In the challenging economic landscape of Calgary, businesses may face daunting financial hurdles. When the burden of debt becomes overwhelming, one may contemplate the prospect of Business Bankruptcy in Calgary. This article aims to provide a detailed guide on this subject, addressing various aspects of business bankruptcy and elucidating available alternatives.
Understanding the Concept of Business Bankruptcy
Business Bankruptcy, also termed as corporate bankruptcy, is a statutory procedure for businesses incapable of repaying their debts. This process is regulated by the Bankruptcy and Insolvency Act and serves as a viable solution when a business’s debts become unmanageable.
The business’s assets will be liquidated and distributed to compensate the creditors. The process of filing for bankruptcy in Canada is carried out through a Licensed Insolvency Trustee (LIT), formerly known as a Bankruptcy Trustee. These professionals are trained and accredited by the federal government to offer expert bankruptcy services and advice. However, it’s significant to note that business bankruptcy isn’t the sole remedy for debt mitigation. There are other alternatives that a business can explore in consultation with a Licensed Insolvency Trustee.
Types of Business Bankruptcy
Small Business Bankruptcy
In the case of a sole proprietorship or partnership, the bankruptcy process is similar to that of an individual filing for bankruptcy. The persons involved are essentially the business, and hence, the business’s structure doesn’t segregate business and personal assets legally.
Business or Corporate Bankruptcy
This type of bankruptcy applies to an incorporated entity that is unable to repay its debts. The corporation is regarded as a legal ‘person,’ as stipulated by the Bankruptcy and Insolvency Act. The owners of the business are shielded from liability, including the corporation’s debts. If the corporation files for bankruptcy, the business ceases to operate, and the employees are likely to lose their jobs.
Do I Qualify for Corporate Bankruptcy?
To qualify for corporate bankruptcy, a business needs to operate in Canada, have liabilities of at least $1,000 more than the total amount of its assets, and meet at least one of the following criteria:
- Unable to meet debt payments on their due date
- Ceased making payment obligations in the ordinary course of business as they are due
- The total of all personal property sold at fair market value would not be enough to repay all debts
Should I File for Corporate Bankruptcy in Calgary?
In Calgary, many businesses struggle to stay afloat. If your corporation is having difficulty paying its debts, you might consider filing for corporate bankruptcy. However, it’s advisable to seek professional advice from an LIT to assess your situation and explain the available options to mitigate your debts.
Alternatives to Filing for Corporate Bankruptcy
Division I Proposal
A Division I Proposal, also known as a commercial or Corporate Proposal, is a suggestion put forward to your creditors by an LIT, to negotiate how you will repay your debt. The proposal is available for both individuals and businesses, and there is no limit to the debt amount. If your business files a Division I Proposal, the proposal can cover any amount of unsecured debt. Unlike bankruptcy, with a Division I Proposal, your business won’t surrender any assets to settle its debts, and your debts will be paid off at a percentage of their original value.
Taking Control of Your Business Debts
If your business is grappling with debt, seeking support is crucial. At Allan Marshall & Associates Inc, we have been assisting people in managing their debt since 1979. Our Licensed Insolvency Trustees are experts in insolvency, including bankruptcy, and can offer you the support and advice you need to settle your business debts, reduce your stress, and move towards a brighter future.
Conclusion
In conclusion, Business Bankruptcy in Calgary is a serious step, requiring careful consideration and professional advice. It’s essential to explore all available alternatives before deciding to file for bankruptcy. Moreover, remember that help is available, and you don’t have to face this challenging situation alone.
