C.E. Craig & Associates Inc.

Division 1 Proposal for Businesses

What is a Division 1 Proposal to Creditors?

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.

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.

Reach out to a debt solutions manager today:

CALL TODAY

FREE CONSULTATION

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.
If you meet the conditions in the proposal in full, you will be legally released from the debts included in the proposal. If during the term of the proposal, all obligations are not met by the debtor, then the Trustee or a creditor may apply to the Court for the proposal to be annulled and you’ll be placed into bankruptcy.
Division 1 Proposal

Reach out to a debt solutions manager today:

CALL TODAY

FREE CONSULTATION

OUR TEAM

Colleen Craig

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 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

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 the Dog

BADGER

 No formal insolvency training, but also non judgmental, loyal, and cute.
 

Reach out to a debt solutions manager today:

CALL TODAY

FREE CONSULTATION

CHECK OUT OUR BLOG

Reach out to a debt solutions manager today:

CALL TODAY

FREE CONSULTATION

OUR REVIEWS

Reach out to a debt solutions manager today:

CALL TODAY

FREE CONSULTATION

RESOURCES & FAQs

VIDEO RESOURCES

FREQUENTLY ASKED QUESTIONS

VIEW FAQs

Reach out to a debt solutions manager today:

CALL TODAY

FREE CONSULTATION