Canadian Bankruptcy Law

The main legislation related to bankruptcy for most cases are the Bankruptcy and Insolvency Act (BIA) and Companies Creditors Arrangement Act (CCAA). Provincial legislation affects bankruptcy related matters like the rights of landlords and secured creditors.

The Bankruptcy and Insolvency Act

The Bankruptcy and Insolvency Act or BIA is the main federal legislation for bankruptcies and insolvencies. It applies to both voluntary bankruptcy liquidations and involuntary ones. The BIA further applies to debtor reorganizations. The BIA is available to those who owe at least a thousand dollars and a legal or natural person in Canada. The Division I proposal is available to those who owe at least $250,000, not including the mortgage on their primary residence. The BIA can apply to anyone who resides in or does business in Canada. If you have an international business or need to file bankruptcy in both Canada and another nation, our legal team has the expertise to assist you in these complex cases. The BIA does not apply to trust companies, loan companies, insurance companies or banks. Farmers cannot be forced into bankruptcy but can seek proposals to alter the terms of their debt. The Bankruptcy and Insolvency Act allows insolvent debtors to make proposals to their creditors to adjust the debt, such as reducing the balance owed or altering payment terms. Always seek the advice of an experienced Calgary bankruptcy lawyer before attempting this process on your own. Failed proposals can be bridged to a liquidation bankruptcy, but this is a painful process. The BIA governs bankruptcy proceedings where the debtor’s creditors have invoked it, such as when someone has committed an act of bankruptcy. If you are being pushed into bankruptcy, always seek the counsel of an experienced bankruptcy law firm in Calgary to ensure that you don’t lose property you have the right to keep or make mistakes in the process that prolong it. The Companies Creditors Arrangement Act The CCAA applies to larger companies trying to reorganize under bankruptcy through a debtor in possession process. Smaller firms can try to reorganize under the proposal sections of the Bankruptcy and Insolvency Act. How do you qualify for protection under the CCAA? First, the company or companies must be insolvent on either a balance sheet basis or liquidity basis. Second, the company must be in at least five million dollars of debt. The Companies Creditors Arrangement Act has three separate parts. The first governs the agreements between companies and creditors for debt repayment. The second section outlines the power and responsibilities of the court and the court’s role in international bankruptcies. The third part of the CCAA discusses how the CCAA interacts with other pieces of insolvency and bankruptcy legislation and information that isn't included in the first two sections.

Provincial Laws on Bankruptcy and Insolvency

Provincial laws define exempt property differently, such as the amount of food, clothing, household furnishings, medical and health items, tools of the trade, farm property, sentimental items and farm property you are allowed to keep. In some categories, there are no dollar limits as to what you are keep, but the law limits the exemptions to what you and your dependents need. Always consult with a bankruptcy law firm in Calgary before making assumptions as to what property is exempt from the bankruptcy.