Court Who can make the proposal How to Commence Notice File Case Flow Statements Inspectors Monitors Proposal Timelines Stay of Proceedings Limit on Stay Classify Creditors Creditor Meetings Required Approval Results Rejections Revisions Court Approval Liability Advantages Disadvantages Conversion BIA Not until approval phase Insolvent person, bankrupt, receiver, liquidator, TIB. Person defined broadly: partnerships, corporations, unincorporated associations. Not banks, insurance co’s. Consumer: debts excluding mortgage debt on principal residence < 250k (see 4.1)) Debtor files “notice of intention” (NOI) or a proposal to creditors that states intention, name, address of licensed trustee (consented to act as proposal trustee), names of creditors w/ claims amounting to >250$ Proposal trustee must send copy of NOI to known creditors of debtor co w/i 5 days Debtor has 10 days from NOI to prepare and file projected cash flow statements, report that is signed by trustee. 4.4.3. If don’t make these within 10 days, deemed bankrupt Creditors may appoint < 5 inspectors of the estate to assist and instruct the trustee After NOI, debtor has 30 days to file proposal with official receiver. If fail, automatic assignment in bankruptcy. Extensions available – see 4.6.2. Automatic but does not apply against secured creditors who gave notice, taken possession or debtor consent. Creditor may seek lifting of stay via application court. Stay applies to Crown claims (tax, CPP, EI), claims against directors. If debtor accepts goods/services during stay, must pay make immediate payment. Exception: Stay does not apply to regulatory bodies, eligible financial contracts, aircraft 6 months max to file the proposal after the NOI Must make proposal to unsecured. May make to secured. If based on classes, must have “commonality of interest”. Proposal trustee call meeting of affected creditors within 21 days of filing of proposal. At least 10 days before meeting, proposal trustee must send proposal, assets/liabilities, creditors names, notice of date and time, proof of claim, proxy, voting letter Double Majority: # majority of voting creditors and two thirds majority in $ amount. Creditors in each class vote separately. Related creditors: only against. If unsecured do not accept: proposal refused: automatic bankruptcy If unsecured approve but secured reject: deemed accepted but secured can enforce their security Ok prior to votes being cast Once double majority, trustee within 5 days makes appointment with the court for hearing to approve. Notice to creditors of hearing must be made > 15 days before. Prepare report for court. Court can accept or refuse. Must refuse if unreasonable. May refuse if offences. See 4.14. Approval binding on all creditors. Court can cancel if debtor fails to honour, injustice, delay, fraud. See 4.17 Proposal trustee: None as long as good faith / reasonable care Bind all creditors, low costs CCAA Yes – must apply to the court Debtor company (incorporated or income trust) where total claims against > 5M$. Debtor company, creditor, or trustee can make the proposal. No banks, insurance companies etc. Can be in proximity to insolvency Commence in province where debtor company has head office via initial application to the court by notice of application to SCJ. No notice but “comeback clause” allows creditors to come back to amend terms. Notice to secured creditors must be given if relates to DIP financing, admin expenses, indemnification of directors. Also Indalex (SCC) says notice to pension required. Initial application is supported with cash flow statements, report, financial statements etc see 5.3.2 Court appoints monitors who must be a trustee. Monitor must within 5 days of initial order post copy on its website, send notice to creditors >1k, entitled to access books n/a Not automatic. Court ordered so it is discretionary and flexile. This stay can not exceed 30 days. Same as BIA wrt Crown, directors, goods/services, regulatory body, aircraft. Creditor can seek application to lift stay via application to court. No Time Limit: can be extended via test. Onus on applicant to prove. See 5.4.3 Plan does not need to be made to unsecured creditors. Can be made to secured creditors. Place into groups via “commonality of interest”. Debtor prefers < groups Application to court for meeting. Court has discretion to grant or not. If court thinks plan isn’t in the best interest of the creditors, court won’t grant Same Double majority but every class of creditors must approve. Related creditors may vote against. If unsecured do not accept: stay of proceedings is lifted, creditors can pursue claims If secured do not accept, can’t continue – must have approval of all classes of creditors to whom plan was made Up to time of voting. After meeting if no adverse effect Court makes initial order based on initial application via a blacklined version of the Standard Form Template CCAA Order. Court is not required to approve the plan even if creditors approved it. Test: strict compliance, fair reasonable, nothing bad done Court can order priority charges for administrative fees, directors fees, critical suppliers – see 5.5 Monitor: None as long as good faith / reasonable care Used for complex restructuring where flexibility is needed, recognized internationally, longer stays available, less stigma, not automatic bankruptcy if plan is rejected All creditors in a class need to be treated equally, proposal must be filed within 6 Increase fees, costs, greater uncertainty bc of court discretion, increased publicity, months after NOI or else automatic bankruptcy, double majority, less flexible smaller debtors cant get relief bc of 5M$ threshold, You can convert from BIA to CCAA You can not convert from CCAA to BIA You can have concurrent procedures in both