FORMAL RESTRUCTURING

Please contact us for an appointment 604 915 5550.

In dealing with your creditors, it is not always possible to implement an informal workout. For example, Canada Revenue Agency may be garnishing your bank account, the bank may have called your loan or cut off your operating line, or certain creditors may have started legal proceedings .

These problems do not have to mean the end of your business. There are formal options available under the Bankruptcy and Insolvency Act which allow you to maintain control of your business, while formulating a restructuring plan that will ultimately return your company to financial stability.

An insolvent business can file a Proposal or a Notice of Intention to Make a Proposal. Both of these filings give your company an absolute Stay of Proceedings from all of your creditors, including:

• Your bank and other secured lenders;
• Canada Revenue Agency;
• Your landlord;
• Telus, B.C. Hydro; and all utilities;
• Any other creditor.

If you begin by filing a Notice of Intention to Make a Proposal, the Stay of Proceedings will give you a minimum of 30 days to formulate a plan to deal with your creditors. The time period can be extended by applying to Court for a further 45-day extension to a maximum of 6 months. The purpose of the Stay of Proceedings is to give management the "breathing" room needed to develop a Proposal to restructure the business without the threat of garnishments or other legal proceedings.

A Proposal can take any number of forms, including:

• One lump-sum payment, often provided by a third party, to compromise all unsecured debt.
• Payment in full (or partial payment) to creditors over an extended period
  of time.
• Liquidation of all or part of your business or liquidation of
  redundant assets.
• Conversion of debt to equity.
• Any combination of the above.

As long as the Proposal is approved by a majority of the creditors representing 2/3 of the value of the claims, the Proposal is binding on all creditors, including those who vote against it.

The process of implementing a successful Proposal is obviously more complex than we have described and involves a detailed review and assessment of your company's financial position. We have assisted numerous companies in executing successful Proposals and we would be pleased to meet with you to see if a Proposal can help you to save your business.

Unfortunately, your business may no longer be viable or your bank may have lost complete confidence in your business and refused to support you any longer. It may be that a formal proposal that allows your business to continue operating and turn around is impractical or impossible.

Although this may mean the end of your business it may be advantageous to consider the liquidation strategies for your business before it deteriorates to the point where there are insufficient assets to cover the debt to your bank and/or Canada Revenue Agency, both of which, you are more than likely personally responsible to repay.