Proposal to creditors
An interesting alternative to commercial bankruptcy!
Commercial bankruptcy is not the only solution. In certain cases, a proposal to creditors may be a better solution. This involves coming to an agreement with your creditors to reduce the amount of your debts and/or extend the repayment period. Therefore, even if your business is insolvent, you could free it from debt while remaining operational.
When should you consider a proposal to creditors?
A proposal to creditors may be considered in the following situations:
- Your creditors are open to an agreement to avoid bankruptcy.
- Your business is viable, but it has too much short-term debt.
- You’d like to avoid liquidation and protect your business.
What is the process for a proposal to creditors?
There are five primary stages in a proposal to creditors:
- Analyzing the situation : After assessing your reality, we’ll propose filing a notice of intention or immediately filing a proposal to creditors. A notice of intention suspends creditor proceedings for a period of 30 days to 6 months, which gives you time to put a recovery plan in place and submit a proposal to creditors.
- Filing a proposal to creditors : The proposal is submitted to the Office of the Superintendent of Bankruptcy and then forwarded to your creditors. A meeting is called within 21 days.
- Creditors’ vote : Your proposal to creditors must be approved by a majority in number and a majority of two thirds in value of the amounts owing.
- Approval by the court : Once the proposal to creditors has been accepted, it must be ratified by the court.
- Payment and discharge from debt : Your company makes all the scheduled payments. When the total has been paid, you’ll receive a Certificate of Full Performance to confirm that your business is discharged of its debts. Then you can finally regain your peace of mind!
What are the advantages of a proposal to creditors?
Filing a notice of intention or a proposal to creditors has the following advantages:
- Retaining your company and its assets.
- Repaying debts over a longer period.
- Paying a lower amount each month.
- Repaying only a portion of your debts.
- Protection against legal action and seizure of wages and assets.
- Implementing recovery measures (lease cancellation, share capital reorganization, interim financing, for example).
- In certain cases, directors may be relieved of their responsibilities related to government remittances such as GST/QST and payroll deductions.
In a nutshell, submitting a proposal to creditors for approval gives your company a second chance and allows you to avoid commercial bankruptcy. This is a win-win solution for everyone involved.
How can a Licensed Insolvency Trustee help you with a proposal to creditors?
Trustees act as an intermediary between your business and your creditors, negotiate a realistic plan and monitor its application. Trustees are the only professionals legally authorized to do this. They are an essential ally who can advise you and ensure that your rights are upheld. Our experts have helped thousands of businesses to turn their situation around and you can trust them too.
Other solutions that can help
-
Learn more
Recovery plan
There are many reasons behind financial difficulties. Together, we’ll analyze the situation and identify your company’s strengths and weaknesses before proposing recovery measures to get it back on track.
-
Learn more
Voluntary liquidation
Business dissolution is a complex process that involves following specific rules. We can develop tailored strategies to maximize the value of your company’s assets while respecting your obligations towards your creditors!
-
Learn more
Commercial bankruptcy
When no other solution is possible, commercial bankruptcy can release you from your obligations towards your company. We work together to analyze how bankruptcy could impact your personal finances. We also come up with solutions to protect you from your creditors. We take care of everything so you can regain peace of mind.