CANADA Law and Practice Contributed by: Clifton Prophet, David F W Cohen, Virginie Gauthier, Thomas Gertner and Kate Yurkovich, Gowling WLG
Gowling WLG Suite 1600
1 First Canadian Place 100 King Street West Toronto ON M5X 1G5 Canada Tel: +1 416 862 3509 Email: genevieve.cloutier@gowlingwlg.com Web: www.gowlingwlg.com
1. Overview of Legal and Regulatory System for Insolvency/Restructuring/ Liquidation 1.1 Legal Framework There are three main insolvency statutes in Canada: • the Bankruptcy and Insolvency Act (BIA); • the Companies’ Creditors Arrangement Act (CCAA); and • the Winding-up and Restructuring Act (WURA). The BIA governs proposals (a restructuring regime for individuals and companies (typically smaller to mid- sized companies)), receiverships and bankruptcies (both personal and corporate). The CCAA provides a restructuring regime for larger corporations. The WURA is a liquidation statute designed to deal with, among other things, the formal liquidation of cer - tain regulated entities, including financial institutions
• winding-up proceedings under the WURA. Voluntary Proceedings A debtor may initiate voluntary bankruptcy proceed - ings by filing an assignment in bankruptcy for the general benefit of its creditors. To make an assign - ment in bankruptcy, the debtor must be an “insolvent person” within the meaning of the BIA and file certain prescribed forms with the Office of the Superintendent of Bankruptcy (OSB). Debtors may also initiate proposal proceedings under the BIA or reorganisation proceedings under the CCAA. Involuntary Proceedings Involuntary proceedings may be commenced by cred - itors under four of the five insolvency and restructuring regimes summarised above. Creditors can apply for: • the appointment of receivers under the BIA or pro - vincial statutes; • bankruptcy orders under the BIA when debtors have committed acts of bankruptcy within the preceding six months, and provided the appli - cant creditor has an unsecured liquidated claim in excess of CAD1,000; and • initial orders under the CCAA. Involuntary proceedings can be commenced in respect of entities to which the WURA applies by:
and insurance companies. 1.2 Types of Insolvency
Types of Voluntary and Involuntary Restructurings, Reorganisations, Insolvencies and Receiverships There are five main insolvency processes in Canada:
• bankruptcy proceedings under the BIA; • proposal proceedings under the BIA; • proceedings under the CCAA; • receiverships; and
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