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If your company is facing the possibility of being insolvent, it may be very difficult to meet financial obligations. Financial distress can occur given that a business’ survival depends on so many elements, including external factors in a competitive and demanding marketplace, and the ability to obtain financing when needed.


There are several primary warning signs that your corporation is struggling or may soon be in financial difficulty:

Accumulation of lines of credit that have not yet been repaid making interest only payments

Operating expenses disproportionate to revenue

Difficulties in collection of receivables

Are unable meet payroll expenses

Aging of payables and suppliers pressuring for payments

Becoming unable to pay a monthly rents and leases on time

Missing statutory payments for payroll taxes; HST; and WSIB

A declining customer base which management is unable to identify causes to correct.

The Corporation may also be facing legal action as a consequence of any of the above factors. Defending any actions can become very costly. At D. & A. MacLeod Company Ltd., we have the expertise and knowledge to assist you and your company through these difficult times and if financial issues are recognized in time, start on a road to a new beginning™.


Deciding to declare bankruptcy or explore other options will depend on the severity of the situation and your ability to employ new techniques related to debt. Your decision will depend on the percentage of total liabilities the corporation has as a result of operating the business and the ability to repay. If the operations are not viable or cannot be restructured, and all other options have been exhausted, then bankruptcy may be the company’s only option. Our experienced team will evaluate the current situation and guide you in assisting the directors making a decision for the company, whether this be filing for corporate bankruptcy, or pursuing a corporate proposal.

Depending upon the nature of the corporation’s obligations, a bankruptcy can rearrange the priority of statutory creditors, which may mitigate director liability and personal guarantees.


In order to file for bankruptcy protection, you will need to seek out a Licensed Insolvency Trustee (LIT). In some cases, the Board of Directors may decide the company should first file a Notice of Intention (NOI) which will allow time to develop a restructuring plan or if company is in the position to by-pass filing a NOI, prepare and file a proposal to its creditors known as a Division 1 Proposal. On filing, there will be an immediate stay of creditor actions against your business. This means that creditor calls and collection notices will stop, as will foreclosures, repossessions in most cases and any debt-collection lawsuits while you create a business plan which enables you to pay as much of the debt as you can.

Signing a document


Over 70 Years' Experience = Solutions = Results

The Corporate Bankruptcy Process

As with a company filing a corporate proposal, the company will need to engage a Licensed Insolvency Trustee to act as trustee in a bankruptcy. A resolution of the Directors is required and a Statement of Affairs is prepared along with other documents to allow the corporation to make an assignment in bankruptcy.

Once the bankruptcy is filed, your trustee will be responsible for taking possession of the company assets and for securing the books and records. Our team at D. & A. MacLeod Company Ltd. is also able to intercede between the company and its creditors and employees, and payments to unsecured creditors will stop.

The trustee will deal directly with the employees on your behalf for wage earner protection, tax slips and records of employment. We will notify Service Canada of the amounts believed to be outstanding to employees, including unpaid wages, severance and termination pay and outstanding vacation pay, which Service Canada will reimburse employees for through their program. Employees will be issued T4s and records of employment and Canada Revenue Agency (CRA) will want to audit the corporation's payroll records. This is an important role of the trustee as it provides you and CRA a comfort level that the payroll records are complete, and that the T4's are correct.

Because a corporation is deemed a separate legal entity and has no associated personal liability for directors (except in limited circumstances such as self-dealing), it is not discharged from bankruptcy.


Corporate bankruptcy can be complex because each type of industry has unique requirements. With over 70 years of experience, our team at D. & A. MacLeod Company Ltd. understands this and has the knowledge to help your company decide on its next steps, including exploring all options that may be available. With multiple conveniences in Eastern Ontario, we are available to meet where it is most convenient for you.

Visit us today in Ottawa, Cornwall, Kingston, Kanata, Smiths Falls, Pembroke, or Brockville. Contact us today online or at 613-236-9111 for a free, confidential consultation to learn more about your debt recovery solutions as a corporate business.

Learn More About Corporate Insolvency

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