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Division I - Corporate Proposals in Ottawa for Businesses

A Division 1 proposal allows a corporation or an individual to resolve their financial situation without filing for bankruptcy. A corporation is not allowed to file a Consumer Proposal under the Bankruptcy and Insolvency Act and any proposal must be lodged as a Division 1 proposal. As well, for consumers, a Division 1 Proposal may the appropriate resolution for an individual where debts’, excluding the amount owed on the personal residence, exceeds $250,000.00 and/or the complexity of an individuals’ financial situation is better dealt with through a Division 1 Proposal scenario.

At D. & A. MacLeod Company Ltd., we have 65 years of experiencing working with individuals and businesses of all sizes to manage difficult financial situations and begin on the road to stability.

In formulating a corporate proposal in Ottawa, Kingston, or Eastern Ontario, a Licensed Insolvency Trustee (LIT) will assist in preparing a proposal to the creditors of the company. The proposal can take many forms from periodic payments to all creditors in one class or divided into several classes if the amounts owing or type of debts are divergent; a lump sum offer or a liquidating proposal to maximize the potential return to creditors.

After the Division 1 proposal is circulated, a meeting of creditors is convened and the proposal is considered and voted on. To be approved, the proposal requires 50 percent plus one in number of creditors voting in person or by proxy representing at least 66.6 percent of the claims filed. Once accepted, the LIT will make an application to Court for approval. If the proposal is accepted by the creditors and approved by the Court, all creditors to whom the proposal has been made are bound by the proposal.

When is a Division I/Corporate Proposal Appropriate?

If a business is experiencing financial trouble and cannot overcome and resolve its debts on its own, a corporate proposal may be appropriate. This solution may save a corporation from having to file for bankruptcy, will help them to return to profitability, save employee jobs, or eliminate director guarantees and statutory obligations including HST and payroll obligations.

Requirements to Filing a Division I/ Corporate Proposal

Throughout Canada, including in Ottawa, a Division 1 proposal is available to:

1. Corporations who are insolvent and in debt with no limit as to the amount owed.

2. Individuals who owe in excess of $250,000 not including the mortgage(s) on the principal residence.

3. Individuals whose complex financial situation may require a Division 1 proposal to resolve their financial situation and the amount owing may be less than $250,000.

Process for Filing a Corporate Proposal in Ottawa or Kingston

Once a Corporation or individual decides to file a Division 1 proposal, it may not be possible to file the proposal immediately. In these circumstances, a Notice of Intention (NOI) is filed to provide a stay of proceedings which prevents creditors from taking any further action. This allows time to prepare and file the proposal which is then submitted to creditors. The proposal must be filed within 30 days thereafter, unless the court grants an extension.

Alternatively, the process can begin with the proposal itself if the proposal to creditors has been formulated and prepared at the time of filing.

The LIT will file the proposal or NOI with the Office of the Superintendent of Bankruptcy. After that, creditors cannot accept payment, garnish salaries, or continue lawsuits against the debtor. Further, all unsecured creditors in the proposal must stop collection from the indebted business.

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Completion of Proposal and Release of Debts Owing

If the Division I/Corporate Proposal is filed in Ottawa, Pembroke, Cornwall or elsewhere in Eastern Ontario, and is completed according to its terms and conditions, the corporation or individual will receive a Certificate of Full Performance and the debtor will be legally released from its debts as permitted under the BIA. To discuss your specific situation and the processes that may be involved, contact us today for a consultation.

Advantages of Corporate Proposals

Below are the advantages of filing a Division 1 proposal as an alternative to bankruptcy:

  • A division I proposal enables the debtor and its creditors to reach a compromise, preventing the need to file for bankruptcy.

  • All legal and collection action is stayed.

  • The debtor pays only a portion of the original amount of unsecured debts and or secured debts covered in the proposal to its creditors.

  • Depending on the terms of the proposal, can eliminate having to pay all tax debts due for HST and director liability owing to Canada Revenue Agency;

  • All assets are retained by the Debtor, except those which may be sold as part of the proposal to creditors.

  • Unfavorable leases for a business to remain viable can be terminated.

  • A corporate proposal enables a business to rebuild and retain jobs for its employees, while offering a better return to creditors, both financially and professionally.

Contact Us about Your Options for Corporate Proposals in Ottawa or Kingston

At D. & A. MacLeod Company Ltd., we provide professional advice regarding your specific financial situation. A division I/corporate proposal may be the option that frees you or your business of surmounting debt burden in order to rebuild. We can meet you in any one of our convenient locations to answer questions you may have about division I/corporate proposals in Ottawa, Kingston, Pembroke, Cornwall, Smiths Falls, Orleans, Kanata, or Brockville.


Contact us today online or at 613-236-9111 for a free, confidential consultation to learn about your options. With our assistance, we are confident you can protect your business today and begin on the road to a new beginning.

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D & A MacLeod Company Ltd

343 O'Connor St.

Ottawa, ON K2P1V9

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