Corporate Debt Restructuring
Corporate Debt Restructuring
Give Your Company a Second Chance
If you are unable to repay your loan (60 000$) from the Canada Emergency Business Account (CEBA) and are out of ideas
Instead of contemplating bankruptcy, you could present a corporate debt restructuring proposal. The goal is to approach the situation by putting an emphasis on the proposal of a constructive solution that will allow the restructuring of the business’s finances, commercial activity and to find a way to economic sustainability.
Some debt restructuring proposals reduce the amount of the debt, while others let you extend the repayment period. Learn more about the procedure to follow to file a debt restructuring proposal and get it approved.
Answers to your questions
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1
What is a debt restructuring proposal?
A debt restructuring proposal (or ordinary proposal) is a proposal made to creditors in order to avoid corporate bankruptcy. It is made by companies or individuals that are experiencing financial difficulties and want to reduce their debt.
A good debt restructuring proposal must be more beneficial for both parties compared to the company’s commercial bankruptcy. It must allow the company to continue its activities while granting a higher amount to its creditors.
2
What are the steps involved in filing a debt restructuring proposal?
Unlike the consumer proposal, the ordinary proposal lets you send a notice of intention to your creditors. After the notice is filed, the debtor must call a meeting of creditors within 30 days.
Before the meeting takes place, the licenced insolvency trustee sends a notice to the creditors explaining the debtor’s financial situation as well as the debt restructuring proposal.
During the meeting, the creditors decide whether or not to approve the proposal. For the proposal to be approved by the creditors, a majority of them must vote in favour. If the proposal is rejected, the debtor’s assets are automatically seized. They must therefore seek protection under bankruptcy law.
3
What are the advantages of a debt restructuring proposal?
An ordinary proposal offers many advantages to companies that are in an unstable financial situation.
Among other things, it lets them avoid the automatic seizure of assets and legal proceedings from creditors. It also lets them cancel a commercial lease and releases them from certain contracts. Finally, a debt restructuring proposal lets your company continue its activities despite its financial difficulties.
4
Types of creditors
There are two types of creditors: unsecured creditors and secured creditors.
Secured creditors
The debt of certain creditors is secured by collateral. For example, the owner of a commercial premises can seize the property if they are not repaid.
If the debt restructuring proposal is not presented to the secured creditors, it does not apply to them. They can therefore automatically seize the assets that are guaranteed to them without taking the proposal that was presented to the other creditors into account.
Unsecured creditors (or ordinary creditors)
Ordinary creditors are those whose debt is not secured by collateral. The repayment of their debt is therefore included in the debt restructuring proposal.
Let us support you
Since 1981, Labelle-Marquis has specialized in the field of insolvency. We will support you in your efforts to request a debt restructuring proposal. In this way, you will breathe new life into your company.
If you need help drawing up a proposal to your creditors, speak with us now. We will give you valuable advice that will allow you to give your company a second chance.
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