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COMMERCIAL PROPOSAL – CORPORATE RESTRUCTURING PART 3

bankrupt, commercial proposal, corporate restructuring, division 1 proposal, liquidator, proposal, restructure, trustee, Company bankruptcyIn last week’s blog we discussed the stakeholders and key players and their roles in a corporate restructuring. This week we’ll be addressing the Division 1 Proposal, commonly referred to as a Commercial Proposal or the Proposal.

What is a Division 1 Proposal? The Division 1 Proposal is a legal document typically drawn up by either the Trustee or the company’s lawyer. It is essentially a compromise between a commercial debtor and his/her creditors that, if approved by the creditors and the Court, becomes legally binding. Proposals help resolve the financial difficulties of a business and offer creditors more than they could expect to receive in a bankruptcy. The agreed upon Proposal is a part of the overall restructuring plan, which is a business plan.

When is a Commercial Proposal, otherwise known as a Division 1 Proposal used? A Division 1 Proposal can be used if a business is viable but financially unsound. The general principal we use in determining if a business is a good candidate for a Proposal is that they have to have a core business that is viable and once they shed themselves of most of their debt and develop a business plan and model that will be profitable they can use a Proposal as a tool to continue operations and settle their unsecured debt for less than the full amount of the unsecured debt.

What are the advantages of a Division 1 Proposal? After a debtor files a Division 1 Proposal or a notice of intention to file a Proposal, creditors may not begin or continue any legal action. The debtor remains in possession and control of their assets and company management continues to make all business decisions. Restoring the financial condition of a business with a Proposal may save the business, preserve jobs, give creditors the best return, provide a continuing source of business for existing and new creditors, and enable the owners and/or shareholders to retain an interest in the business.

If your company is experiencing severe financial difficulties, avoid a Company bankruptcy. Contact Ira Smith Trustee & Receiver Inc. to discuss whether a Division 1 Proposal is the right strategy for you. Starting Over, Starting Now we can help to restructure and turnaround your company, restoring it to financial health.

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Brandon Blog Post

FINANCIAL VIABILITY ASSESSMENTS – CORPORATE RESTRUCTURING PART 2

financial viability assessments, bankruptcy alternatives, consumer proposals, corporate restructuring, division 1 proposal, proposal, restructuring, toronto bankruptcy, trustee, turnaround management, Vaughan, company bankruptcyLast week we discussed the process of corporate restructuring. This week we’ll be addressing the stakeholders and key players and roles in a corporate restructuring, as well as the issue of financial viability assessments.

Serious financial difficulties cause a great deal of distress; the very viability of your company is in question. You need professional help and you need it now. The cause of the financial difficulties must be identified, financial and viability assessments must be done, and an organization and restructuring plan must be implemented. There are stakeholders and key players that are involved, but who are they and what role do they play?

Who are the stakeholders: Depending on the size and structure of your company stakeholders may include corporate management, financial institutions, suppliers, shareholders, governments, regulatory bodies and employees.

Who are the key players and what are their roles: The key players in a corporate restructuring are the:

Company’s Accountant: The role of the accountant may include payroll, cash collections, disbursements, procurement and property accounting, tax preparation, financial planning, business consulting and payroll services.

Company’s Lawyer: The role of the lawyer may include drafting contracts, taxes, facilitating mergers, and handling human resources issues.

Trustee: The trustee is a restructuring professional. We work with all of the stakeholders and key players, creating realistic strategies and solutions for your company. The problems that caused and contributed to the financial distress must be identified and addressed after which a plan must be put into place to restructure the company and affect the turnaround. We perform a financial viability assessment in order to begin the planning process of a corporate restructuring.

Contact Ira Smith Trustee & Receiver Inc. With our expertise and skills in restructuring and turnaround management we will work with you to find and implement the right financial and business strategies that address your particular issues. We will assist you to avoid your company bankruptcy. Starting Over, Starting Now we can begin to rehabilitate your financially troubled company. Watch for our next blog – Corporate Restructuring Part 3 – when we’ll be addressing the Division 1 Proposal.

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Brandon Blog Post

CORPORATE RESTRUCTURING PART 1

corporate restructuring, financial restructuring, proposal, restructuring, richmond hill, richmond hill bankruptcy, toronto bankruptcy, trustee, trustees, vaughan, vaughan bankruptcy, woodbridge, woodbridge bankruptcy, company bankruptcyMany companies are experiencing financial difficulties as a result of the current climate of economic uncertainty, fast-moving markets, increased competition and outdated business models. As Trustees & Receivers we are often involved in corporate restructuring, a process which many clients find confusing.

We know there is confusion about the meaning of the terminology, the roles played by the various stakeholders and professionals, and the difference between a restructuring business plan and the Proposal. I’ll attempt to demystify it for you.

What is corporate restructuring

Corporate restructuring is a strategy to move from financial harm and return to a financially viable state.

When to consider restructuring

When a company is having trouble making payments on its debt and this situation is one that may lead to the company’s collapse, corporate restructuring should be considered.

Corporate restructuring increases a business’ efficiency – reducing costs, increasing profits – and therefore avoiding closure.

When is a company eligible for restructuring

There is a general principle we use in determining if a business is a good candidate for financial restructuring. It is that they must have a core business that is viable. First they must shed themselves of their debt which is weighing them down. They must also develop a business plan and model that will be profitable. Then they will be able to continue to run.

When should you contact a trustee?

If your company is experiencing serious financial difficulties, the sooner you contact a trustee, the better.

Contact Ira Smith Trustee & Receiver Inc. We will evaluate your situation and create an effective restructuring plan that will help your company to become financially sound, Starting Over, Starting Now. We will help you avoid a company bankruptcy.

Watch for our next blog – Corporate Restructuring Part 2 – when we’ll be addressing the key players, stakeholders and roles in a corporate restructuring.

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Brandon Blog Post

GREY DIVORCE IN CANADA CAN CREATE SERIOUS DEBT FOR BOOMER RETIREES

grey divorce in canada“Divorce is the one human tragedy that reduces everything to cash”. – Rita Mae Brown

The terms “silver separation” and grey divorce” sound very benign, but their financial ramifications have spelled disaster for many boomer retirees. Instead of travelling the world or spending carefree days on the golf course, many retired baby boomers may now be saddled with a mountain of debt and are trying to figure out how to pay their bills because of grey divorce in Canada.

A study done in 2012 by Bowling Green State University in Ohio revealed that the divorce rate among people who are retired or near retirement had more than doubled in the United States in just 20 years. According to Statistics Canada, divorces among couples 65 years of age and older are becoming more and more common and that the average age at which Canadians divorce has been rising steadily for a number of years. And, this trend is expected to continue. Susan Eng of the national seniors’ advocacy group CARP said that in recent years her office has been seeing an increase in calls from divorcees who are unsure of how they were going to make ends meet now that they were alone.

Although women seem to be the hardest hit, men are not immune. The nest egg that you have accumulated for retirement now has to be divided and you may also be supporting minor children and helping to support adult children and/or ageing and ailing parents. The financial challenges of your new reality may have created more debt that you can handle.

Grey divorce in Canada summary

Debt is a four-letter word but it can be managed with professional help. If you are experiencing serious debt problems because of grey divorce in Canada, or for any other reason, contact Ira Smith Trustee & Receiver. Credit Counselling, Debt Consolidation, and Consumer Proposals are all options that we can explore and then we will come up with a plan that will work best for you. Although life can be difficult after a grey divorce you can start over and live a debt-free life Starting Over, Starting Now.

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Brandon Blog Post

CONSUMER PROPOSALS OR PERSONAL BANKRUPTCY; WHICH IS RIGHT FOR YOU?

credit, credit scores, credit score, credit report, credit reporting agencies, problems with credit, toronto, bankruptcy, vaughan bankruptcyIf you are experiencing serious financial problems you need professional advice and a plan of action. The first thing that you should do is contact a licensed trustee. A licensed trustee is a federally regulated professional who will evaluate your situation and help you to arrive at the best possible solution for your problems. Consumer proposals and personal bankruptcy are two options for insolvency. Which is right for you?

CONSUMER PROPOSALS

PERSONAL BANKRUPTCY

Stops creditors from taking legal action against a debtorStops creditors from taking legal action against a debtor
Requires a licensed trusteeRequires a licensed trustee
Your total debt cannot exceed a $250,000 (excluding a mortgage)If you owe more than $1,000 you are eligible & no limit on the amount of debt
Your monthly payment is fixedMonthly payments may vary as they are based on your income and assets
You retain your assetsCertain assets may have to be seized by the Trustee
No monthly tasks or reportingMonthly income and expense reporting is required
You are still entitled to all tax refund(s) and/or credits which you are owed.Tax refunds for the year of your bankruptcy and any prior unfiled years will be forfeited
After the completion of a consumer proposal your credit rating is R7After a bankruptcy your credit rating is R9
A Consumer Proposal will appear on your Credit Report for three years after completionA first Bankruptcy will appear on your Credit Report for six to seven years (in Ontario) after your final discharge from the Bankruptcy (14 years for a second Bankruptcy)

Ira Smith Trustee & Receiver Inc. can provide you with solutions to your financial problems and with a plan of action, Starting Over, Starting Now we can help you achieve your goal of a debt free life. Take the first step and contact us today.

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Brandon Blog Post

Everything You Wanted to Know About Credit Scores But Were Afraid to Ask

everything you wanted to know about credit scores but were afraid to ask, credit, credit scores, credit score, credit report, credit reporting agencies, problems with credit, toronto, bankruptcy, vaughan bankruptcy
everything you wanted to know about credit scores but were afraid to ask

Everything you wanted to know about credit scores but were afraid to ask: Introduction

Credit may not be sexy but it does make the world go ‘round. That is why it is important for you to know everything you wanted to know about credit scores but were afraid to ask.

Everything you wanted to know about credit scores but were afraid to ask: Our lives revolve around credit

Our lives revolve around credit – mortgages, car loans, student loans, credit cards…. Take out your wallet and look inside; how many credit cards do you have? According to a poll conducted on behalf of Credit Canada:

  • 43% of Canadians have more than 3 credit cards
  • 80% of Canadians do not know their credit score
  • 63% of Canadians do not know how their credit score is determined

The more you understand about credit the less likely you are to get yourself into trouble.

Everything you wanted to know about credit scores but were afraid to ask: What is a credit score?

A credit score indicates the risk you represent to lenders compared to other consumers. In Canada we have two credit reporting agencies – Equifax and TransUnion. They use a scale from 300 – 900 to rate your credit score. The number is calculated using a mathematical formula based on the information in your credit report (has detailed information on a person’s credit history including identifying information, credit accounts and loans, bankruptcies and late payments, and recent credit inquiries). You get points if lenders believe that you use credit responsibly. Conversely you lose points if you manage credit poorly. The higher your number is the better. A high number means that you are a good risk for credit. There are many factors that figure your credit score:

  • Length of time you’ve had credit
  • The types of credit that you use
  • Do you pay your bills on time?
  • How much debt are your carrying?
  • How many people have inquired about your credit?
  • Have you been bankrupt before?

Everything you wanted to know about credit scores but were afraid to ask: Why is my credit score important?

At some point in your life you will want access to credit whether it’s for a credit card or to borrow money to buy a house or a car, or to start a business. If you have a high credit score, you may be able to get a lower interest rate on loans, which can save you a lot of money over time. A good credit score will allow you to meet your goals for the future.

If you’re experiencing problems with credit, contact Ira Smith Trustee & Receiver Inc. We can help you get your life back on track Starting Over, Starting Now.

Call a Trustee Now!