Campbell Saunders

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THE CORPORATE TEAM
	Harold Saunders President
	David Gray Senior Vice President
	Patty E. Wood Vice President
	John D. McEown Associate
	Scott Cameron Associate

LIQUIDATION STRATEGIES

If your business is no longer viable or your creditors are not prepared to support your proposal, you may still be able to have a degree of control over how your assets
are liquidated.

Informal Liquidations

In certain circumstances your bank or secured creditor may agree to forebear for a period of time while you attempt to locate an en bloc purchaser for your business or at least sell your assets on an orderly basis. This may allow you to achieve a greater value for your assets than a bankruptcy or receivership. However, because it is likely that the proceeds may still not be sufficient to pay all of your creditors, the sales process will ultimately end up in a receivership or bankruptcy process to facilitate the distribution of the proceeds.

Liquidation Proposals

More often than not, a Stay of Proceedings from creditor actions will be required to execute an orderly liquidation of your assets. Under a formal liquidation proposal, the creditors may allow you, with the assistance and direction of the Trustee, to liquidate your business in an orderly fashion. Again this may allow you to realize a greater value for your assets than a formal bankruptcy or receivership.

RECEIVERSHIPS

The appointment of a Receiver or Receiver-Manager is a remedy that is only available
to a secured creditor or the Court.

When a secured creditor (generally, a bank, trust company, or credit union) lends money to a business, it generally requires a General Security Agreement or other form of security. The security is then registered with the Personal Property Security Registry
in British Columbia so that all parties have notice that the company has pledged its
assets to the secured creditor.

The General Security Agreement almost always allows for the appointment of a
Receiver or Receiver-Manager within the security instrument. If your company is in default under the provisions of the security agreement, the secured creditor has the
right to demand payment of the amount owing to it and, if you are unable to pay, the secured creditor may appoint a Receiver or Receiver Manager to enforce its security.

Before the secured creditor can enforce the security and appoint a Receiver, it must provide you with a Notice of Intention to Enforce Security pursuant to the provisions of the Bankruptcy and Insolvency Act. The Notice must give your company a minimum of 10 days to repay the loan or cure the default.

Only after the expiry of the 10-day period can the secured creditor enforce its security. Prior to the expiry of the 10-day Notice, your Company would be able to file a Notice of Intention to File a Proposal to Creditors, which would stay the secured creditor from enforcing its security for a 30-day period.

If your company receives a Notice of Intention to Enforce Security,
it is critical to seek the advice of insolvency professionals immediately. Otherwise, the secured creditor will be able to enforce its security
with relative impunity and the ability for you to restructure your
financial affairs will be severely limited.

If you need further information in this area, please contact
a member of our corporate team.

BANKRUPTCIES

After a review of your company's financial position, you may come to the conclusion
that the most appropriate option available is for the company to make an Assignment
in Bankruptcy.

Although this ultimately means the end of your business, it may be advantageous to take steps to liquidate the business before it deteriorates further, to the point where there are insufficient assets to cover the debt to a secured creditor (the Bank) or Canada
Revenue Agency, which you may be required to pay personally.

In a bankruptcy, all of the assets of the business, except those assets encumbered by valid security, are turned over to the possession and control of a Trustee in Bankruptcy. The Trustee takes steps to preserve, protect, and evaluate the business and its assets, and provides a report to the creditors at the First Meeting of Creditors.

At this meeting, the creditors will generally appoint Inspectors to assist the Trustee in dealing with the assets and undertakings of the business. The Directors of the company are required to attend the meeting and may be called upon to explain the causes of the company's financial difficulties or other matters relating to the assets.

The Trustee offers the assets of the business for sale and conducts a process to ensure that the assets are sold for the highest price in the circumstances. Ultimately,
with the approval of Inspectors, the assets of the company are sold and converted into cash, accounts receivable are collected, and any other assets dealt with. A dividend is paid to the company’s proven creditors on a pro-rata basis and, for the most part, all of the company’s debts are extinguished by the bankruptcy.

If you require further information regarding the Bankruptcy process, please contact a member of our corporate team.