Under the Companies' Creditors Arrangement Act it may be possible for a British Columbia business that carries debt of more than $5 million to establish protection from creditors. Among other things, that protection prevents creditors from petitioning the business into bankruptcy, seizing its property or otherwise trying to collect the money owed. While the stay that is issued is not permanent, it may be extended multiple times, provided certain qualifications are met.
In an earlier post we wrote about retailer Target Canada seeking protection from the court under the Companies' Creditors Arrangement Act. Following the closure of all of the retailer's stores, it proposed a recovery plan. In addition to suppliers to which money was owed, the plan also involved landlords unexpectedly impacted by the sudden closure.
Businesses in British Columbia that are struggling to get by financially should be aware that there are multiple options that may be available to resolve the issue. Seeking bankruptcy protection to avoid having to liquidate assets is one option. When this route is the one selected, there is a process in place that needs to be followed. Throughout that process a Licensed Insolvent Trustee will play a role.
While financial difficulties could mean the end to a company, in many cases a company in this situation has options that could keep it in business. Since the liquidation of a business in the course of a bankruptcy impacts not only that company and its employees, but its creditors and potentially their employees as well, exploring the options available to save a business is often best for all involved.