When a borrower defaults on its loan, the lender or other secured creditor may decide that the time has come to take action and exercise its rights against the borrower's assets. One of those rights is to appoint a receiver to take possession of the debtor's assets and liquidate them to satisfy the debt owed.
Bankruptcy and "bankruptcy protection" are two options open to a business that finds itself in dire financial straits. Although similar in name, the two terms differ greatly in purpose.
For individuals up against an insurmountable wall of debt, bankruptcy offers relief: After the Court grants an order of discharge, the debtor is released from creditors' claims. But exceptions exist, as set out under Section 178(1) of Canada's Bankruptcy and Insolvency Act (BIA). Debts falling into one of these classes of claims survive bankruptcy and shadow a debtor for life until paid in full.
The terms "bankruptcy" and "insolvency" are often used interchangeably in normal conversation, but they are different. Insolvency