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COVID-19 FAQ: Access to the Courts for Insolvency Matters

Question:

“I’ve heard the courts are closed during the COVID-19 crisis. Can anything be done to help my business?”

Answer:

At present, the Supreme Court of British Columbia is open for limited purposes. The Court will hear essential and urgent matters in a variety of areas, which include some types of insolvency applications.

However, courts not the only option for dealing with insolvency issues. Creditors and debtors can work together to address short-term and medium-term solutions. For example, negotiating payment options may achieve a short-term solution. Where more is required, a forbearance agreement may give a debtor more breathing room.

And even where a formal insolvency procedure is required, not all such procedures require court involvement. For example, troubled businesses can “stay” their creditors, even their secured creditors, and gain essential breathing room by filing a Notice of Intention to Make a Proposal (“NOI”) under the Bankruptcy and Insolvency Act. This is done through a licenced insolvency trustee, and does not require court involvement. Some insolvency processes still require court orders, and where that is the case, many will be considered urgent and therefore the sort of application that the Court will consider. Under changes brought in late last week, the court process for requesting an urgent application now specially refers to a number of applications in bankruptcy, receivership and other insolvency situations. The Court has set out a procedure to request a hearing for an urgent insolvency matter.

This April 2, 2020 “Notice to the Profession, the Public and the Media Regarding Civil Proceedings – Insolvency” can be found here.

Gehlen Dabbs is OPEN to help you and your business during these challenging times. Please contact us for assistance.

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