What To Do When Your Supplier Or Client Is Insolvent

In a changing economy, companies are constantly facing new challenges, and none are immune to insolvent suppliers or clients.

It is therefore crucial to be able to identify the early warning signs of a company's insolvency and to be aware of the issues that can arise when a client or a supplier becomes insolvent.

When Insolvency Looms on the Horizon

Late payments for the delivery of products or services are the most common indicators of a company's insolvency. Over time, the persistence and/or worsening of the situation constitutes an even stronger indicator of a client or supplier's potential insolvency.

When a company becomes insolvent, it can claim protection under the Bankruptcy and Insolvency Act ("BIA") or the Companies' Creditors Arrangement Act ("CCAA"). Together, these two acts make up the main framework for Canada's insolvency process.