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What is Insolvency & Financial Restructuring?

Best Insolvency lawyers for litigation in Canada as ranked by Lexpert

Insolvency and insolvency litigation is generally understood to relate to acting for and advising lenders, other creditors, debtors, trustees in bankruptcy, receivers and other participants in corporate insolvencies and debt enforcement, collection and recovery, and typically involves bankruptcy, receivership or similar court-supervised insolvency proceedings or private enforcement remedies. Insolvency lawyers who work in litigation are focused on these topics.

 

Insolvency lawyers may also be advising corporations, financial institutions, bondholders, distress or hedge funds, investors, purchasers and other participants in the formulation, negotiation and implementation of corporate financial restructurings, whether in circumstances of insolvency or solvency and whether involving debt and/or equity, and includes informal negotiated workouts and refinancings and financial restructurings implemented pursuant to insolvency statutes such as the Companies' Creditors Arrangements Act and the Bankruptcy and Insolvency Act or corporate statutes such as the Canada Business Corporations Act or similar provincial statutes. Practitioners in this area may be involved in cross-border restructuring matters.

 

 

Please note that the Lexpert Directory has separate practice areas for:

  • Corporate commercial litigation lawyers
  • Banking lawyers

 

What is insolvency and restructuring?

Insolvency and restructuring are two separate terms which may mean different things; however, their goal is basically the same – to help a debtor-company recover from its financial difficulties in order to become financially stable once again.

 

Insolvency is when a debtor-company is in a financial distress, making it difficult to pay its creditors when these debts become due and demandable. Here, a debtor-company may implement restructuring, among other statutory procedures available to them, to manage insolvency.

 

Restructuring is when debts are “restructured” into feasible payment schedules in coordination with the debtor-company's creditors, while continuing its business operations. Plans or proposals on restructuring debts are details of how the said debtor-company will pay off these restructured debts, while sustaining operational expenses to continue its day-to-day business transactions.

 

This may result to cost cutting measures through disposal of assets, reorganisation of the company, laying off employees or reduction of their benefits but not below labour standards. The plan or proposal may also be subject to court approval or action, depending on the state laws on restructuring and insolvency, and of the creditors also.

 

Is bankruptcy different from insolvency?

In Canada, the difference between insolvency and bankruptcy is in its nature:

  • insolvency is a financial state that makes a debtor-company or -individual to pay off their debts as it becomes due, such as when the total liabilities exceed that of their current assets;
  • bankruptcy is the legal process, or may refer to the court order, which declares or is declaring a debtor-company or -individual as insolvent, thus providing for the process to be done to equitably pay these creditors out of the assets of the debtor.

 

Financial Restructuring and Insolvency Lawyers

When financial restructuring and insolvency have separate applicable statutes, or have different respective laws which may overlap with each other, financial restructuring and insolvency lawyers assist clients in the construction of these statutes.

 

As financial restructuring and insolvency lawyers, they may either represent the debtor, which is either an individual, a company, or an organisation at the verge of becoming insolvent or bankrupt; or they may also represent the creditor/s who have interests in the debtor’s insolvency or bankruptcy state.

 

Restructuring plans or proposals may be done extrajudicially or outside the auspices of the court, but this is subject to the parties’ own volition and protections set by the law may not be applicable in this case. Hence, it is recommended that restructuring be done with the help of financial restructuring and insolvency lawyers under the guidance of the court through a judicial proceeding.

 

Work done by financial restructuring and insolvency lawyers

Most of the work of financial restructuring and insolvency lawyers is negotiating with the other party for a restructuring proposal that would be beneficial to both parties – either judicially or extrajudicially. Thus, part of their work would also be transactional, such as preparation of the restructuring proposal, or other documents needed for the regulatory compliance of filing for insolvency or bankruptcy under the law.

 

After this, when court proceedings commence, financial restructuring and insolvency lawyers represent their clients before the courts during insolvency litigation, keeping in mind the desired outcomes of their clients. They are also present during administration, until receivership, or even during liquidation.

 

Prior or during the judicial filing of insolvency or bankruptcy of a debtor-company, financial restructuring and insolvency lawyers do not only exhibit their knowledge on insolvency and restructuring laws, but also of corporate laws, property laws, contract laws, taxation, or banking laws.

 

What is the Winding Up and Restructuring Act Canada?

The Winding-up and Restructuring Act (WURA) is the Canadian federal statute that mainly outlines the judicial process of liquidation, winding-up, and restructuring of government-regulated companies or corporations, financial institutions, and insurance companies.

 

Section 3 of the WURA enumerates the circumstances when a company is already considered insolvent, but mainly, when such company is unable to pay off its debts or its liabilities as these debts become due and demandable.

 

In Section 4, the WURA specifies when a company is deemed unable to pay its debts – when a creditor has sent a notice to the debtor for the payment of the latter’s debts, and the debtor has not responded after 60 days, a debtor is now considered insolvent.

 

The WURA is applicable only to corporations and companies listed in Section 6(1) that is insolvent, is currently on the process of liquidation or winding up, either by petition of the shareholders, its creditors, assignees, or liquidators, or through the control of the appointed Superintendent of Financial Institutions.

 

When an application winding up has been filed, a debtor-company ceases to operate, followed by the appointment of liquidator/s or trustee/s, and the said debtor-company's assets will be applied to the satisfaction of its debts to its creditor/s.

 

What are the insolvency laws in Canada?

The main insolvency laws in Canada are the Bankruptcy and Insolvency Act (BIA), and the Companies' Creditors Arrangement Act (CCAA). This is in addition to provincial and territorial laws on insolvency and other federal laws which may apply to a certain institution, such as the Bank Act.

 

Bankruptcy and Insolvency Act (BIA)

The BIA is the federal law on bankruptcy and insolvency processes, thus providing for the specific scope and rights of all parties involved – the debtors, its creditor/s, the trustees, and the federal government through the Superintendent of Bankruptcy.

 

Part III of the BIA governs the provisions of the proposals, which is the restructuring regime prepared by the debtor-companies or –individuals for its creditors on any compromise or sale of the former’s assets for the orderly satisfaction of the debts. Trustee/s will then manage the debtor’s properties, followed by a creditor/s’ meeting to decide on such proposal, which will be the basis for issuance of the court order.

 

Companies’ Creditors Arrangement Act (CCAA)

The CCAA is a federal law which applies to larger companies or corporations. It provides for a restructuring regime where the claims against the debtor-company is more than $5,000,000, according to Section 3(1). With end view of preventing the said debtor -company or -corporation from becoming bankrupt, the CCAA provides for processes for all parties to reach a compromise agreement, to be agreed to also during a creditors’ meeting.

 

Here, the debtor-regime of CCAA is different from the BI, where the debtor in former retains ownership of its properties and assets, while continuing its operations; as compared to the latter where a trustee is appointed. Although, both circumstances are under the supervision of the court.

 

Want to know more about these Canadian laws? Head down below to consult with the best financial restructuring and insolvency lawyers as ranked by Lexpert.

Ontario

Toronto Leading Firms - Major Full Service
Most Frequently Recommended
Blake, Cassels & Graydon LLP
Goodmans LLP
Osler, Hoskin & Harcourt LLP
Stikeman Elliott LLP
Consistently Recommended
Aird & Berlis LLP
Bennett Jones LLP
Cassels Brock & Blackwell LLP
Davies Ward Phillips & Vineberg LLP
McCarthy Tétrault LLP
Torys LLP
Repeatedly Recommended
Borden Ladner Gervais LLP (BLG)
Dentons Canada LLP
Fasken Martineau DuMoulin LLP
Gowling WLG
McMillan LLP
Miller Thomson LLP
Norton Rose Fulbright Canada LLP
Toronto Leading Firms - Boutique Firms
Most Frequently Recommended
Thornton Grout Finnigan LLP
Consistently Recommended
Chaitons LLP
Repeatedly Recommended
Lenczner Slaght
Reconstruct LLP
Tyr LLP
Toronto Leading Practitioners - Insolvency Litigation
Most Frequently Recommended
George Benchetrit
Toronto, Ontario
Chaitons LLP
Scott A. Bomhof
Toronto, Ontario
Torys LLP
Christopher Burr
Toronto, Ontario
Blake, Cassels & Graydon LLP
Robert J. Chadwick
Toronto, Ontario
Goodmans LLP
Harvey G. Chaiton
Toronto, Ontario
Chaitons LLP
Matthew P. Gottlieb
Toronto, Ontario
Lax O'Sullivan Lisus Gottlieb LLP
Pamela L.J. Huff
Toronto, Ontario
Blake, Cassels & Graydon LLP
Robert I. Thornton
Toronto, Ontario
Thornton Grout Finnigan LLP
Consistently Recommended
Ian E. Aversa
Toronto, Ontario
Aird & Berlis LLP
Joseph J. Bellissimo
Toronto, Ontario
Cassels Brock & Blackwell LLP
Stuart Brotman
Toronto, Ontario
Fasken Martineau DuMoulin LLP
David R. Byers
Toronto, Ontario
Stikeman Elliott LLP
Jeremy Dacks
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
John L. Finnigan
Toronto, Ontario
Thornton Grout Finnigan LLP
Jamey D. Gage
Toronto, Ontario
McCarthy Tétrault LLP
Peter Griffin
Toronto, Ontario
Lenczner Slaght
Aubrey E. Kauffman
Toronto, Ontario
Fasken Martineau DuMoulin LLP
Maria Konyukhova
Toronto, Ontario
Stikeman Elliott LLP
Sharon A. Kour
Toronto, Ontario
Reconstruct LLP
Heather Meredith
Toronto, Ontario
McCarthy Tétrault LLP
D. J. Miller
Toronto, Ontario
Thornton Grout Finnigan LLP
Grant B. Moffat
Toronto, Ontario
Thornton Grout Finnigan LLP
Clifton P. Prophet
Toronto, Ontario
Gowling WLG
Miranda Spence
Toronto, Ontario
Aird & Berlis LLP
Kevin J. Zych
Toronto, Ontario
Bennett Jones LLP
Repeatedly Recommended
Michael E. Barrack
Toronto, Ontario
Blake, Cassels & Graydon LLP
Brendan Bissell
Toronto, Ontario
Reconstruct LLP
Philip Cho
Toronto, Ontario
WeirFoulds LLP
Larry Ellis
Toronto, Ontario
Miller Thomson LLP
Steven L. Graff
Toronto, Ontario
Aird & Berlis LLP
Monique Jilesen
Toronto, Ontario
Lenczner Slaght
R. Shayne Kukulowicz
Toronto, Ontario
Cassels Brock & Blackwell LLP
Kevin P. McElcheran
Toronto, Ontario
Kevin McElcheran Commercial Dispute Resolution
Alan B. Merskey
Toronto, Ontario
Cassels Brock & Blackwell LLP
Haddon Murray
Toronto, Ontario
Gowling WLG
Rachel Nicholson
Toronto, Ontario
Thornton Grout Finnigan LLP
Orestes Pasparakis
Toronto, Ontario
Norton Rose Fulbright Canada LLP
Joe Pasquariello
Toronto, Ontario
Goodmans LLP
Kyle Plunkett
Toronto, Ontario
Aird & Berlis LLP
Natalie Renner
Toronto, Ontario
Davies Ward Phillips & Vineberg LLP
Ken Rosenberg
Toronto, Ontario
Paliare Roland Rosenberg Rothstein LLP
Bobby H. Sachdeva
Toronto, Ontario
Miller Thomson LLP
Monique Sassi
Toronto, Ontario
Cassels Brock & Blackwell LLP
Aryo Shalviri
Toronto, Ontario
Blake, Cassels & Graydon LLP
E. Patrick Shea
Toronto, Ontario
Gowling WLG
Toronto Leading Practitioners - Financial Restructuring
Most Frequently Recommended
Chris Armstrong
Toronto, Ontario
Goodmans LLP
David Bish
Toronto, Ontario
Torys LLP
Scott A. Bomhof
Toronto, Ontario
Torys LLP
Christopher Burr
Toronto, Ontario
Blake, Cassels & Graydon LLP
Robert J. Chadwick
Toronto, Ontario
Goodmans LLP
Harvey G. Chaiton
Toronto, Ontario
Chaitons LLP
Pamela L.J. Huff
Toronto, Ontario
Blake, Cassels & Graydon LLP
Natasha MacParland
Toronto, Ontario
Davies Ward Phillips & Vineberg LLP
Brendan O'Neill
Toronto, Ontario
Goodmans LLP
Elizabeth Pillon
Toronto, Ontario
Stikeman Elliott LLP
Linc Rogers
Toronto, Ontario
Blake, Cassels & Graydon LLP
Tracy C. Sandler
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
Ashley John Taylor
Toronto, Ontario
Stikeman Elliott LLP
Robert I. Thornton
Toronto, Ontario
Thornton Grout Finnigan LLP
Marc Wasserman
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
Sean Zweig
Toronto, Ontario
Bennett Jones LLP
Consistently Recommended
Ian E. Aversa
Toronto, Ontario
Aird & Berlis LLP
Milly Chow
Toronto, Ontario
Blake, Cassels & Graydon LLP
Evan Cobb
Toronto, Ontario
Norton Rose Fulbright Canada LLP
Michael De Lellis
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
Caroline Descours
Toronto, Ontario
Goodmans LLP
John L. Finnigan
Toronto, Ontario
Thornton Grout Finnigan LLP
Mario J. Forte
Toronto, Ontario
Goldman Sloan Nash & Haber LLP
Jamey D. Gage
Toronto, Ontario
McCarthy Tétrault LLP
Virginie Gauthier
Toronto, Ontario
Gowling WLG
Asim Iqbal
Toronto, Ontario
Gowling WLG
Ryan Jacobs
Toronto, Ontario
Cassels Brock & Blackwell LLP
Aubrey E. Kauffman
Toronto, Ontario
Fasken Martineau DuMoulin LLP
Rebecca L. Kennedy
Toronto, Ontario
Thornton Grout Finnigan LLP
Sharon A. Kour
Toronto, Ontario
Reconstruct LLP
Joseph Latham
Toronto, Ontario
Goodmans LLP
Kyla Mahar
Toronto, Ontario
Miller Thomson LLP
D. J. Miller
Toronto, Ontario
Thornton Grout Finnigan LLP
Grant B. Moffat
Toronto, Ontario
Thornton Grout Finnigan LLP
Robin B. Schwill
Toronto, Ontario
Davies Ward Phillips & Vineberg LLP
Jennifer Stam
Toronto, Ontario
Norton Rose Fulbright Canada LLP
Leanne M. Williams
Toronto, Ontario
Thornton Grout Finnigan LLP
Kevin J. Zych
Toronto, Ontario
Bennett Jones LLP
Repeatedly Recommended
Gregory R. Azeff
Toronto, Ontario
Miller Thomson LLP
Martino Calvaruso
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
Philip Cho
Toronto, Ontario
WeirFoulds LLP
Dylan A. Chochla
Toronto, Ontario
Fasken Martineau DuMoulin LLP
David F.W. Cohen
Toronto, Ontario
Gowling WLG
Tony DeMarinis
Toronto, Ontario
Torys LLP
Larry Ellis
Toronto, Ontario
Miller Thomson LLP
Brian F. Empey
Toronto, Ontario
Goodmans LLP
Caitlin E. Fell
Toronto, Ontario
Reconstruct LLP
Kenneth D. Kraft
Toronto, Ontario
Dentons Canada LLP
R. Shayne Kukulowicz
Toronto, Ontario
Cassels Brock & Blackwell LLP
Edmond F.B. Lamek
Toronto, Ontario
DLA Piper (Canada) LLP
Natalie Levine
Toronto, Ontario
Cassels Brock & Blackwell LLP
Alex L. MacFarlane
Toronto, Ontario
Borden Ladner Gervais LLP (BLG)
Kevin P. McElcheran
Toronto, Ontario
Kevin McElcheran Commercial Dispute Resolution
Haddon Murray
Toronto, Ontario
Gowling WLG
Lee Nicholson
Toronto, Ontario
Stikeman Elliott LLP
Rachel Nicholson
Toronto, Ontario
Thornton Grout Finnigan LLP
Joe Pasquariello
Toronto, Ontario
Goodmans LLP
R. Graham Phoenix
Toronto, Ontario
Loopstra Nixon LLP
Kyle Plunkett
Toronto, Ontario
Aird & Berlis LLP
Natalie Renner
Toronto, Ontario
Davies Ward Phillips & Vineberg LLP
Ken Rosenberg
Toronto, Ontario
Paliare Roland Rosenberg Rothstein LLP
Waël Rostom
Toronto, Ontario
McMillan LLP
Gale Rubenstein
Toronto, Ontario
Goodmans LLP
Rajvinder S. Sahni
Toronto, Ontario
Bennett Jones LLP
John J. Salmas
Toronto, Ontario
Dentons Canada LLP
Monique Sassi
Toronto, Ontario
Cassels Brock & Blackwell LLP
Adam Slavens
Toronto, Ontario
Torys LLP
Steven Weisz
Toronto, Ontario
Cozen O'Connor
Bradley Wiffen
Toronto, Ontario
Goodmans LLP
London Leading Practitioners - Insolvency Litigation
Most Frequently Recommended
Timothy C. Hogan
London, Ontario
Harrison Pensa LLP
London Leading Practitioners - Financial Restructuring
Most Frequently Recommended
Timothy C. Hogan
London, Ontario
Harrison Pensa LLP
Repeatedly Recommended
Anthony G.J. Van Klink
London, Ontario
Miller Thomson LLP
Melinda Vine
London, Ontario
Harrison Pensa LLP
Ottawa Leading Firms
Repeatedly Recommended
Gowling WLG
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