HELPING YOU SOLVE YOUR DEBT PUZZLE
Is a Corporate Bankruptcy always necessary?
Discover if filing a corporate bankruptcy is always necessary and what to do.
Book Your Free Consultation
Let’s explore your corporate debt options together.
Steps if you are Shutting Down a Company without a Formal Bankruptcy
As well, by legislation Director or Officer of a limited corporation are automatically held responsible for some corporate debts. These specific types of obligations and the individual amounts vary from province to province, but can include such items as:
- CRA trust claims (employee remittance)
- HST/GST
- Employee wages
- Provincial Tax
- WCB (Workers Compensation)
- Personal guarantees
1. Notice to Trade Creditors
If you are a small business owner and your business is not viable, then shutting down may be the only option. As discussed above, you may also be personally liable for some corporate debts and it is best to be clear about your personal exposure.
If there is no need for a formal bankruptcy, we often recommend write a brief letter to each creditor. This letter or email can outline the difficulties and inform each creditor that no further payments will be forthcoming. Creditors may choose to respond or not. Creditors may notify you if they feel you owe them personally (personal guarantee). You must respond to them in writing stating your position. Responding is essential if you are personally named in the legal action. You should ask to see the signed personal guarantees if you are personally named by a creditor.
2. Notice to CRA
If you are shutting down a company, as a Director you do have an obligation to file the final outstanding tax returns. These include corporate returns (T2, GST, PST, T4’s) etc with the Canada Revenue Agency (CRA) and PST and WCB with the provincial authorities.
The last step is to file a request to CRA to cancel your CRA Business Number (BN) once final returns have been completed.
Note, if there is debt remaining to CRA they will not allow you to cancel your business Number. They do this to allow them to collect against the Directors personally.
The company will still legally exist as long as the Annual Returns with the Registrar of Companies if filed each year. However, after two consecutive years of non-filing, the company will be struck from the Register. After being struck from the registry, the company will no long legally exist.
Personal InsolvencyWithin a few months of shutting the business, it will become clearer what debts will remain personally either as Director Likability or under a guarantee. At these times, the principles of the corporation may have to consider the personal debt options. Personal options for individuals who are burdened by insurmountable debt include Personal Bankruptcy or Consumer Proposal
Or review recommendations from the Office of the Superintendent of Bankruptcy at this location
At C.E .Craig & Associates Inc we offer a FREE Consultation where we sit down with you to review both business and personal debt solutions
Canadian Corporate Bankruptcy vs Personal Bankruptcy: What’s the difference?
Often people are confused when the talk about owing their own business. Under Canadian law, a corporation (also called a limited company) is considered a “person”. The company is also called a ‘business”. A corporation is a separate individual for insolvency purposes. It can own its own assets and owe its own debts. A corporation is separate from the person/people that own it legally. (called shareholders)
However, many people who operate a “business” are operating as a “sole-proprietor” and do not own a corporation. For tax and insolvency purposes, a sole proprietor is the business. They are one in the same. If a person is a sole proprietor and experiencing debt issues, then they have to consider personal bankruptcy or a consumer proposal.
Need Business Debt Help?
Book Your Free Consultation
Easily understand your business debt solutions, book a free consultation with the C.E. Craig & Associates Team. Our experienced Licensed Insolvency trustees will be there to support you through debt relief.
Testimonials
Client Testimonials & Reviews
Don’t just take it from us.
See what are happy clients have to say about solving their debt puzzle.
How We Help Businesses
Other Corporate Insolvency Services
Corporate bankruptcy
Sometimes, even with the best efforts of staff and management companies can find themselves struggling with debt and a corporate bankruptcy might be considered.
Receivership
Receivership is an option when there is a corporate insolvency. A Receivership is an option for a secured lender when a debt is unpaid and in default.
Division 1 Proposal
A Division I Proposal is a formal procedure governed by the Bankruptcy and Insolvency Act and is available to both businesses/corporations, as well as individuals.
Business Bankruptcy Resources & Information
Read the latest guides, insights, and resources prepared by our team to help you have peace of mind.
Contact Us
Reach out to a debt solutions manager today
There can be many solutions to debt problems and every person’s story is unique. At C.E. Craig & Associates Inc. we take the time to listen to you – to help find the best option for you. Every journey begins with one single step.