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Legal Guide


A corporation may be insolvent without being bankrupt. By legal definition, a company is “insolvent” if:

  • •     It is unable to meet its obligations as they generally become due;
  • •     It ceases to pay its current obligations as they generally become due in the ordinary course of business; or
  • •     The aggregate of its property is not sufficient to enable payment of all of its obligations if disposed
    of at a fairly conducted sale under legal process.

Arrangements under the Companies’ Creditors Arrangement Act


A corporate debtor can seek protection from its creditors by making an application under the CCAA. The CCAA is not a detailed code like the BIA, but is a relatively brief flexible statute that is driven by court orders. Because of its flexibility, the CCAA has been used in most complex insolvencies for large Canadian corporations. A corporate debtor can seek protection from its creditors by making an application under the  CAA. The CCAA is not a detailed code like the BIA, but is a relatively brief flexible statute that is driven by court orders. Because of its flexibility, the CCAA has been used in most complex insolvencies for large Canadian corporations.


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