The Concordance Proposal: How to Get Along With Your Creditors Being a Business?

Keep control of your business by making a proposal for debt relief (also known as a regular proposal). This legal technique is well defined in the Bankruptcy and Insolvency Act.

To use it, you must first get in touch with a trustee in bankruptcy (the modern term is licensed trustee in insolvency).

The aims of the proposal concordataire/ordinaire:

  • An insolvent company has the right to propose a plan to its creditors to reduce the amount of its debts, to reorganize them or to extend the maturity of its payments. The acceptance of this plan will allow the continuation of the commercial activity of this company.
  • When a first-class concordat proposal is drafted, the various parties involved come out all the winners and at the same time avoid bankruptcy of the company.
  • If all goes well, the company should suddenly boom, while the creditors will recover a higher amount as a result of bankruptcy.

 The 4 reasons to use a proposal

If you are a director of the company, you would probably like to know the main reasons for turning to the proposal.

Here are the 4 predominant factors to choose this solution:

1. Protecting your business (against the threat of foreclosures and lawsuits).
2. If the proposal allows, you may in some cases terminate your commercial lease.
3. Your business will not cease trading.
4. Your creditors will no longer harass you for your outstanding amounts.

Protect your business with a notice of intent: when the proposal is not drafted

If you are concerned that one or more of the creditors will initiate legal proceedings against the company in the near future, a notice of intent may be required (this is the case if these lawsuits interfere with commercial transactions). of the company).

Why should you write the notice of intent?

  • If you suspect the municipality or Hydro-Québec to cut you some public services such as natural gas, water or electricity.
  • If you feel the impact of your continued operations by your main suppliers.
  • If the taxman or a creditor is about to have the bank account of the company or its assets seized.

Sometimes you do not have enough time to write an ordinary proposal before there are consequences. Learn more about the Notice of Intent that will let you breathe while waiting for the next step.

As soon as the notice of intention is filed, here is all that is suspended (temporarily if the ordinary proposal is not accepted):

  • Legal actions against the company.
  • Payments to creditors.
  • Seizures in progress.

The great advantage of the notice of intention is to give the company the necessary time to conceive a tempting proposal to all its creditors without suffering the effects of its indebtedness.

To have the assistance of an experienced intermediary (a trustee in bankruptcy in Quebec) in writing your notice of intent , COMPLETE THE FORM ON THIS PAGE.

You will stop all legal remedies threatening you. Concentrate on a way to save your business now!

The stages of the proposal

A lot of people believe that bankruptcy offers the only way out of a troubled financial situation.

This is however not the case.

The proposal could get rid of all your debts (or a fraction) if you offer it in the right way to your creditors. The goal is to get your company out of financial trouble to get a new take off.

Thanks to the advice and information provided by our quality partners, your business will rise from the ashes and recover its financial health.

Preliminary meeting with your authorized insolvency trustee

First, the trustee in bankruptcy will study in detail your situation and then tell you your options.

Depending on your context, two solutions are available to you:

1. Notice of intent (see above for usefulness).
2. The proposal concordataire.

Documentation must be approved

Be aware that a signature is required at the bottom of the notice of intent (as well as for the ordinary proposal) before it can be shared with your creditors.

The statement of the proposal

The testimony of your documentation (the proposal) will be filed with the Superintendent of Bankruptcy by the trustee in bankruptcy.

At this time, your request will be registered in due form.

21 days later (or earlier), the Insolvency Trustee will call a meeting of creditors to vote for or against your proposal.

Your creditors are notified

To announce the date of the meeting of creditors, the trustee in bankruptcy will send to all your creditors a message that will include several things:

  1. The proposal concordataire itself.
  2. A financial report does not omit any details about your company.
  3. The statutory balance sheet.

The creditors announce themselves for or against the proposal

From the moment the proposal is filed until the date of the meeting, each creditor will have the chance to vote for or against your plan.

Know that a dollar equals one vote, which means that a creditor to whom you owe more money will have a greater impact on the final decision than a small player. 

What happens if your proposal is rejected?

Unlike the consumer proposal that affects individuals, the proposal can not be reviewed or rewritten.

You only have one chance. If you get a refusal, your business automatically goes bankrupt.

What happens to the meeting of creditors during the presentation of a proposal?

The meeting of creditors

The trustee in bankruptcy will present your finances to the meeting of creditors and will take the time to properly answer questions about the ordinary proposal to everyone.

Note: if some of the creditors had already voted, they have the right to change their minds.

You may decide to add or amend your proposal at this meeting to satisfy the creditors. If, despite all your concessions, you do not win the popular vote, the business falls under the law of bankruptcy.

Ratification of the proposal to the court

After a vote in your favor, the authorized insolvency trustee will go to the Courts for the ratification of the document.

Payments provided for in the contract

Under the agreement provided for in the ordinary proposal, the company will have to pay what it promised to repay to the trustee in bankruptcy.

It may not exceed 30 days, unless the inspectors or creditors authorize it.

Proof of release and release of creditors

When all amounts are paid by the deadline stipulated in the agreement, the insolvency trustee will send you a document.

This confirmation of the end of the proposal and of your financial obligations will also announce that your company is no longer tied to the trustee in bankruptcy.

 What happens after a proposal is filed?

As soon as the notice of intent or the proposal for bankruptcy reaches the OSB (Office of the Superintendent of Bankruptcy), your company no longer has to pay its creditors.

  • Normally, there is also a suspension of garnishments and all legal actions. Remember that if your proposal is rejected, these legal proceedings will start again.
  • If your proposal is accepted, the company will release the indebtedness mentioned in the ordinary proposal.
  • If your business leases its business premises, you can notify your landlord of the termination of your lease thirty days after the filing of the notice of intent.

However, some debts will never fade: secured debts and special debts. You will not be able to include these amounts in your proposal.

What are these special debts? Here are a few :

  • All your claims from fraudulent transactions.
  • Any contraventions or punishments from the Courts.
  • If there are any interests that add to any special claim.
  • If you have missed a claim to the insolvency trustee.

The disposition of the company in order to make a proposal concordataire!

The primary provision is the insolvency of the company.

This means that the company does not have the means to pay its creditors in a timely manner.

 The proposal concordataire you free of what debts?

What will disappear from the company’s file: the outstanding portion of the unsecured creditors and any other clause included in the proposal.

It is not impossible to delete secured claims. In order to do that, you have to add them to your proposal and hope the creditors will accept it. Warning ! This offer is rarely made to secured creditors because it is much more likely to be rejected .

How far can the debt restructuring proposal go?

On what period of time can a proposal be applied?

A reasonable amount of time if you want the creditors to accept it. In the law, you will not find any limitations or parameters requiring you to pay a minimum monthly or in a certain time.

It all depends on the creditors’ approval. Be aware that they will know the financial details of your business, this is not the time to try to fool them. A modest amount or too long delays will attract an immediate refusal.

 Under what conditions will the proposal for bankruptcy lead to bankruptcy?

The rejection of the proposal by creditors (if the vote is not two-thirds in your favor) will result in the bankruptcy of your company. Similarly, if your company does not respect the terms of the contract, it will go directly into bankruptcy.

Which creditors can be reimbursed using a proposal for debt?

Which creditors can be reimbursed using a proposal for debt?

Come discover the function of each type of creditor and what they are entitled to do.

The definition of the creditor: a person to whom he is owed money.

Here are some examples:

  • A partnership.
  • One person.
  • The government.
  • A company.
  • A limited partnership.
  • A joint stock company.
  • A non-profit organization.
  • Any individual or group of people to whom you owe money.

Creditors are divided into four distinct categories: unsecured creditors, secured creditors, special creditors and preferred creditors.

Here are their roles and their differences.

The definition of an unsecured creditor

  • It has no security (a lien guaranteeing repayment).
  • Depending on the share proposed in the proposal, he will receive only a fraction of his claim.
  • When you have finished repaying your debts according to the financial context of your proposal, you will be released from the unsecured creditor.

An example of unsecured creditor : The Visa Credit Card Company.

The definition of a secured creditor

  • He holds a lien (a lien guaranteeing repayment).
  • You can not generally get rid of secured creditors through a proposal for debt relief.

Example of a secured creditor : Your financial institution that has granted you your mortgage loan.

Namely : You can however include your secured creditors in your proposal, but this is rather rare.

What is a creditor with a special status?

  • A “special” creditor means that you do not get out of debt even after you have repaid your proposal.
  • You will have to pay it even if your debts were unsecured or privileged.

The definition of a preferred creditor

The definition of a preferred creditor

  • The claim has no guarantee, however, it is mandatory to put it at the top of the list.

Example of a preferred creditor : The trustee in bankruptcy.

Find the professional who will get you out of your debt situation!

You may be wondering whether the (ordinary) debt proposal would be a solution to the indebtedness of your company.

Find an expert who will help you build your proposal today! 

Do not lose sleep while trying to do the impossible. It happens to everyone to experience ups and downs. Your company only needs a second wind.

Turn to a professional, accustomed to corporate turnaround and insolvency!


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