When Filing For Bankruptcy In
...CANADA
The law sometimes seems to pervade all aspects of our
lives and an involvement with bankruptcy and insolvency
law has proved to be almost unavoidable for business
people in Canada during the 1990’s. In simplest term, corporate and individual bankruptcy law provides a set of rules to prevent chaos among the creditors of an insolvent corporation or individual.
The legislation is a complex in part because those creditors fall into so many categories-secured creditors, unsecured creditors, government creditors, and so on-each with its own special rights and interests in the bankruptcy process.
Canada’s federal bankruptcy statute, the Bankruptcy and Insolvency Act, also deals with corporate receivership. A receivership is not the same as a bankruptcy. By the same token, a receiver is not the same as a trustee in a bankruptcy. However, the two systems have a lot in common and a receivership of an individual or a corporation usually occurs at the same time as a bankruptcy.
Corporations that have become insolvent can try to avoid bankruptcy and receivership by reorganizing their finances. The Bankruptcy and Insolvency Act deals with reorganizations and another federal statute, the Companies’ Creditors Arrangement Act, may offer relief to some corporations. Some of Canada’s biggest news stories of the past few years have concerned the attempts of major Canadian
companies such as Olympia & York, Algoma Steel, Grafton Fraser, Woodwards, Westar Mining, and Birks, to complete reorganizations. But the most well known companies were both Air Canada and Canadian Airlines.
Air Canada, Canadian Airlines, and United Airlines
are all commercial passenger air carriers. Beyond that,
they have only a few similarities. All are old commercial
carriers that were facing bankruptcy together until the...
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