On March 22, 2019, Rothman, Benson & Hedges was granted protection from its creditors in Ontario proceedings under the Companies' Creditors Arrangement Act (CCAA). These proceedings will give RBH an opportunity to propose some plan of arrangement which its creditors will then vote on.
Mark Twain said, "If you tell the truth you don't have to remember anything." That wisdom was driven home in the recent Ontario case McGoey (re), in which a bankrupt tried to prove that two properties registered in his name were actually held by him in trust for someone else, and therefore were not available to his creditors. He produced two trust deeds showing this.
British Columbia's limitation period was shortened in 2013 from six years to two, which means that, as a general rule, the right to sue someone is lost two years after the claim first arose. This shortened deadline continues to catch creditors unawares.
Creditors are often frustrated to find that their debtors don't have assets or other means to pay their debts. Even more frustrating is when creditors discover that their debtors did have assets, which have recently been disposed of.
It's a standard tactic of creditor proofing. Instead of investing in a business, principals make loans to the company. Then, if the business fails, they're secured creditors, standing first in line when the receiver sells company assets to pay creditor claims.
The fruits of a business owner's lifetime of hard work can vanish almost instantly with the insolvency of a company. Unfortunately, in the heady, frantic days of business startup, many owners may be too focused on success to think about protecting themselves and their assets from the possibility of failure.
Opening one's own business is a dream for some. People who decide to follow this dream often put a lot on the line to do so. If the business does not perform as expected, financial problems could arise. Depending on the specific situation, those problems could financially decimate those behind the business. This outcome may be eliminated, or at least minimized, through proper planning. One method that may be employed to protect the assets of a business is to create a holding company. If the assets of the business are owned by a holding company, and leased to an operating company that carries out the business, then the failure of the business does not mean the assets are at risk.
"I'm worried about my creditors. Can I transfer my half of the house to my spouse?"
One of the few "creditor-proofing" steps that actually works involves that old-fashioned investment your parents and accountant have been recommending for decades: RRSPs. Under changes to the law which came into force in July, 2008, money invested in RRSPs is exempt from creditors.