Bankruptcy and Restructuring

Expertises connexes

The different insolvency proceedings available under Canadian law—including bankruptcy, consumer proposals, and restructuring processes—can often seem complex and overwhelming, both for debtors seeking relief from unmanageable debts and for creditors trying to recover money owed to them. These legal mechanisms aim to strike a balance between providing a fresh financial start to honest but unfortunate debtors and ensuring fair treatment for all creditors involved.

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 Procedure⁵.

Alternatives to Bankruptcy: Preventive Measures for Debtors

First of all, it is very important to know that the law provides preventive measures for debtors who 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.

Bankruptcy Proceedings: Consequences for Creditors

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.

Protecting Creditor Rights: How Bernier Fournier Can Help

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.

Preferential Treatment and Non-Releasable Debts

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.

Bernier Fournier: Your Partner in Insolvency Matters

We are fully aware that the bankruptcy of a debtor may be destabilizing for the creditor, and Bernier 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 Wage Earner Protection Program Act, S.C. 2005, c. 4, s. 1.
⁴ Civil Code of Québec, CQLR c. CCQ-1991.
⁵ Code of Civil Procedure, CQLR c. C-25.01.
⁶ Bankruptcy and Insolvency Act, prec., note 1, s. 42.
⁷ Id., s. 69(1).
⁸Id., s. 69(2).
⁹Id., s. 96.