12. Introduction to Bankruptcy
The Bankruptcy and Insolvency Act (BIA) is the Canadian federal statute governing bankruptcy and insolvency matters in Canada. The BIA provides a framework for individuals and companies to restructure their debt and liquidate their assets and provides creditors with a mechanism to collect what is owed to them. The BIA is administered by the Office of the Superintendent of Bankruptcy in Canada and applies to all provinces and territories. It outlines processes for filing for bankruptcy, the duties of trustees and creditors, the rights of bankrupts, and other related matters. The BIA also provides mechanisms for consumer proposals and debt agreements, which are alternatives to bankruptcy.
The following are some key features of the BIA:
- The Bankruptcy and Insolvency Act (BIA) is the primary federal statute in Canada governing insolvency and bankruptcy proceedings.
- It sets out the rights and responsibilities of individuals and organizations facing financial difficulty, as well as the procedures for dealing with their debts.
- It provides for a trustee to be appointed to manage the financial affairs of a bankrupt, and to realize assets and distribute proceeds to creditors.
- It also provides for the discharge of certain debts and the protection of creditors’ interests.
- It allows for the reorganization of businesses in financial distress, through arrangements entered into by creditors and debtors.
- The BIA also sets out the rules governing the proceedings of insolvency trustees, as well as the duties and liabilities of those who are involved in insolvency proceedings.
- It also provides for the regulation of consumer proposals, which is a form of repayment arrangement that can be used to avoid bankruptcy.