If I declare business Bankruptcy, can I keep my business?

October 12, 2012 11:01 pm Published by

If I declare business Bankruptcy, can I keep my business?

If you declare bankruptcy you can keep your business under certain circumstances. If you are self-employed (sole proprietor or partnership) you can continue to operate your business while you are bankrupt or in bankruptcy or making payments under a Proposal. You will be required to report to the Trustee what your earnings are each month through you Monthly Income Statements. If you have significant assets belonging to your business you may be able to claim them as an Exempt Assets as your allowance for Tools of the Trade is $10,000.

If you declare bankruptcy in Canada, part of your duties under the Bankruptcy and Insolvency Act will be to disclose your income to the bankruptcy trustee on regular (usually monthly basis). Generally this is done through preparing monthly Budget Sheets or Monthly Income and Expense Statements. If you are self-employed, part of this duty then will be to disclose the income your small business makes on a monthly basis. This may mean more accounting for you, but it required so that the trustee can see how much income you have monthly.

If you own shares in a limited corporation that you use to earn an income, the value of these shares will need to be reviewed by the Trustee. Generally shares of limited corporations privately held (own by you the debtor) have little value to others but this will need to be discussed with your Trustee as each situation will need to be reviewed.

However, in British Columbia you cannot be a Director of a limited corporation if you are an UN-discharged bankrupt. If there are no other Directors if you have to resign, then the corporation cannot operate. You can remain as a director if you file a Proposal.