The different insolvency proceedings, such as bankruptcy designed to protect an insolvent debtor, may be difficult to understand by both debtors who wish to be discharged from their debts and creditors who fear that the debt due to them will be extinguished before being paid back in full.
The Bernier Fournier team can provide you with information concerning the legislation that governs bankruptcy and insolvency matters. This legislation notably includes the Bankruptcy and Insolvency Act1, the Companies’ Creditors Arrangement Act2, the Wage Earner Protection Program Act3, the Civil Code of Québec4 as well as the Code of Civil Procedure of Québec5.
First of all, it is very important to know that the law provides preventive procedures for debtors to wish to avoid bankruptcy. Good examples of these are the consumer proposal and the bankruptcy scheme.
When preventive procedures are neither desirable nor sufficient, bankruptcy proceedings may be initiated on the initiative of the creditors provided that the insolvent debtor has committed at least one of the acts of bankruptcy listed in the Bankruptcy and Insolvency Act6.
The initiation of one of the previously mentioned procedures results in consequences for the creditor. The main consequence is the suspension of all collection proceedings regarding a provable claim initiated by the creditor against the debtor7. The secured creditors are, however, an exception to this principle seeing as they may, under certain conditions, continue to exercise their recourses against the debtor8.
The Bernier Fournier team is committed to defending creditors’ rights to enable them to derogate from the suspension of procedures, whenever possible, or to start negotiations to ensure the collection of their debt by means of a guarantee given to the creditor, i.e., a security. In the event where the suspension of procedures is unavoidable, a proof of claim must be prepared and the creditor will eventually be called on to vote at a meeting of creditors. The Bernier Fournier team has the necessary expertise to represent creditors throughout this process and see that they obtain the highest possible market value for their debt.
Finally, there is a possibility that debtors will attempt to favour another creditor, for personal reasons, or simply try to escape their obligations. The Bankruptcy and Insolvency Act9 sets forth consequences notably in cases of preferential treatment in order to protect creditors’ rights. In addition, the discharge of the bankrupt does not release the latter from non-releasable debts. Thus, retaining the services of a lawyer of Bernier Fournier’s team could enable you to prevent your debtor from acting against your rights and to legally require that your debts be paid back to you.
We are fully aware that the bankruptcy of a debtor may be destabilizing for the creditor, and Berner Fournier’s informed team can make the difference. Please do not hesitate to contact us with respect to the following:
- Voluntary deposit
- Consumer proposal
- Bankruptcy scheme
- Interim receiver
- Initial bankruptcy event
- Secured creditor
- Ordinary creditor
- Worker debt
- Supplier debt
- Challenging a preferential treatment
- Discharge from bankruptcy and opposition thereto
- Non-releasable debts
- Business restructuring
1 Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3
2 Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36
3 Section 1, Wage Earner Protection Program Act, S.C. 2005, c. 47
4 Civil Code of Québec, CQLR c. CCQ-1991 (Already online)
5 Code of Civil Procedure, CQLR c. C-25.01 (Already online)
6 Section 42, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3
7 Section 69(1), Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3
8 Section 69(2), Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3
9 Section 96, Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3