Canadian Bankruptcy and Insolvency Laws

Understanding the Bankruptcy and Insolvency Act in Canada

When it comes to financial turmoil and insolvency, the Bankruptcy and Insolvency Act (BIA) in Canada serves as a guiding light. Familiarly known as the “Bankruptcy Act,” it provides a structured legal framework for individuals and companies facing financial difficulties.

The act outlines the roles and safeguards the rights of all parties involved in a bankruptcy or proposal proceeding. It includes the Superintendent of Bankruptcy, their representatives, the court, trustees, creditors, and debtors.

Navigating the Bankruptcy and Insolvency Act

Below is a breakdown of the key aspects of the Bankruptcy and Insolvency Act:

  1. Superintendent of Bankruptcy: The act outlines the roles and responsibilities of the Superintendent of Bankruptcy, including oversight of all bankruptcy cases in Canada.
  2. Trustees: The act provides a framework for trustees to manage bankruptcy cases, including the administration of assets and repayment of debts.
  3. Creditors and Debtors: The act defines the rights and obligations of both creditors and debtors in bankruptcy proceedings.
  4. Court: The act outlines the role of the court in bankruptcy proceedings, including the adjudication of disputes and the enforcement of bankruptcy laws.

The Companies’ Creditors Arrangement Act (CCAA)

In addition to the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act (CCAA) plays a significant role in Canada’s insolvency law. Established during the global economic depression of 1933, the CCAA aims to help financially troubled corporations restructure their affairs to avoid bankruptcy.

The CCAA facilitates negotiations between the company and its creditors under the court’s supervision. The ultimate goal is to devise a Plan of Compromise, allowing the company to continue operations while managing its debts effectively.

Provincial Legislation and the Bankruptcy and Insolvency Act

Bankruptcy law in Canada isn’t solely governed at the federal level. Each province and territory have specific laws related to property exemptions, debt collection, and enforcement of court orders. These provincial laws often play a crucial role in determining what property you’re entitled to keep when you file for bankruptcy.

Alberta

In Alberta, the Civil Enforcement Act guides insolvency law, detailing how different types of assets are affected by bankruptcy. Alberta also has an Orderly Payment of Debts Program, consolidating unsecured debts into one monthly payment with a low-interest rate and a set payment period.

British Columbia

The province’s bankruptcy laws, asset management, wage garnishments, and payment options are based on the provincial laws set forth in the Court Order Enforcement Act.

Manitoba

In Manitoba, the Executions Act and the Judgements Act govern bankruptcy and insolvency. These statutes inform agreements surrounding consumer proposals and debt repayment.

New Brunswick

The Memorials and Executions Act governs bankruptcy and insolvency law in New Brunswick, providing guidelines for mortgages, personal property, and land sales.

Newfoundland and Labrador

The province’s insolvency laws are laid out in the Judgement Enforcement Act. It provides detailed information about property and land seizures, wage garnishments, exemptions, and more.

Nova Scotia

The Judicature Act is the authority on bankruptcy and insolvency in Nova Scotia. The government also offers an Orderly Payment of Debts Program for those considering bankruptcy or a consumer proposal.

Ontario

Bankruptcy laws in Ontario are governed by the Executions Act, which outlines wage garnishment procedures, property ownership exemptions, and more.

Prince Edward Island

The Judgement and Execution Act guides bankruptcy and insolvency procedures in Prince Edward Island. The provincial government also offers an Orderly Payment of Debts Program, aiding in wage garnishment and asset management during bankruptcy.

Quebec

Quebec’s bankruptcy and insolvency laws are dictated by the Code of Civil Procedure, outlining what you can and can’t keep if you file for bankruptcy in Quebec.

Saskatchewan

The Enforcement of Money Judgement Act and the Farm Security Act provide information on the implications of going bankrupt in Saskatchewan. The provincial government also provides an Orderly Payment of Debts Program to help navigate the process.

Northwest Territories, Nunavut, and Yukon

In these territories, the Exemptions Act outlines what property you’re entitled to keep if you go bankrupt.

Conclusion

Understanding the Bankruptcy and Insolvency Act and the provincial legislation surrounding bankruptcy in Canada can be a complex task. However, it’s an essential step for anyone facing financial difficulties. With this knowledge, individuals and businesses can navigate the bankruptcy process with confidence, knowing their rights and options under the law.

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