terms of the restructuring proposal fair and calculated to benefit the general body of creditors?
Did the Trustee properly follow all required procedural steps including properly holding and counting the voting by the creditors?

As long as the answers to these questions are yes and the restructuring proposal took the interests of all stakeholders into account, then the court will approve the restructuring proposal. Then the company or the person must successfully complete it including making all payments required under the restructuring proposal.

How can a restructuring proposal fail or head south?

A financial restructuring plan under the BIA can fail if:

the person or company fails to file the required cash flow statement and related documentation within the 10 day period after the filing of the notice of intention to make a proposal or the debtor;
fails to file a financial restructuring proposal within the 30-day time limit after the filing of the notice of intention to make a proposal or such greater time period authorized by the court;
the requisite majority of creditors voting do not accept the restructuring proposal;
the court does not approve the restructuring proposal; or
the restructuring proposal is accepted by the creditors and approved by the Court but the debtor fails to make the payments and do any other things contained in the restructuring proposal.

When the debtor is automatically bankrupt when there is an event of default in the Proposal

Under the following situations, the person or company will be deemed to have filed an assignment in bankruptcy if the person or company:

fails to file the required cash flow statement;
the debtor fails to file the financial restructuring proposal on time;
the requisite majority of creditors voting do not accept the restructuring proposal; or
the court does not approve the restructuring proposal

Under any of these conditions, the person or the company is automatically deemed to have filed an assignment in bankruptcy. You can go back and review my earlier blogs for the personal bankruptcy process and for what the corporate bankruptcy process is all about.

You can do the same thing when the restructuring proposals are accepted by the creditors and approved by the court but the debtor fails to make payments or do any of the other things contained in the restructuring proposal.

A Proposal default that does not automatically mean bankruptcy

Unlike the other events of default, when the debtor fails to make a payment under the Proposal, there is not an automatically deemed assignment in bankruptcy. Rather the Trustee has to give notice to the debtor and if there are any the inspectors in the restructuring to them also. The person or company attempting to restructure then has 30 days to remedy the default. If they do not remedy the default after the 30 day period then the Trustee has to issue a notice of default which is sent to the debtor, the creditors, and to the Superintendent of Bankruptcy.

After giving notice of default, the Trustee does not have to do anything else. Any one of the creditors can then bring a court motion to annul the restructuring proposal. If the Trustee has the funding to do so and is directed by the inspectors, the Trustee can also bring that motion.

If the motion is brought and is successful then and only then is the person or company deemed to have filed an assignment in bankruptcy.

But if nobody brings the motion the company or person actually just floats out there and the Trustee is entitled to go for taxation of its receipts and disbursements, make whatever distribution it can with the funds on hand and then go get its discharge.

Three types of bankruptcy in Canada

So to recap, the three types of bankruptcies in Canada are:

filing an assignment of bankruptcy;
a bankruptcy application and the issuance of a bankruptcy order; and
as explained in this blog, a deemed assignment in bankruptcy.

I hope you enjoyed this blog on creditors, a financial restructuring proposal and the process for a deemed assignment in bankruptcy. The IraSmith team is available to help you at any time. We offer sound advice and a solid plan for Starting Over Starting Now so that you’ll be well on your way to a debt-free life in no time.

Do you have too much debt? Are you banking on some outside event that you have no control over, like an inheritance or gambling winnings to save you or your company?

If yes, then you need immediate help. The Ira Smith Team comprehends just how to do a debt restructuring. Much more notably, we know the demands of the business owner or the person who has too much debt. Due to the fact that you are managing these stressful financial problems, you are anxious.

It is not your fault you cannot fix this issue on your own. You have just been shown the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief now.

At Ira Smith Trustee & Receiver Inc., we take a look at your whole condition and layout a strategy that is as unique as you are. We take the load off of your shoulders as a part of the debt negotiation approach we will create just for you.

We understand that individuals facing financial troubles require a lifeline. That is why we can establish a restructuring procedure for you as well as end the pain you feel.

Call us now for a no-cost consultation. We will certainly get you or your business back on the road to a well balanced and healthy life and end the pain factors in your life, Starting Over, Starting Now.

Tags Bankruptcy, Bankruptcy and Insolvency Act, BIA, Companies’ Creditors Arrangement Act, Corporate Bankruptcy, court approval, creditors, deemed assignment in bankruptcy, financial restructuring, Ira Smith Trustee, licensed insolvency trustee, meeting of creditors, notice of intention to make a proposal, personal bankruptcy, restructuring, restructuring proposal, trustee

Form 31 Proof of Claim Introduction

Background Information on Form 31 Proof of Claim

Purpose of Form 31 Proof of Claim

Importance of Properly Completing Form 31

Section 1: Understanding the Basics of Form 31 Proof of Claim

Definition of Provable Claim

Difference Between Provable and Unliquidated Claims

Identifying False Claims

Section 2: Required Information for Completing Form 31 Proof of Claim

Personal Details of the Creditor

Details of the Claim

Priority of the Claim

Section 3: Additional Considerations for Completing Form 31 Proof of Claim

A Claim of Lessor For Disclaimer of a Lease

Valuing a Secured Claim

Claim by Farmer, Fisherman or Aquaculturist

Claim by Pension Plan for the unpaid amount

Claims Against Directors

Claim of a Customer of a Bankrupt Securities Firm

Complicated or Contingent Claims

Section 4: Procedural Requirements for Submitting Form 31 Proof of Claim

Deadline for Submitting Proof of Claim

Properly Filing the Form 31

Notice of IntentionTo Make A Proposal

Notice of Bankruptcy Process

Section 5: Ensuring Accuracy in Completing Form 31 Proof of Claim – A Step-by-Step Guide to Filing a Proof of Claim

Step 1: Gather Required Information

Step 2: Complete the Header Information

Step 3: Furnish Creditor Details

Step 4: Specify the Debt

Step 5: Provide Supporting Documentation

Step 6: Sign and Date the Form

Step 7: File the Form

Additional Tips and Reminders

Section 6: Common Mistakes to Avoid when Completing Form 31 Proof of Claim

Section 7: Form 31 Proof of Claim FAQs

Conclusion

What happens when you file for bankruptcy? Introduction

What happens when you file for bankruptcy? Importance of understanding the bankruptcy process in Canada

What happens when you file for bankruptcy? Requirements and eligibility criteria for filing for bankruptcy in Canada

What happens when you file for bankruptcy? Language barriers and their implications

Challenges faced by individuals who cannot speak basic English

Types of insolvency process people and companies can access

What happens when you file for bankruptcy? Access to language support services

What happens when you file for bankruptcy? The Ali (Re) case

What happens when you file for bankruptcy? The OSB position

What happens when you file for bankruptcy? Conclusion

Receivership in Canada: What does receivership mean?

What does going into receivership in Canada mean?

Receivership in Canada: What is the difference between a court-appointed receiver and a privately appointed receiver?

How is receivership in Canada different from bankruptcy proceedings?

What are the key distinctions between receivership in Canada and liquidation?

Can individuals be placed into receivership in Canada?

Receivership in Canada: Whose receiver is it anyway?

What are the conditions under which a receiver may be appointed?

How the entrepreneur can avoid receivership in Canada

Receivership in Canada summary & speak with a licensed insolvency trustee

What is CCAA protection?

Is CCAA protection the same thing as chapter 11?

What is CCAA protection in Canada and “The Stay”?

Comeback hearing: Can CCAA Canada protection be extended?

CCAA protection: What is the role of the Monitor?

CCAA protection: The Plan of Arrangement or Compromise

CCAA protection and the financial statements of the debtor

CCAA protection: Creditor approval of the Plan of Arrangement or Compromise

CCAA protection and court approval of the Plan of Arrangement or Compromise

CCAA protection: You can access CCAA filing records and court documents through 2 sources

You Owe Money—The CCAA protection

What does a licensed insolvency trustee do?: What is a licensed insolvency trustee?

What does a licensed insolvency trustee do?: Licensed insolvency trustees are professionals who are federally regulated

What does a licensed insolvency trustee do?: The credit counselor or a debt management program as an alternative

What does a licensed insolvency trustee do?: The Consumer Proposal Process

What does a licensed insolvency trustee do?: The bankruptcy process

What does a licensed insolvency trustee do?: The assignment of assets

What does a licensed insolvency trustee do?: Opting for a consumer proposal

What does a licensed insolvency trustee do?: Going the bankruptcy route

What does a licensed insolvency trustee do?: Final thoughts

What does the bankruptcy trustee investigate – What is a bankruptcy trustee?

What does the bankruptcy trustee investigate – Tell your bankruptcy trustee everything

What does the bankruptcy trustee investigate? What if I fail to remember to divulge something?

*Claim by Farmer**, Fisherman or Aquaculturist*

*Notice of Intention**To Make A Proposal*

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

**When is a Canada consumer proposal appropriate?**

**What happens when you file a Canada consumer proposal?**

**Why you should move your bank accounts before filing a Canada consumer proposal or a Canada bankruptcy**