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We have assisted numerous companies in executing successful Proposals and we would be pleased to meet with you to see if this could be a viable option for you.


What Is the Process?

  • If your debts are over $250,000 (excluding the mortgage on your principal residence) you could be eligible to file a Division I Proposal to your creditors.

  • Once a Division I Proposal is filed, we are required to call a meeting of creditors within 21 days from the date of the Proposal. We will prepare a report to your creditors that includes the causes of your financial situation and our recommendation with respect to supporting the terms of your Proposal.

  • Creditors can attend the meeting either in person or by proxy.

  • During the meeting, the creditors have the ability to ask questions and recommend changes to the terms of the Proposal.

  • Creditors can vote to either accept or reject the Proposal; should the Proposal be approved by the creditors, the Trustee is required to obtain Court approval.

  • If the Proposal is rejected, the debtor is immediately deemed bankrupt.

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Division I Proposal (Formal Restructuring)

If an informal workout is not possible, there are formal options available under the Bankruptcy and Insolvency Act (“BIA”) which will allow you to maintain control of your business, while formulating a restructuring plan that could ultimately return your company to financial stability.


Perhaps you have just weathered a prolonged slow period and are forecasting increased sales and profitability, maybe you have an underperforming business unit or retail store(s), or when considering scaling back operations, you have identified a large potential employee severance obligation. These are all valid reasons to consider a formal restructuring.


An insolvent business can file a Proposal or a Notice of Intention to Make a Proposal under the BIA, either of which will provide your company with an absolute Stay of Proceedings from all of your creditors, including:

  • Your bank and other secured lenders
  • Canada Revenue Agency
  • Your landlord
  • Any other creditor/supplier


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 and present a Proposal to your creditors. The time period can be extended by applying to the 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:

  • A lump-sum payment, often provided by a third party
  • Payments to creditors over an extended period (i.e. 3 to 5 years)
  • Liquidation of all or part of your business, or the liquidation of certain assets
  • Conversion of debt to equity
  • A Proposal must be accepted by the company’s creditors to be binding on all creditors, including those who vote against it. Once the company has satisfied the terms of its Proposal and continues to meet its current obligations, the debts as at the date of filing are fully extinguished.

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. 

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