Bankruptcy Law in Canada and B.C deal with insolvent or bankrupt persons and companies. Many of these laws were established by the federal government and apply to all Canadian individuals and corporations. Other bankruptcy related legislation has been put into place by individual provinces, such as British Columbia, and those laws apply only to the individuals and corporations residing or carrying on business there. All the bankruptcy rules are designed to preserve the rights of both insolvent debtors and those creditors who have a financial interest in that insolvency.
The two key pieces of legislation governing bankruptcies and insolvencies in Canada are the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act.
The Bankruptcy and Insolvency Act
The Bankruptcy and Insolvency Act (BIA) was established by the federal government and is intended to serve the following general purposes:
- To provide for the financial rehabilitation of insolvent persons.
- To permit an honest but unfortunate debtor to secure a fresh financial start and resume his or her place in the business community.
- To provide for the orderly and fair distribution of the property of a bankrupt among his or her creditors.
- To allow for the investigation of the affairs of the bankrupt or insolvent person.
- To permit the setting aside of preferential or other fraudulent transactions so that all ordinary creditors may share equally in the realizations from the bankrupt’s assets.
Bankruptcy rules in the BIA set out the rights and responsibilities of all the people and institutions with an interest, or involvement, in the affairs of an insolvent or bankrupt person or corporation. These include the Superintendent of Bankruptcy, the official receivers who represent the Superintendent of Bankruptcy, the court, licensed bankruptcy trustees, as well as the individual debtors and creditors.
The BIA governs all bankruptcies in Canada. For more information about the BIA, visit Bankruptcy – BIA, Policies, Rules, Directives and Forms online on the federal government’s web site.
The Companies Creditors Arrangement Act
The Companies’ Creditors Arrangement Act (CCAA) is a federal bankruptcy law in Canada that governs insolvency of companies and corporations only, not individual debtors. Its purpose is to set out and preserve the rights of the company and its creditors such that a plan of arrangement can be implemented for the presumed benefit of all parties.
British Columbia bankruptcy rules
Each province, including British Columbia, has specific laws for dealing with certain aspects of dealings between debtors and creditors. These bankruptcy rules usually focus on what property you can keep when you go bankrupt, as well as the rights of debtors and creditors in other debt collection situations.
Note: This information should not be used as a substitute for a consultation with a licensed trustee as the bankruptcy rules often change and, also, may be applied differently in your particular situation. You can contact us to arrange a free consultation with our licensed bankruptcy trustee in B.C. to discuss your options and how these bankruptcy laws apply to you.