Filing Bankruptcy If You Are A Director Of An Incorporated Company

The path of entrepreneurship is filled with unexpected twists and turns. Sometimes, these can lead to financial difficulties that require drastic measures such as filing bankruptcy. For those who hold the position of a director in an incorporated company, this process can be even more complex.

Understanding Bankruptcy

Before diving into the specifics, it’s crucial to understand what bankruptcy actually entails.

Bankruptcy is a legal process that provides relief to individuals or businesses that cannot pay their debts. It allows them to start fresh by discharging debts that they are unable to repay.

The Legal Framework

The BC Business Corporations Act

According to Section 124(2)(c) of the BC Business Corporations Act, a director of a company cannot be in a state of bankruptcy. This essentially signifies that if you decide to file for bankruptcy, you would need to step down from your position as a director.

 

Always consult a lawyer or notary for correct advice on your specific situation.

 

The Resignation Process

Resigning from the directorship of a company involves submitting a written resignation which is then maintained in the company’s minute book. Additionally, the company’s details at the Corporate Registry also need to be updated.

The Succession Plan

If you happen to be the sole director of the company, the situation becomes trickier. Before filing for bankruptcy, you would need to find someone suitable to assume the role of director. This person should be appropriately appointed by the shareholders of the company.

Seeking Legal Advice

Again, it’s essential to consult a lawyer or notary to understand all the requirements and implications. They can provide the right advice tailored to your situation.

Conclusion

Filing bankruptcy as a director of an incorporated company is a significant decision that can have far-reaching implications. It is essential to understand the legal framework and potential consequences before taking such a step. Always seek professional legal advice to make informed decisions.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.