Term
| Differences between the BIA and CCAA |
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Definition
| The BIA is a statute driven procees, it follows set guidelines and procedures. The CCAA is a court driven process, which leads to "creativity" and isn't good for law. |
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Term
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Definition
| The CCAA is a statute of the Parliament that allows insolvent corporations owing their creditors in excess of $5 million to restructure their business and financial affairs. |
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Term
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Definition
| The CCAA exists as a means to bind all creditors, protect the assets of debtors, give creditors information about the debtor, provide ease in the administration of restructuring, and to allow corporations the opportunity to restructure and "get back on their feet." The CCAA is more flexible than the BIA, and is more useful for larger, more complex businesses. |
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Term
| Framework of Restructuring under the CCAA |
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Definition
| Assets remain vested in the debtor and the business continues to operate, giving them time to asses their situation and form a plan of action. The CCAA process allows the creditors to get more information about the debtor company and its current state. The company must define a business plan and restructuring plan. The court acts as a gatekeeper, facilitating and monitoring the restructuring process. |
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Term
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Definition
| Businesses applying under the CCAA must be insolvent (courts have decided that if it's "reasonably foreseeable a company won't be able to meet its future obligations" they can be considered insolvent; you can't stop bankruptcy if it's already too late), must owe in excess of $5 million, and must do business in Canada. You can only switch between the CCAA and BIA at the beginning of the process, and you must completely restart the process if switching to the BIA because it is very structured. |
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Term
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Definition
| It isn't always clear whether the court should accept a businesses registration under the CCAA as qualifications aren't clearly laid out. In a perfect world there would be an international court that dealt with international bankruptcies, but since this does not exist, Canada deals with assets where ever they are situated and companies can qualify even if they're headquartered outside of Canada but still operate within Canada. |
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