The following is a list of frequently asked questions and answers. The answers are based on a general set of circumstances and are for illustrative purposes only. If you are in any doubt as to the action you should take, you should consult your own professional advisors.
Q: Who is the Proposal Trustee?
A: The Proposal Trustee is an independent Licensed Insolvency Trustee (usually a firm of accountants) appointed by the Official Receiver (a representative of the Office of the Superintendent of Bankruptcy).
Q: What is the role of the Proposal Trustee?
A: The Proposal Trustee has responsibilities to both the Debtor (Company that has filed a NOI or Proposal) and the creditors, and must act impartially.
The Proposal Trustee’s duties include monitoring the business, reporting to the Court on any major events that might impact the viability of the company, appraising and investigating the affairs and property of the Debtor to estimate, with reasonable accuracy, the financial situation of the Debtor and the causes of the Debtor’s insolvency, assisting the company in the preparation of the Proposal, reporting on the company’s projected cash flow and the Proposal, notifying the creditors of any meetings of creditors and tabulating the votes at these meetings.
Q: When do creditors get paid?
A: Generally, all payments to creditors owed monies by the Debtor (and legal actions by creditors against the Debtor) are stayed as of the date of the filing of the Notice of Intention (“NOI”)/Proposal and are dealt with under the Debtor’s Proposal. If the Proposal is accepted by the creditors and approved by the Court, the creditors will be paid in accordance with the payment provisions of the Proposal. If the Proposal is rejected by the creditors or not approved by the Court, the Debtor is deemed to have made an assignment in Bankruptcy, and any payment to creditors will be determined by a formal Bankruptcy process.
Q: As a supplier, can I repossess my goods/inventory after a customer has filed a NOI or Proposal, pursuant to Section 81.1 of the Bankruptcy and Insolvency Act. (“BIA”)
A: No. Section 81.1 of the BIA does not apply to NOIs or Proposals
Q: Post NOI/Proposal filing, do I have to supply goods to the Debtor?
A: Pursuant to Section 65.1 of the BIA a supplier is prohibited from refusing to continue to provide goods and services to a Debtor; however the supplier is not required to provide the Debtor with credit terms. While the provision of credit may assist the Debtor in its restructuring activities, a supplier may require the Debtor to purchases its goods and services on a cash on delivery basis.
Q: When do I get to vote on the Proposal?
A: You will receive a copy of the Proposal from the Proposal Trustee once it has been drafted and filed with the Official Receiver and you will have an opportunity to vote on the Proposal at a Meeting of Creditors held to consider the Proposal. The Proposal Trustee will inform you of the date and location of the meeting.
Q: How do I ensure that I am on the Creditor’s list and will receive a copy of the Proposal?
A: The Trustee appointed under the NOI will provide a Notice to Creditors to all creditors owed more than $250 within 5 business days of the filing of the NOI. A copy of this Notice and all other relevant NOI/Proposal documents can be found on this website.
Check the list to ensure that your name is on the list and that your address is correct. If you are a creditor and are not on the list, contact the Proposal Trustee and provide the relevant details.
Once the Proposal has been prepared and filed with the Official Receiver, the Proposal Trustee will send to all known creditors a notice of the First Meeting of Creditors, a statement of assets and liabilities, a copy of the Proposal, a Proof of Claim form, a Voting Letter and Proxy for you to complete and return to the Proposal Trustee prior to the First Meeting of Creditors or you may bring the completed forms to the First Meeting of Creditors.
If you are aware that the Debtor has filed an NOI or Proposal and you have not received any notices, please contact the Debtor and/or Proposal Trustee.
Q: How do I participate in the vote?
A: Creditors must file a proof of claim in order to participate in the Proposal. A copy of the proof of claim form and instructions can be found on the website.
Creditors who do not complete a Proof of Claim form are not entitled to vote on the Proposal or to receive any distribution payment in the event the Proposal is accepted by the creditors. Creditors whose claims have been filed and admitted by the Proposal Trustee will participate in the vote and any distribution payment.
Q: What happens if the Proposal is not approved or is rejected by the creditors?
A: If the Proposal is rejected by the creditors, the Debtor will be automatically be deemed Bankrupt.