Options In Insolvency: Can I Keep The Company?

When a Canadian corporation becomes insolvent and can no longer meet its obligations, the natural result is that the creditors come knocking. When this scenario arises, creditors and corporations have options to deal with the issues between the parties. The Bankruptcy and Insolvency Act (the “BIA”) and the Companies' Creditors Arrangement Act (the “CCAA”) exist to aid companies and creditors in dealing with insolvent corporations, and the options under the acts will be discussed below.

An insolvent company is defined within the BIA as an organization who:

• Is unable to meet obligations as they generally become due;
• Who has ceased paying obligations in the ordinary course as they become due; or