the honest-to-goodness truth on bankrupting a corporation
introduction
I have been blogging on personal and corporate insolvency matters for just over six years now.
I have covered many topics.
During a recent corporate bankruptcy consultation. I realize that I have never written about what the steps are for
bankrupting a corporation.
An important issue arising from this topic would be what the directors of a corporation going into bankruptcy should know.
There are three ways for a company to be bankrupt.
Like an old bankruptcy matters. There are three methods that result in bankrupting a corporation in Canada.
The first way is being pushed and the second way is jumping in with both feet voluntarily. I know corporations don't have
feet.
The third ways to have the company's creditors moved out of Corporations attempt to restructure.
Hey miss Brandon's block. I will focus on describing the first two methods.
bankruptcy application and involuntary bankruptcy
Unsecured creditors at least $1,000 against the company.
The motion is called a bankruptcy application.
In order to do so.
Retain a bankruptcy lawyer.
Gotten the consent of a licensed insolvency trustee formerly called a bankruptcy trustee trustee to administer the
corporate bankruptcy.
The applicants also have to prove that at least one.
Facts of bankruptcy listed in section 42 one of the p.m.
Commonly seen acts of bankruptcy are fraudulent transfers of property allow any lawful seizure of some or all of their
property by a creditor a process and a catch-all ceasing to meet many liabilities as they come due.
jumping in with both feet a voluntary bankruptcy
Why does term I mean filing an assignment in bankruptcy?
In this case rather than someone going to court the directors call a directors meeting.
At the meeting the director's result if a company is experiencing financial difficulty and cannot continue to operate.
Directors also reserved at the company should file an assignment in bankruptcy.
The director who has the authority to sign the bankruptcy documents is called the designated officer.
Before the documents are ready for signing the trustee who was selected must get enough information in order to prepare
the documentation.
Weather Corporation in Ontario or elsewhere in Canada and regardless if it is a result of a bankruptcy order an assignment
in bankruptcy the information.
information and documents a trustee needs
twisty requires a great deal of information
Sometimes company officials can provide it and in other cases the trust he has to dig through the books and records of the
company.
Here is a list of what is needed?
Exact corporate name and address of head office details of any other locations.
broken corporate seal
bankruptcy order of the resolution of the directors
full description of the nature of a business
names of officers and directors and their addresses
incorporation of the company
The date the company ceased operations if prior to the date of bankruptcy.
The greatest number of employees employed in the last 12 months.
Listing of names addresses Social Insurance Number amount sewing for each of severance termination wages vacation pay
commissions and expenses.
Employee, tibor's and Rose for current-year employees employer should issue to all employees for year of bankruptcy and
prior.
Creditors lifting accounts payable details consisting of name address account numbers and respective amount owing
classified as follows.
Secured. Thanks Leasing Company Source deductions Etc.
Preferred wage is owing rent to landlords government remittances outstanding.
Canada Revenue Agency amount selling for Source deductions HST and income tax
Workers Compensation Board if applicable
municipal authorities for example business taxes and Realty taxes
employers health tax
Unsecured trade suppliers Hydro Bell Canada gas Etc.
Details of any unsecured private party loans shareholder loans or advances due to the company.
details of any unions if applicable including name address account number
details of contingent liabilities and pending legal action if any
Accounts receivable aged trial balance and detailed backup documentation invoices delivery slips purchase orders Etc to
support collection efforts.
From the age trial balance classify the accounts has good doubtful value equal the total balance.
Tori detailed information on inventory cost in the company's assessment of estimated realizable values
Machinery equipment in plant detailed listing providing original cost if possible an estimated realizable value.
Office furniture and fixtures detailed listing providing original cost if possible an estimated realizable value.
Real estate all details of real estate owned including legal descriptions original cost appraisals if any an estimated
fair market value.
Vehicles provide descriptions including gear model value
vehicles for lease financing provide copies of the lease Finance documentation
Other assets details about their assets such as prepaid expenses deposits Goodwill intangibles shares or any Investments
patents trademarks.
Bank Account Details of all bank accounts including name address account number and approximate balance in the accounts
Last 12 months of the county records bank statements and canceled checks for all accounts maintained.
financial statements most recent
corporate solicitor name and address
Listing of leased equipment copy of lease Vehicles office in any other equipment.
insurance policy IES
A brief Narrative of Management's opinion is the causes of insolvency.
Disclosure of any sale or disposition of assets outside of the ordinary course of business in the last year.
the trustees job
Corporate bankruptcy trustee with certain exceptions takes possession of the assets of the company.
If the trustee is aware that there are Dean Trust claims against the assets or there was a secured creditor like a
Chartered Bank the trustee must be careful.
The trustee should have already had a conversation with those parties prior to the bankruptcy to determine what rights if
any the trustee may have against such property.
Assuming there are assets not subject to the valid claim of third parties the trustee must at least.
Establish, whether the value of the assets will be enhanced if the trust he operates the company's business.
Take into account what obstacles existing running a business and how to minimize risk if it is beneficial or necessary to
run a business.
Decide what are the very best means to sell the properties.
Unblock is one parcel or individually or at least several parcels.
Determine if there are any third-party on the company's premises.
Identified there any company assets located on the property of third parties?
Prepare the required reporting to Service Canada so that the former employees will be able to make their wage-earner
protection plan that claims.
See their appropriate insurance coverage in proper physical security over the assets.
Identify any inventory been delivered in a 30 days prior to bankruptcy.
What rights of medication might exist?
circularize the creditors requesting claims to be filed in order to understand what the death in breath of claims against
the company are
This way the trust he can formulate a distribution to creditors in priority with a net funds available from the sale of
assets.
What's the director should be concerned about?
Director should have two concerns when contemplating bankrupting a corporation.
They should be concerned about any decisions. They had made or Senior Management actions. They have ratified.
Sears in the United States
this includes
The allegation is that the directors condone it approved Eddie Lampert actions were presumably swiping billions of dollars
from the one-story Merchant.
II there are various types of claims against the corporation that are also personal claims against directors.
the list includes director liability for unpaid
wages
HST
Source deductions
certain environmental offenses
cyber security risks
In general there is a relatively short list of things to write for.
In many cases, there will be director and officer Insurance to be relied upon.
Directors may also have a due diligence defense.
Director resigning Your Position will not protect them against.
Are you a corporate director?
Are you a director of a corporation that has too much debt?
Is your company's Capital insufficient to fulfill every one of its economic responsibilities and maybe insolvent?
Are you worried that your firm's major secured lender will simple it's been dancing completely and demand repayment info
which the company will not be able to do.
If you responded Yes to any of these questions call the Irish myth team today.
We have Decades of generations of experience restructuring and turning around companies seeking Financial restructuring or
a debt negotiation strategy.
You can have a no-cost assessment so we can fix your company's debt problems.
Call the IRA Smith team today.
This will allow you to return to being efficient healthy and balanced starting over.