Restructuring and Insolvency

Commercial insolvency proceedings in Canada may take a variety of different forms. The insolvent business may be rehabilitated by a restructuring of the corporation and its debts under one or more statutes governing commercial insolvencies. Such “debtor-in-possession” proceedings may also result in the sale of some or all of the assets of the insolvent business.

Alternatively, the assets of a business may be liquidated by a trustee in bankruptcy or sold on a going-concern basis in creditor-initiated proceedings, by a receiver of the business appointed privately or by a court, by the exercise of other private remedies of a secured creditor under its security or through some combination of the above.

A number of significant amendments to Canada’s insolvency legislation took effect on September 18, 2009. The impact of these amendments on Canadian restructuring and insolvency proceedings is set out below. Any insolvency proceedings that were commenced prior to September 18, 2009 will be subject to the prior rules, as detailed in this section.