Tag: corporate bankruptcies

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BANKRUPTCY LAWYER: IS ONE ESSENTIAL TO FILE FOR BANKRUPTCY IN ONTARIO?

bankruptcy lawyer
bankruptcy lawyer

Bankruptcy lawyer: Introduction

Step right into this week’s edition of Brandon’s Blog, where we’re embarking on a profound exploration. Our focus today delves into a crucial theme that carries substantial weight within the psyche of a myriad of Canadian consumers grappling with financial adversity, as well as Canadian business owners navigating their enterprises with too many business debts through fiscal quandaries. The question at the forefront: do the circumstances warrant enlisting the expertise of a bankruptcy lawyer when contemplations of insolvency filings in Canada take center stage?

Venturing through the intricate landscape of insolvency and the realms of personal or corporate bankruptcy has the potential to stir feelings of frustration and helplessness. This sentiment amplifies mainly when the trajectory of your personal or corporate fiscal destiny hangs in a precarious balance, swaying like a delicate pendulum. The gravity of making prudent choices during this trying juncture cannot be overstated. At its core, lies the quintessential need to not only identify the right course but also to discern the adept professional from whose wellspring of wisdom guidance should be sought.

In this Brandon’s Blog, I will outline the scenarios in which consulting with a bankruptcy lawyer is highly advised, but as you will see, it is not essential in every circumstance. Whether you are taking into consideration submitting a restructuring proposal or seeking bankruptcy protection, recognizing who to turn to for specialist assistance for legal and financial advice can substantially affect the result of your financial journey.

I will discuss the intricate details surrounding insolvency as well as bankruptcy law in Canada. By diving into the significance of professional assistance and support, I intend to equip you with the understanding needed to make enlightened decisions during this difficult phase. Join me as we decipher the secrets of insolvency and bankruptcy and empower ourselves to safeguard a better financial future.

Bankruptcy lawyer: Overview of the insolvency and bankruptcy process in Canada

The bankruptcy procedure in Canada is governed by the Bankruptcy and Insolvency Act (BIA). It is a legal statute developed to supply relief to people and companies that are unable to pay their financial obligations. The process always includes the services of a Licensed Insolvency Trustee that is responsible for administering the insolvency process.

The Licensed Insolvency Trustee is first required to assess the debtor’s entire financial situation, including the causes of the insolvency, the current financial position and the nature of the assets and liabilities of the debtor. The Licensed Insolvency Trustee then needs to make recommendations to the debtor to solve their current financial crisis. Once agreed on, what insolvency or bankruptcy process will be implemented, the BIA and the restructuring consumer proposal, Division I proposal or the bankruptcy, is put into operation to offer a fresh start for the debtor while making certain there is fair treatment for the creditors.

A Licensed Insolvency Trustee is the only professional licensed in Canada by the federal government to administer the Canadian insolvency process chosen. In many cases, the process can be carried out without the advice of a bankruptcy lawyer.

bankruptcy lawyer
bankruptcy lawyer

Bankruptcy lawyer: Formal insolvency options in Canada

Navigating the intricate labyrinth of bankruptcy within Canada unfurls as a legal undertaking of profound significance, extending its benevolent embrace to both individuals and enterprises ensnared within the inescapable clutches of their fiscal commitments. This orchestrated progression finds its regulatory compass in the venerable BIA, its vigilant guardianship entrusted to a duly licensed sentinel of fiscal adversity, recognized as a Trustee.

Commencing this odyssey, the debtor sets forth to formally lodge their supplication for bankruptcy, an entreaty promptly received by the Licensed Insolvency Trustee, who, in turn, undertakes the judicious scrutiny of the debtor’s economic constellations. From this intricate appraisal blooms a stratagem, a masterwork designed to navigate the undulating terrain of debt repayment, fostering equilibrium amid the ranks of creditors.

Through the procession of this intricate ballet, the debtor finds sanctuary from the clamorous onslaught of creditor collections, an ephemeral respite nestled within the folds of the overarching process. This respite, however, is not a sojourn of idle reprieve; it entails the debtor’s obligatory participation in the convocations of credit counsel, a didactic interlude intended to illuminate the labyrinthine corridors of fiscal wisdom.

Once the intricacies of this design garner the seal of approval, the gears of asset liquidation are set into motion, unfurling a cascade of transactions wherein the debtor’s holdings metamorphose into liquid currency, a tribute disseminated among the consortium of creditors who await their apportioned spoils.

The culmination of this voyage heralds the debtor’s liberation from the shackles of residual indebtedness, a phoenix rising from the embers of fiscal duress, reborn into a realm unburdened by the obligations that once ensnared them.

The formal insolvency options in Canada are described below.

Insolvency and debt relief solutions for individuals –

  • Restructuring by making monthly payments under a consumer proposal for those who owe $250,000 or less (not including any debts secured by and registered against a person’s residence).
  • Financial restructuring under a Division I proposal, for those who owe more than $250,000.
  • Personal bankruptcy.

Insolvency and debt relief options for companies –

  • Financial restructuring under a Division I proposal as an alternative to bankruptcy.
  • Sale of assets through a receivership enforcement process initiated by a secured creditor.
  • Restructuring for companies that owe $5 million or more under the Companies’ Creditors Arrangement Act (CCAA).
  • corporate/business bankruptcies..

In certain situations, looking for the advice of a Canadian bankruptcy lawyer is of utmost significance. An insolvency or bankruptcy filing is an intricate legal process that needs careful consideration of an individual’s financial scenario. A bankruptcy legal representative can assist with whether corporate or personal bankruptcy, as the case may be, is the best option, the kinds of insolvency processes readily available, and the connected lawful obligations and effects.

Furthermore, individuals can seek assistance from a bankruptcy lawyer to guide them through the legal procedures. It is highly recommended that consumer debtors seek advice from both a licensed insolvency trustee and a bankruptcy lawyer in certain circumstances. Some typical scenarios that warrant additional counsel from a bankruptcy lawyer well-versed in insolvency law include:

  1. They are involved in complex family law proceedings.
  2. There are one or more legal actions against you that allege unlawful behaviour, such as fraud or fraudulent misrepresentation or the conversion of someone else’s property, such as funds held in trust.
  3. The bankrupt’s application for discharge from bankruptcy is being opposed and therefore there will be a court hearing.
  4. Their financial situation is intertwined with other issues where confidential consultation with legal advice is required and that advice must be protected by solicitor-client privilege.
  5. There are special asset considerations where a privileged discussion with a bankruptcy lawyer is essential before seeking advice and assistance from a Licensed Insolvency Trustee.

In corporate insolvency situations, we always recommend that the Directors obtain legal advice from a bankruptcy lawyer in addition to the corporation obtaining legal assistance.

A bankruptcy lawyer can provide customized guidance in such touchy situations as well as representation to guarantee the most effective feasible outcome for their clients.

bankruptcy lawyer
bankruptcy lawyer

Can I file for bankruptcy without a bankruptcy lawyer in Canada?

While it is possible to declare bankruptcy without a bankruptcy lawyer in Canada, it is recommended to seek legal counsel for complex corporate and personal filings. Hiring a bankruptcy attorney supplies several advantages, including knowledge of insolvency legislation, assistance in more complex proceedings and guidance on unusual issues, specific unique creditor issues or claims and personal liability under any personal guarantees.

In addition, a bankruptcy lawyer can represent you in court proceedings such as with litigants who have obtained approval of the court to continue litigation against the debtor and on a personal bankruptcy discharge hearing. This will guarantee that your legal rights are safeguarded throughout the process. Therefore, in these kinds of consumer and corporate insolvency matters, it is smart to talk to a qualified bankruptcy lawyer to ensure a smoother and much more successful bankruptcy process in Canada.

Determining the necessity of enlisting the services of both a bankruptcy lawyer and a Licensed Insolvency Trustee: Is a bankruptcy lawyer required to initiate bankruptcy proceedings in Canada?

Filing for bankruptcy in Canada can be a complex as well as stressful process, however, as defined above, it is feasible to do it without the help of a bankruptcy lawyer. A bankruptcy lawyer cannot launch the bankruptcy process in Canada. In Canada, bankruptcy, as well as any other insolvency process, is launched and administered by Licensed Insolvency Trustees that are qualified and also supervised by the Office of the Superintendent of Bankruptcy (OSB). So when someone files for bankruptcy, it is done with a trustee in bankruptcy (this is the old name for a Licensed Insolvency Trustee).

Trustees are accountable for overseeing and handling the Canadian bankruptcy and insolvency procedures, including the liquidation of assets and the distribution of proceeds to creditors for unsecured debts. They additionally offer debtors financial counselling, therapy and support on how to handle their financial resources in the future. To end up being a Trustee, people need to satisfy particular educational and professional requirements, consisting of completing specialized training, courses and examinations. Thus, Canadians can trust that their insolvency, as well as personal bankruptcy procedures, are being managed by qualified and also experienced professionals.

Regardless of the guidance and aid regarding your financial affairs from a Licensed Insolvency Trustee before and also after the initiation of a financial restructuring or personal bankruptcy process, a Licensed Insolvency Trustee practically acts on behalf of the unsecured creditors. So, for circumstances like those described above, if any debtor has an extra complicated scenario, is associated with sticky scenarios or is concerned about the director or personal responsibility as a result of a business restructuring or bankruptcy, then the recommendations of a bankruptcy lawyer should be acquired before entering into any insolvency procedure.

bankruptcy lawyer
bankruptcy lawyer

Bankruptcy lawyer and a Licensed Insolvency Trustee: Determining the necessity of enlisting the services of both a bankruptcy lawyer and a Licensed Insolvency Trustee

There arise certain junctures where the imperative of engaging a proficient bankruptcy lawyer to adroitly navigate the intricate labyrinth of the Canadian bankruptcy process becomes unequivocal. As expounded upon earlier, should your fiscal panorama manifest intricacies reminiscent of a Byzantine tapestry, replete with an entanglement of debts and creditors, the tutelage and expertise proffered by a bankruptcy lawyer morph into an invaluable compass.

The determination of the exigency to enlist the services not only of a bankruptcy lawyer but also of a bankruptcy trustee constitutes a pivotal crossroads for both individuals and enterprises ensnared in the throes of financial quandaries. While a bankruptcy lawyer adroitly dispenses legal counsel and advocates in the corridors of justice, a bankruptcy trustee’s role expands to encompass the labyrinthine realm of debt reorganization, proposal filings, and the art of debt alchemy. Their convergence encapsulates a holistic stratagem in the pursuit of resolving the monetary labyrinth.

Grasping the complexity inherent in bankruptcy law is tantamount, and a seasoned bankruptcy lawyer deftly steers through the legal firmament, charting a course that aligns with the best nexus of legal tenets. Conversely, a Licensed Insolvency Trustee proffers a detached analysis of the financial constellation, endowing clients with an array of options extending beyond the binary realm of bankruptcy and answering any questions about bankruptcy you may have.

At its essence, the verdict to summon forth both the prowess of a bankruptcy lawyer and the sagacity of a Trustee should hinge upon the unique tapestry woven by individual circumstances and the crystalline aspirations of the client. Ultimately, it comes down to the complexity and sensitivity of the person’s or company’s overall situation.

How to find a qualified bankruptcy lawyer or Licensed Insolvency Trustee in Ontario

When confronted with financial troubles in Canada, it’s important to make informed choices. If you’re thinking about bankruptcy, it’s smart to seek guidance from a Licensed Insolvency Trustee. These professionals can assist you through the intricate procedure and also give important understanding.

For those with especially complicated financial circumstances, or who is a corporate director of an insolvency company, it might be essential to employ the help of a seasoned bankruptcy lawyer.

Starting your search for trustworthy professionals can be frustrating. Nonetheless, a calculated strategy can aid. Begin by discovering the Law Society of Ontario’s website, where you’ll discover a comprehensive list of competent legal experts that concentrate on bankruptcy and insolvency.

To locate a bankruptcy trustee near you, explore the computerized database of the OSB. This will certainly give a list of bankruptcy trustees in your locale to seek insight, advice and assistance. For both a bankruptcy lawyer as well as a Trustee, it is essential to engage in a comprehensive conversation with any prospective advisor, delving into their specialist background, navigational technique, and cost structure.

Efficiency is not the only aspect to think about; reliability and also the personal vibe you get from that person to see if you make a connection are likewise essential elements that need to inform your decision. By locating an ally who can give adept support throughout this challenging period, you can navigate this hard juncture with greater ease as well as confidence.

Finally, check out Google and other online reviews. There is nothing better than reviews from people who were in your shoes before and sought assistance from a Licensed Trustee, bankruptcy lawyer or both. Their experience and insight into specific professionals will help you immensely. Things to look for include:

  1. What service did they perform for the person?
  2. Does the reviewer live in your general area?
  3. Did the professional do a good job?
  4. What were some of the reviewer’s favourite things in working with that professional?
  5. Did they work with any specific people in the firm that they highly recommend?
  6. How did the Licensed Insolvency Trustee or bankruptcy lawyer they chose to compare to others they may have consulted with?
  7. Are there any tips the reviewer offers to others?

Bankruptcy lawyer: Conclusion

Looking for legal advice when considering bankruptcy is not needed in every scenario. However, it is necessary when it concerns complicated plans. Hiring a qualified bankruptcy lawyer can provide countless benefits. They have the proficiency as well as knowledge to advise you before embarking on a bankruptcy process and afterwards to assist you with the whole procedure.

When considering filing an assignment in bankruptcy in Canada, it is crucial to comprehend the complexities of the process and also the potential effects. While it may be possible to navigate through it without an insolvency lawyer, talking to one will supply the specialist expertise necessary to guarantee a smooth and efficient process when you have complex or unique issues in your situation.

From evaluating your financial situation to exploring alternatives such as a restructuring proposal, a bankruptcy lawyer can direct you through the legal puzzle and also suggest the most ideal strategy. When it concerns matters as substantial as bankruptcy, seeking expert help is a sensible choice to secure your best interests and also secure a fresh financial start.

I hope you enjoyed this bankruptcy lawyer Brandon’s Blog. Problems with making ends meet are a growing concern in Canada, affecting individuals of all ages and income levels.

Creating a solid financial plan can be the key to unlocking a brighter and more prosperous future. By taking control of your finances, you can prioritize your expenses, set clear financial goals, and build a strong foundation for your dreams to come true. With the right mindset and approach, financial planning can empower you to regain control, eliminate this issue as a source of stress in your life and find peace of mind.

Individuals must take proactive measures to address financial difficulties and promptly seek assistance when necessary. It is crucial to recognize that financial stress is a prevalent concern and seeking help is a demonstration of fortitude, rather than vulnerability. Should you encounter challenges in managing your finances and find yourself burdened by stress, do not delay in pursuing aid.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses with debt problems that are in financial distress. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns are obviously on your mind.

The Ira Smith Team understands these financial health concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own and it does not mean that you are a bad person. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team uses innovative and cutting-edge methodologies, to adeptly navigate you through the intricacies of your financial challenges, ensuring a resolution to your debt-related predicaments without resorting to the rigours of the bankruptcy process. We can get you debt relief now!

We have helped many entrepreneurs and their insolvent companies who thought that consulting with a Trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, Starting Over, Starting Now.

bankruptcy lawyer
bankruptcy lawyer

 

 

 

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PENSIONS IN BANKRUPTCY: FEDERAL CONSERVATIVE PARTY PROMISE MASSIVE CANADIAN WORKER PENSION PROTECT1ON

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

 

Pension & Bankruptcy in Canada

Underfunding is a major concern for traditional, defined-benefit pension plans. In other words, do they have enough pension assets and therefore enough money to meet their projected future pension obligations? Inadequate actuarial assumptions, poor investment returns, and mismanagement can lead to pension plan underfunding. In the case of corporate insolvency of a large employer with a defined-benefit pension plan, this issue always arises. Underfunded pensions in bankruptcy wind up hurting retirees.

The Sears Canada court-supervised liquidation forced us to again focus on the treatment of pensioners in corporate bankruptcies under the Bankruptcy and Insolvency Act (Canada) (BIA) or restructurings and liquidations under the Companies’ Creditors Arrangement Act (CCAA). It was widely reported that representative for 17,000 Sears Canada retirees says insolvency laws are unjust when it comes to underfunded pensions.

PM Justin Trudeau is the only person who wants this election right now. Erin O’Toole, leader of the Conservative Party, promised to prioritize pensioners ahead of companies and creditors during bankruptcy and restructuring proceedings if he were elected.

This Brandon Blog discusses the issue of pensions in bankruptcy and how the Liberals had several opportunities to fix it but did not.

Pensions in bankruptcy: Pension and benefits issues in bankruptcy and restructuring

Pensioners suffer pension losses and ultimately pension income losses when a company is insolvent and its defined benefit pension fund plan is underfunded. In practice, the pensioners’ rights are weak and highly inadequate, especially when pension plans are underfunded. Although provincial and federal government pension legislation purports to offer some protection for amounts owing to an underfunded pension plan, insolvency legislation does not preserve that protection for the majority of those amounts. The insolvency protection of pensioners and pensions in bankruptcy is thus largely illusory.

Founder and Director of the National Centre for Business Law, Dr. Janis Sarra teaches law at Peter A. Allard School of Law. Canadian pensioners and employees, she believes, are among the worst protected pensions in bankruptcy and/or in insolvency among 60 countries.

In every Canadian province and territory, pensioners are protected by law in connection with pension deficits and pension payments. Specifically, every jurisdiction grants a deemed trust to protect employee pensions earned on employer assets owed to pension plans. The Pension Benefits Standards Act, which governs federally regulated pension plans, specifies the amounts that must be held separately from the employer’s funds, for example. Funds held in trust for active and retired pension plan members are not considered a part of the employer’s estate in liquidation or bankruptcy.

Under the Pension Benefits Act in Ontario, employers are required to hold all amounts owing to the pension plan in trust on behalf of their employees. According to the Supreme Court of Canada, the Ontario Pension Benefits Act creates a deemed trust over the entire wind-up deficit, subject only to the doctrine of paramountcy. Therefore, Ontario’s pension legislation expressly recognizes that the deemed trust is covered by all amounts of the employer owing to the pension plan.

The pension legislation in Quebec confers a deemed trust on special payments due in the year of insolvency. The special payments already due are deemed to be in trust, and the amount owing to the pension plan for unpaid special payments is deemed to be in trust based on Quebec’s pension law.

Due to other judicial decisions not giving effect to these deemed trusts in BIA and CCAA proceedings, the federal and provincial pension legislation has been hindered. In the meantime, to the extent that the BIA and CCAA protect pensions, the protection is negligible in practice. In Ontario (and every other province), provincial law protections are subject to the doctrine of paramountcy.

Paramountcy says that in the conflict between federal and provincial laws, federal law takes precedence. Both the BIA and CCAA are federal laws. The Supreme Court of Canada has held that provincial deemed trusts are not applicable to bankruptcy cases unless the BIA expressly permits them. There have even been successful attacks on federal pension law.

In accordance with existing regulations, the secured creditors may receive funds that would otherwise go to employees’ pension plans. Therefore, there really isn’t much protection for pensions in bankruptcy.

pensions in bankruptcy
pensions in bankruptcy

Pensions in bankruptcy: PM Justin Trudeau had his chance to fix this problem

Erin O’Toole doesn’t seem to be bringing up a new subject. The Liberal federal government had at least three chances to fix this pension issue for Canadian workers whose employers become financially troubled and have to liquidate or file for bankruptcy. A brief look at the recent history follows.

Let’s look at some history of attempts to protect pensions in bankruptcy. The Canadian Association for Retired Persons, a nationwide not-for-profit group, lobbied politicians on Parliament Hill about legislation changes. According to Wanda Morris, vice-president of CARP, the unfunded pension liability should be given priority so that it is handled first.

There is no priority for retirees when it comes to dividing up assets in bankruptcy, and Morris wants to protect underfunded defined benefit pensions when the company goes through restructuring or bankruptcy.

CARP estimates that roughly 1.3 million Canadians, aside from the retired Sears employees, may be at risk due to defined benefit pension plans. The closure of Sears Canada stores made the plight of retirees a top priority for CARP.

Marilène Gill, Bloc Québécois MP, introduced a member’s BILL C-372, on Oct. 17, 2017. It was intended to change the BIA and the CCAA. The change seeks to correct the injustice faced by retired workers whose pension and insurance policy benefits are not secured when their company declares bankruptcy or undergoes restructuring. As a result of Sears Canada closing locations, the changes were related to the employees’ and retirees’ treatment.

On October 17, 2017, Bill C-372 passed First Reading. The House rarely passes private member’s bills like this one. The Liberal Party did not support taking it further and allowed it to die.

Hamilton Mountain NDP MP Scott Duvall asked for leave to introduce Bill C-384 in the House of Commons on November 6, 2017. He proposed amending Canada’s insolvency laws so that companies must bring any pension fund to 100% before paying any other secured creditors. Additionally, it requires companies to pay termination or severance pay owing before paying secured creditors. Similarly, this bill passed first reading and then died.

Lastly, Senator Art Eggleton, P.C., proposed BILL S-253 shortly before his retirement to amend the insolvency legislation in Canada. After First Reading passed on September 18, 2018, Second Reading followed on September 25. By introducing this bill, the BIA and CCAA would be amended. The plan proposed to give priority to claims for unfunded obligations or solvency deficiencies of pensions. This is applicable to both solvent companies as well as companies that might become insolvent if certain shareholder payments were made.

The proposed legislation would also amend the Pension Benefits Standards Act as well as the Pension Benefits Standards Regulations in order to enable the Superintendent of Financial Institutions to identify when a pension plan’s funding is impaired and to recommend to the employer the necessary steps to fix it. It is not surprising that the Liberal federal government did not carry forward this bill.

Pensions in bankruptcy: Erin O’Toole vows to force bankrupt firms to pay pensions over executive bonuses

The Hon. Erin O’Toole announced on August 24, 2021, that if he wins the election he plans to protect workers’ pensions. In bankruptcy and restructuring proceedings, he pledges to give priority to pensioners over the corporations and most other creditors.

According to him, as part of Canada’s Recovery Plan, a Conservative government will change the law to ensure that workers come first in cases of bankruptcy and reorganization.

The Conservative Party of Canada will also improve pension security by:

  • Preventing executives from receiving bonuses during a time of restructuring unless the pension plan is fully funded.
  • Unlike in the past, underfunded pension plans will no longer be forced to convert to annuities, a practice that involves financial assets being disposed of and replaced with an insurance contract to reduce risks, as well as offer pensioners, fixed payments. The practice of companies failing during a recession when markets are depressed usually locks in losses and means workers receive less money.
  • By mandating that companies report the funding status of their pension plans to their employees, they can provide their employees with greater transparency.

No further details were given. At least the Conservative Party is focused on this issue of when an employer is insolvent and there are pensions in bankruptcy.

pensions in bankruptcy
pensions in bankruptcy

Pensions in bankruptcy: Summary

We will have to wait to see the results of this election to know if anything might change when it comes to pensions in bankruptcy of the employer.

I hope that you found this pensions in bankruptcy Brandon Blog informative. An unexpected situation, such as your employer having financial trouble and entering liquidation or bankruptcy proceedings, by their very nature, are not pleasant and could have the effect of making your debt load now impossible to service. There are several insolvency processes available to a person or company with too much debt. You may not need to file for bankruptcy.

If you are concerned because you or your business are dealing with substantial debt challenges, you need debt help and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties with debt relief options as an alternative to bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people with credit cards maxed out and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do as we know the alternatives to bankruptcy. We help many people and companies stay clear of filing an assignment in bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

pensions in bankruptcy
pensions in bankruptcy
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HOW HERTZ TEACHES US MODERN AND RISKY RULES OF BUSINESS BANKRUPTCY IN CANADA AND THE USA

business bankruptcy in canada
business bankruptcy in canada

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Stay healthy, well balanced and safe and secure everyone.

If you would prefer to listen to the audio version of this business bankruptcy in Canada and the USA Brandon’s Blog, please scroll to the bottom and click play on the podcast.

Business bankruptcy in Canada Introduction

Late in the day on Friday, May 22, 2020, Hertz Global Holdings Inc. (Hertz) filed for Chapter 11 bankruptcy in Delaware. The filing gives Hertz some breathing room to operate its business. During this time, Hertz also needs to come up with a business turnaround plan and a debt restructuring plan that creditors can support. The movement of Hertz stock last week teaches us some modern and risky rules of business bankruptcy in Canada and the United States.

Corporate bankruptcies and the Hertz investors

Hertz stock closed on the NASDAQ exchange on May 22 at US$2.84. It dipped to a low of US$0.40 on May 26. Legendary investor Carl Icahn sold all of his Hertz shares at an average price of $0.72. He dumped his 39% stake in Hertz at a loss of nearly $2 billion. Last Friday Hertz shares closed at US$2.57 per share. This morning, the trading touched US$3.40 per share.

So Hertz is up handsomely since May 26. Hertz has filed for bankruptcy protection. It doesn’t make sense that investors should be pushing the stock up. Hertz is selling off its fleet and further depressing the used car market. So far there is no indication that a business plan and debt reduction plan has been developed, let alone accepted by the creditors.

As far as assets, they have locations and a database of customers. But every major rental car company also has locations and a database. Whenever business and leisure travel resumes to pre-COVID-19 levels, if you can’t rent a car from Hertz you will rent it from a different company. So what are the non-fleet assets worth?

So on the surface, the investor money finding a home in Hertz stock and pushing up the stock price doesn’t make sense. So, are there savvy investors getting into Hertz or are they all just following the herd and will all end up losers?

Why Hertz filed for Chapter 11 bankruptcy protection

Since 2014, Hertz has had four different CEOs. It is difficult to develop and implement a cohesive business strategy with such turmoil in the senior management ranks. As the coronavirus pandemic brought travelling to a sudden halt, Hertz suffered dramatically as a mass of its revenue depended on business travellers and vacationers renting vehicles when arriving at their destination airport. Nobody knows how long it will take until travel gets back to where it was and what Hertz needs it to be.

Hertz’s debt has been increasing as it invested heavily in its vehicle fleet. They may have also missed the mark in the mix of vehicles consumers want, requiring it to take on even more debt to make further fleet purchases. Hertz could no longer afford to make the interest payments on its debt load. At the time of its bankruptcy filing, Hertz had US$1 billion of cash and US$13 billion of debt.

The $13 billion in financing Hertz made use of to acquire its fleet of 500,000 automobiles. The financing was done via what is known as asset-backed securities. These are connected straight to the value of the vehicles. When the value of the cars drops, Hertz must make up the difference in cash within about three months, unless values rebound before that time.

However, with the coronavirus pounding the brakes on the economy and eliminating employment for so many, the drop in the value of used vehicles is expected to remain that way for a long time. Hertz knew that it could not make up the difference to its lenders when they made a demand, which was their right. Hence the bankruptcy filing.

The modern risky rules of investing in business bankruptcy in Canada and the USA

Normally, in a public company restructuring, it is not only the creditors that take a hit. Shareholders usually get a good drubbing. Share values fall and new shares are issued to raise capital. This further dilutes the holdings and value of those holdings for shareholders. But investors must believe that Hertz will come back. How else can you explain the surge in the share price?

Before this year, the company had ten consecutive quarters of positive growth. They were still losing money, just not as much. Investors must believe that Hertz will be able to survive. They must believe that the company although leaner and smaller, this is the time to jump on an opportunity to make money.

I am not a financial advisor, I am not saying whether this is a good or bad investment. It certainly is a very risky one. All I am saying is that as a licensed insolvency trustee (formerly called a trustee in bankruptcy) administering business bankruptcy in Canada, this does not make any sense to me.

I guess only time will tell if these investors pushing up the stock price are insightful risk-takers or losers. Carl Icahn doesn’t believe it.

Business bankruptcy in Canada and the USA summary

I hope you have found this business bankruptcy in Canada and the USA Brandon’s Blog helpful.

The Ira Smith Team family hopes that you and your family members are remaining secure, healthy and well-balanced. Our hearts go out to every person that has been affected either via misfortune or inconvenience.

We all must help each other to stop the spread of the coronavirus. Social distancing and self-quarantining are sacrifices that are not optional. Families are separated from each other. We look forward to the time when life can return to something near to typical and we can all be together once again.

Ira Smith Trustee & Receiver Inc. has constantly used clean, safe and secure ways in our professional firm and we continue to do so.

Revenue and cash flow shortages are critical issues facing entrepreneurs and their companies and businesses. This is especially true these days.

If anyone needs our assistance for debt relief Canada COVID, or you just need some answers for questions that are bothering you, feel confident that Ira or Brandon can still assist you. Telephone consultations and/or virtual conferences are readily available for anyone feeling the need to discuss their personal or company situation.

The Ira Smith Team is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Stay healthy, well balanced and safe and secure everyone.

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WHAT ARE THE BEST CORPORATE BANKRUPTCIES?

corporate bankruptcies

If you would prefer to listen to the podcast of this corporate bankruptcies Brandon’s Blog, please scroll to the bottom of the page and click on the audio file.

Best corporate bankruptcies: Introduction

Who would think that I could write a blog about the best business failures? Corporate bankruptcy is normally associated with job loss, creditors and investors or shareholders losing out and liquidation.

This is true. But once in a while, corporate insolvency can also be used to end the life of a very financially sick corporation so that a new company can rise from the ashes and offer jobs to the affected employees of the bankrupt company. The story of the ServiCom bankruptcy is an example of the best possible outcome. Here is its story.

Best corporate bankruptcies: The ServiCom shutdown

On Thursday, December 6, 2018, the bankruptcy of the parent company of the ServiCom phone call center in Cape Breton closed it down without warning. It made 600+ Cape Bretoners immediately unemployed less than three weeks before Christmas.

Numerous people were out of a job after layoffs at the Sydney, N.S. telephone call centres over that weekend. The staff members at ServiCom expected to begin their week like they would any other Monday. On Saturday, the news broke that the company had suddenly laid off their staff members. Instead of working, they located themselves applying for unemployment and trying to find jobs.

“We were told to log off and then suddenly we don’t have a job” claimed one former employee. That Saturday, the telephone call centre notified the employees of the information that they no longer had work.

There was no notice for the layoff of this real number of employees. Accordingly, social agencies were incapable to set up conferences or job fairs to aid displaced staff members.

Best corporate bankruptcies: It was tough

Employees like Jamie Barbara were trying to stay positive in light of the problem. “Relieved, relieved now,” she said. “I can go on about my life and look for a job even harder than I was before”.

It was a tough several weeks for ServiCom employees. Many of the workers waited outside the Salvation Army to get a Christmas grocery order. Just before Christmas, that despair has transformed to delight. They obtained good news. Many people were thinking about bankruptcy.

Best corporate bankruptcies: A Christmas miracle

The workers were praying for a Christmas miracle and it arrived 13 days after ServiCom closed its doors.

An American business person, Anthony Marlowe, bought the assets of the bankrupt company for $1.5 million. The workers were thrilled that Mr. Marlowe was entering Sydney, N.S. and taking over. Mr. Marlowe started his career in outbound telemarketing as a call centre supervisor. Currently, he owns many call centre companies.

Todd Riley, the former manager of ServiCom in Sydney is now the Vice President of the new Sydney Call Centre. He claims they’ll be open for service and previous staff members are welcome. All of them will have their jobs back. There could be a couple of transfers from one program to another, however, everybody that was on the payroll will certainly be back.

Best business insolvencies: When jobs are saved

The telephone call centre now operates as the Sydney Call Centre and is owned by Mr. Marlowe’s company, MCI Canada. The excellent news is that he is seeking to expand the business.

Georgina Stuart is just one of many previous phone call center employees that were expecting to return to work in the New Year. “It’s just fantastic that we’ve got hope and work in the future, yes it absolutely does, so we’re looking forward to 2019.”.

There is now a feeling of relief. It was absolutely a roller coaster of feelings for the ServiCom employees. The Sydney Call Centre employees are thrilled to be back to continue their good work.

The building still had the ServiCom name on it when the employees returned. However, it absolutely is currently the Sydney Call Centre sustaining United States telecom AT&T as well as GM’s OnStar service, with much more business to hopefully come.

So, if anyone ever tells you that there is no such thing as best business insolvencies you can tell them this story.

Best business insolvencies: What about your company?

Does your company have excessive debt? Is the business viable but the corporate body is too sick to continue? Is your business in danger of shutting down? Will employees who have become like family be out of a job? Are the pain, stress, and anxiety currently adversely influencing your health and wellness?

If so, contact the Ira Smith Team today. We have years and generations of helping people and businesses seeking financial restructuring. As a licensed insolvency trustee, we are the only specialists certified and overseen by the Federal government to offer financial restructuring solutions.

We provide a free consultation to assist you to solve your problems. We know the discomfort financial obligations causes. The Ira Smith Team can end it as soon as possible from your life. This will permit you to start a fresh start, Starting Over Starting Now.

Call the Ira Smith Team today so that we can start helping you get back into a healthy and balanced, stress-free life.

 

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FINANCIAL DISASTER PREPAREDNESS: 4 STEP PLAN TO STOP FINANCIAL DISASTER

Financial disaster preparedness: Introduction

The people drowning in debt are always scared of the thought of speaking to a licensed insolvency trustee (formerly known as a bankruptcy trustee (Trustee). The purpose of this Brandon’s Blog is to allow me, a Trustee, to give you some basic points on financial disaster preparedness in a non-scary way. Hopefully, it can help you avoid a financial disaster.

On the 27th day of the United States Federal government closure, many federal employees that are already under money stress and anxiety are not surprisingly asking whether an insolvency proceeding is the only alternative.

These people did not ask for this. Although they will eventually receive all their back pay, that doesn’t help their cash flow today.

Some personal bankruptcies are started by events beyond somebody’s control. The US government shutdown is such an example. Alternatively, unlike the shutdown, a number are completely within an individual’s control.

Here are four ideas on just how to maintain your finances from falling off the edge right into insolvency.

Financial disaster preparedness: #1 – Keep an eye on your credit cards

Try to pay your monthly credit card bill, and all your expenses, on or before their due date. If timely payments cannot happen, pay it back asap or arrange a repayment strategy to decrease late charges as well as interest charges.

Never ever carry over a credit card balance. Attempt to pay your balances, including all your expenses, promptly.

Similarly, be conscientious what your credit history is. Almost every person will certainly have a time in their lives when they’ll need to borrow cash for some major expenditure.

Your credit score will affect the borrowing rates you are offered. Knowing one’s credit history can aid people to make a better decision on when to jump, or hold back, on a choice to borrow.

Financial disaster preparedness: #2 – Know your monthly expenses (and savings too)

When I do credit counselling and speak to people about loan basics, I discuss spending behaviours and always talk about the difference between wants and needs. I always encourage people striving for economic self-reliance to begin with a straightforward exercise: document every single expense in a month.

By mapping out all the spending, people can rank where their cash should, as well as shouldn’t, be going. For example keep an eye out for the daily latte, which is a habit because, it builds up, A more expensive specialty coffee is a want, not a need. A less expensive plain coffee could suffice.

There is one routine I always urge. Make a routine that you will set aside a particular percentage of your income for an emergency fund. The same goes for socking away, at the very least a little, to an RRSP. Work these savings into your budget.

In my experience, all consumer insolvencies commonly entail inadequate financial savings to cover the unanticipated. This is a common problem among Canadians that I have previously written about in my blogs.

Credit cards are also a significant cause of personal insolvencies. Many of our personal insolvency clients use credit cards to supplement their income. Rather than budgeting, they use their credit cards for various expenditures that they really cannot afford and are unable to pay down their credit card balances.

Financial disaster preparedness: #3 – Boost your financial literacy

There are various ways to begin early in life to prevent financial disaster problems. If these guidelines sound familiar, that’s because they are. However, yet few individuals appreciate them. That’s partly because they’re not taught it in the schools.

Canadians have a financial literacy problem. Many people think that some people are born rich and others aren’t. The reality is that those who are well off just have a more realistic understanding about spending and saving within one’s earnings.

Financial literacy, like civics education, needs to be a requirement in all elementary school, high school and university educational programs.

Financial disaster preparedness: #4 – Preserve your financial self-reliance


Those who lived through the great depression understand how fragile funds can be. Clipping coupons and looking for the most affordable prices is just part of their normal behaviour.

Insolvency filings have been at their lowest point since 2007, and there are varying explanations for the decline.

During the last decade, Canadians have amassed debt. Now that interest rates are rising, it is expected that personal insolvency filings will rise. Personal insolvencies will be more a part of our world as a result of unexpected disasters and negative decisions.

Corporate bankruptcies will always be a part of the system as markets change and businesses experience threats they cannot survive.

We must all be financially vigilant. I hope these tips will help you in avoiding any form of financial distress.

Financial disaster preparedness: What about you?

Do you have excessive debt? Are you in need of financial disaster preparedness? Does your business have way too much financial debt and is in danger of shutting down? Are you concerned that the future rate of interest hikes will make currently workable financial obligations totally uncontrollable? Is the pain, stress and anxiety currently adversely influencing your health and wellness?

If so, contact the Ira Smith Team today. We have years and generations of helping people and businesses seeking financial restructuring. As a licensed insolvency trustee, we are the only specialists certified and overseen by the Federal government to offer financial restructuring solutions.

We provide a free consultation to assist you to solve your problems. We know the discomfort financial obligations causes. We can end it as soon as possible from your life. This will permit you to start a fresh start, Starting Over Starting Now.

Call the Ira Smith Team today so that we can start helping you get back into a healthy and balanced, stress-free life.

financial disaster preparedness

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CAN YOU FILE PERSONAL AND CORPORATE BANKRUPTCY? SMALL BUSINESS OPTIONS

Can you file personal and corporate bankruptcy: Introduction

Can you file personal and corporate bankruptcy is a question all small business owners ask us when they come to our office for a free consultation. We discuss local business bankruptcy with entrepreneurs in our office. Their personal and business lives are intertwined. There’s very little distinction between the individual their small business.

This is especially true if their business in unincorporated and is being operated as a proprietorship. Our role is to first understand them as a person and as a business separately. This way we can give the best possible advice. If the business is a proprietorship, then we are only talking personal bankruptcy, or alternatives to avoid bankruptcy, such as a consumer proposal or restructuring proposal.

If their business legal form is that of a corporation, then we look at both the corporate and personal issues separately. The reason for this is because in the eyes of the law, the corporation and the individual are separate people. Many times it is not necessary for both the corporation and the individual to each file an insolvency process. Maybe only one has to.

Separating your business and personal assets and liabilities is a great reason for incorporating your business. When discussing bankrupting an incorporated company, we also need to consider if there are any Director liabilities. We must also consider the owner’s personal situation. This is so we can make sure they do not do themselves more personal harm than good. We also first look to see if there is a way to restructure and save the corporation.

Can you file personal and corporate bankruptcy: What is bankruptcy

Bankruptcy is a lawful method for the honest but unfortunate company or person to get a remedy from the burden of the financial debts that cannot be repaid. When an assignment in bankruptcy is submitted a “stay of proceedings” is invoked.

What the stay of proceedings means

The stay of proceedings results in stopping creditors from beginning or continuing with litigation against the company or person. The stay of proceedings also stops an unsecured creditor who has obtained a judgement. It stops them from garnishing funds from a bank account or part of the person’s wages.

For unsecured creditors, the stay of proceedings also calls a timeout to make sure that one unsecured creditor does not get a benefit over others in regards to the settlement of financial obligations. Keep in mind that the bankruptcy process could also be started by one or more unsecured creditors. They must be owed at least $1,000 in total.

can you file personal and corporate bankruptcy

Can creditors push you into bankruptcy?

The unsecured creditor(s) could file a motion with the Court requesting that a Bankruptcy Order be issued against the company or person. The method of bankrupting a corporation in Canada is the same as that of a person. In addition to being able to prove that the company or person owes this unsecured creditor or group at least $1,000, they also need to prove that at least one act of bankruptcy has been committed in the 6 months prior to the filing of the motion.

The Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) identifies the various acts of bankruptcy. The most common one is “ceases to meet his liabilities generally as they become due”.

Secured creditors are generally not impacted by bankruptcy. They can realize upon the assets of the company or person covered by the security. In return for the original loan, the lender required that the borrower put up the security as a condition of the loan. The reason for this was so that if insolvency happens, the lender could sell the assets to try to repay the loan, interest and costs.

The secured creditor only really takes part in the bankruptcy process if after they have sold all the assets covered by their security, they are still owed money. The balance they are still owed is an unsecured debt.

Personal bankruptcy

If an individual’s business is a single proprietorship or a partnership, but not a corporation, legally, the person or people are also the business. So when they deal with the possibility of bankruptcy, all their assets are included, subject to provincial exemptions. Simply put, the assets of the business are not held different from their individual assets, so a small business bankruptcy of this kind is personal bankruptcy.

Where does Canada Revenue Agency fit in?

There are generally 3 types of claims that Canada Revenue Agency (CRA) has against a business. It does not matter if the business is incorporated or is a sole proprietorship.

The 3 kinds of CRA claims generally are:

  1. Unremitted source deductions from employee payroll
  2. Net HST owing
  3. Unpaid income tax from profitable years

Both the HST liability and income tax, in a bankruptcy, is an unsecured claim. However, the HST liability is also a personal claim against the Director(s) of a corporation. Unremitted source deductions are both a deemed trust claim against the bankrupt’s assets and in the case of a corporation, a personal claim against the Director(s) of the company.

When we do our first consultation with a business owner, when the business is run in a corporation, whenever unremitted source deductions or HST is involved, this always leads to a talk about the person’s situation in the event CRA would make a claim against the Director.

Some bankruptcy statistics

According to the Office of the Superintendent of Bankruptcy Canada, for the 12 months ending September 30, 2017, there were 125,912 insolvencies in Canada. This is a decrease of 3% over the same time period a year earlier. Consumer insolvency filings were 122,296 or 97.1% of total filings. The consumer filings were split into 59,192 bankruptcies and 63,104 consumer proposals – roughly half and half.

Business insolvency filings for the same time period in all of Canada totalled 3,616, a decrease of 8.1% from the 12 month period one year earlier. Business insolvency filings were split into 2,719 bankruptcies and 897 proposals. These statistics do not include filings by very large corporations under the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36).

As you can see, for a country the size of Canada, there were not a lot of business insolvencies during the first 9 months of 2017. The consumer filings were split roughly even between bankruptcy and a consumer proposal, the best consumer bankruptcy alternative.

Alternatives to Declaring Bankruptcy

A consumer proposal entails paying back a part of your financial debts in return for your unsecured creditors forgiving the remaining balance owing. A consumer proposal provides a significant benefit for a proprietor or partner in an unincorporated business. Unlike in a bankruptcy, your assets are not available for seizure by the licensed insolvency trustee (LIT).

You can take up to 60 months to pay off your consumer proposal. How much you will have to offer your creditors depends on what the unsecured creditors could expect in your bankruptcy. Working with a LIT, you work out that amount through discussion and analysis. A LIT can explain the entire process to you.

From a financial viewpoint, a consumer proposal is better than your bankruptcy because it permits the unsecured creditors to recoup a larger part of the debt than they would receive in your bankruptcy.

What is best for you and your business?

If you find you or your business is in a financial danger zone, contact Ira Smith Trustee & Receiver Inc. We’re full-service insolvency and financial restructuring practice serving companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now.

Your financial problems can be solved with immediate action and the right plan. Give us a call today.

can you file personal and corporate bankruptcy
can you file personal and corporate bankruptcy
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