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Division 1 Proposal for Businesses

What is a Division 1 Proposal to Creditors?
There is no limit to the amount of debt that can be included in a Division 1 Proposal but if the individual filing the Proposal owes more than $250,000 not including a mortgage on a principle residence, that individual MUST file a Division 1 Proposal and cannot file a Consumer Proposal.
Corporations must file a Division 1 Proposal and cannot file a Consumer Proposal. Consumer Proposal legislation was put in place in 1997 to allow a streamlined Proposal process for consumers who had a relatively small amount of debt – less than $250,000. (originally it was limited to $75,000 in debt but was amended in 2009 to include up to $250,000 in debt and further allowed consumers to file jointly).
A Division 1 Proposal is a proposal or an offer to your creditors to settle your debts which generally means that you propose to pay back less than the full amount that you owe to them. A Div 1 Proposal must be done with the assistance of a Licensed Insolvency Trustee (formerly a Trustee in Bankruptcy) licensed under the Bankruptcy and Insolvency Act of Canada. If your offer or Proposal is accepted by the creditors and The Court, it becomes a legally binding on all parties. Once the Proposal terms are completed, the balance of the debt is written off by your creditors.
A proposal is a good alternative to bankruptcy when there is a core business that is viable in the long run. Creditors will realize a greater recovery while the debtors company, once it has met its obligations as outlined under the proposal, sees its liabilities extinguished.
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Process
- Engage the Services of a Licensed Insolvency Trustee
- The LIT will file the proposal, or the notice of intention to file a proposal, with the Office of the Superintendent of Bankruptcy.
- Stop making payments to all unsecured creditors
- Stay of Proceeding will immediately start: all salary garnishments will stop and lawsuits against you by creditors will be stayed (stopped).
- Secured creditors have the option of being part of a Division I proposal.
- Creditors must get more in the Proposal than they would in a Bankruptcy
- Attend at a meeting of creditors where creditors will vote to accept or reject the proposal.
- If at least 66.6 percent (two thirds) in dollars and 50 percent plus one in number of eligible creditors who vote approve the proposal, the proposal is accepted by the creditors.
- If the proposal is accepted by the creditors the Court review is required. If accepted by the Court, all unsecured creditors are bound by the proposal, even if some voted NO.
- If the proposal does not receive the required votes, you are immediately declared bankrupt as of the date of the meeting of creditors
- If your Division I proposal is accepted, you must adhering to the terms under the proposal (like paying money to the Trustee) other conditions in the proposal; and you retain your assets so long as you make your payments to your secured creditors.

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OUR TEAM

COLLEEN CRAIG
Colleen founded C.E. Craig & Associates Inc. in 2003 after 10 years in the insolvency industry. As a federally licensed Trustee in Bankruptcy she deals with the day-to-day issues that creditors and debtors encounter when they are faced with Insolvency situations. As a Chartered Accountant, Colleen brings a pragmatic approach to dealing with the complex matters and finding the right solution for all parties.

JANET WHITE
Janet has been with C.E. Craig & Associates Inc. since 2003, when the company opened. She helped build the practice from the ground up, giving her a thorough understanding of the ins and outs of insolvency legislation and procedures.

LESLEY BENTLEY
We were pleased to welcome Lesley Bentley into our firm in 2013. She has been an Estate Administrator for over 30 years offering advice to individuals struggling with personal financial issues.

BADGER
No formal insolvency training, but also non judgmental, loyal, and cute.
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C.E. Craig & Associates Inc. - Victoria
204 – 2736 Quadra Street
Victoria, BC V8T 4E6
Phone: 250.386.8778
Toll Free: 1-888-815-5050
Fax: 250.386.6864

C.E. Craig & Associates Inc. - West Shore
102-2823 Jacklin Rd
Victoria, BC V9B 2V8
Phone: 778.430.5587
Toll Free: 1-888-815-5050
Fax: 250.386.6864

C.E. Craig & Associates Inc. - Nanaimo
55 Front Street
Nanaimo BC, V9R 5H9
Phone: 1-888-815-5050
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