Canadian Bankruptcy Laws
Canadian bankruptcy laws are determined by two major pieces of federal legislation—The Bankruptcy and Insolvency Act, and The Companies' Creditors Arrangement Act—as well as provincial legislation that specifies what type of property you're entitled to keep during bankruptcy.
The Bankruptcy and Insolvency Act
The Bankruptcy and Insolvency Act (BIA) governs all bankruptcies that take place in Canada. Sometimes informally referred to as "the bankruptcy act", it is designed to help "honest but unfortunate debtors" overcome their financial challenges.
The act defines the roles and protects the rights of everybody involved in bankruptcy proceedings, including the Superintendent of Bankruptcy, his or her representatives, the court, trustees, creditors, and debtors.
The Companies' Creditors Arrangement Act
The Companies' Creditors Arrangement Act (CCAA) is federal legislation designed to give financially troubled corporations the opportunity to restructure their affairs in order to avoid bankruptcy. It was enacted in 1933, a time of global economic depression when a company going bankrupt usually meant shareholders' investments disappeared, creditors recovered little, and the "social evil of devastating levels of unemployment" was exacerbated.
The CCAA brings the company and its creditors together under the supervision of the court. The ultimate goal is to reorganize or reach an arrangement under which the company can continue to do business.
Bankruptcies in Canada are not only governed at the federal level. Each province and territory has specific laws surrounding property exemptions and enforcement of court orders and debt collection. Provincial laws are often relied upon to determine what property you are entitled to keep when you file for bankruptcy.
You're Not Alone: Work With a Licensed Insolvency Trustee
In order to better understand your rights and responsibilities during bankruptcy, it's important to seek advice from a Licensed Trustee for Bankruptcy and Insolvency. Start by arranging a free, confidential consultation at your local MNP LTD office. We're here to help you choose the right debt solution for your unique situation—whether it's declaring bankruptcy or opting for an alternative process, such as a consumer proposal or debt consolidation loan.