Insolvency and  restructuring in Canada

Things to know

  • Canada’s insolvency and restructuring regime consists primarily of two statutes:  (1) the Companies’ Creditors Arrangement Act(CCAA), and (2) the Bankruptcy & Insolvency Act(BIA) 

  • Both statutes provide for restructurings similar to Chapter 11 of the U.S. Bankruptcy Code (the Code), and liquidations analogous to Chapter 7 of the Code 
  • The BIA is available to most corporate debtors and provides a structured set of rules and regulations. The CCAA provides tremendous flexibility in restructuring proceedings for debtors with total debts of over $5 million 
  • Both statutes provide for a broad stay of creditors’ rights and remedies; the filing of a plan or proposal to compromise the debtor’s debts (or, as an alternative, the sale of some or all of its assets); meeting(s) of affected classes of creditors for voting on the debtor’s plan or proposal; followed by court sanction. A court appointed officer monitors the proceedings and reports to the court and creditors 

  • The Winding-Up and Restructuring Actgoverns the restructuring and liquidation of certain eligible corporations, mainly financial institutions. 
  • In certain circumstances, Canadian companies may restructure pursuant to corporate statutes, such as the Canada Business Corporations Act, fundamental changes in corporate structure through a courtapproved plan of arrangement, including a compromise of corporate bonds and similar debt obligations.
  • Secured creditors may apply to court for the appointment of a receiver or may privately appoint a receiver under their security documents to realize on secured assets. 
  • There is a hierarchy of priorities for claims against an insolvent debtor. 
  •  Super-priority status applies to certain claims, such as unpaid employee wages, payroll deductions, and certain pension payments.

Things to do

  • In a cross-border insolvency, Canadian courts generally encourage coordination among the various insolvency proceedings in all jurisdictions so that the restructuring or liquidation can proceed in a fair and orderly manner 
  • Part IV of the CCAA and Part XIII of the BIA enable coordination of cross-border insolvencies by permitting Canadian courts to recognize certain orders made in foreign insolvency proceedings

Canada Company Registration

Company Formations Canada offers fast and easy company registration in Canada for non-Canadian residents and foreign companies wishing to operate and do business in Canada.

Register a new company in Canada as a non-Canadian resident

Register a foreign company in Canada

Canada Registered agent services for foreign companies and non-Canadian residents.

Canada Nominee director services for foreign companies and non-Canadian residents.

Shared from: Osler, Hoskin & Harcourt llp Publication

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