Does your company need a second life? The business proposal (Division I Proposal) allows you to make an agreement with your creditors to give a break to your business. This agreement will lower the amount of your debt and/or extend the repayment term. The goal: to enable your company to continue its operations and to reorganize.
What is a Business Proposal?
A business proposal is a legal mechanism provided under the Bankruptcy and Insolvency Act and administered by a Licensed Insolvency Trustee. The objective of the proposal is to allow an insolvent company to free itself from the burden of its debts while continuing its operations.
A well-orchestrated business proposal is an agreement where all parties come out winners in contrast to the bankruptcy of the company. On the one hand, the proposal allows the company to have a second life and, on the other, creditors to reach a larger sum than in a bankruptcy.
Notice of Intention
When a company is worried that one or many creditors may take legal action that would interfere with its operations, but lack of time to prepare a full business proposal, it can file a notice of intention.
Reasons for Filing a Notice of Intention
- imminent seizure of the assets of the company or its bank account by a creditor or tax authorities;
- undue pressure from critical suppliers that prevents the company to operate;
- imminent cutoff of public services such electricity and natural gas;
The Notice of Intention is a simple document that announces to creditors that a business proposal will be submitted to them shortly. The Notice of Intention stops all proceedings against the company and prevents future procedures.
Once the Notice of Intention is filed, a proposal must be presented to creditors within the next 30 days. During this period, the trustee will carefully analyze the situation of the company and review its financial statements, its property and any other relevant documents. Thus it may present creditors with a state of affairs of the company.
The initial 30-day period may be extended to a total period of six months if the company needs time to reorganize its business, update its financial and accounting information, solicit potential investors or buyers, conduct a debt refinancing, etc.
- The business proposal is a formal agreement concluded between a company and its creditors.
- It protects the company against lawsuits and seizures.
- It allows the company to continue its operations.
- Under certain conditions, it can terminate commercial leases or contracts.
We Are Here for You
We will be at your side as a trusted partner to restore the success of your business and allow it to continue its operations. Make an appointment with us for a free of charge, no-obligation initial consultation.