Alternatives to Commercial Bankruptcy

Even if your business is in debt, it’s not necessarily on the verge of bankruptcy. In fact, bankruptcy is a last resort. Before considering it, there are alternatives like a recovery plan, voluntary liquidation or a bankruptcy proposal. Each has its advantages and inconveniences and depends on your situation.

The recovery plan

A company could have financial difficulties for many reasons. By consulting an expert, you can devise a financial recovery plan together to restore its situation.

Overall, this plan would consist in :

• Identifying your business’s strengths and weaknesses : how do you stand out on the market? What is preventing your business from attaining its objectives? How can you improve the situation?
• Identify the threats your business is exposed to as well as the business opportunities to seize : do the dangers come from external or internal factors? How can you avoid them? What are new, potential market segments? And consumer trends?
• Develop and implement a recovery plan : subsequent to the analysis, the corporate turnaround professional will propose adequate recovery measures to get you back on track.

Voluntary liquidation

A company with financial difficulties, but that is not insolvent, can decide to cease its operations. It will need to begin a voluntary liquidation. It will need to have sufficient funds to pay its creditors.

Voluntary liquidation implies that :

• Assets will be realized, that is, the company’s property will be sold
• Company receivables will be recovered
• Employer, permit and commodity tax numbers will have to be cancelled
• Clearance certificates will have to be obtained from the government authorities
• Debts will be settled
• A statement of accounts will have to be made to the company’ shareholders or, as applicable, to the court

You should know that once the company is liquidated, creditors can sue the company’s shareholders personally for the amounts owed to them. A professional will be able to help you respect your obligations, maximize the sale of assets and, above all, avoid being held personally liable for the debts incurred by the company. Don’t hesitate to call on one of our insolvency experts. They will be in the best position to help you find solutions.

Bankruptcy proposal

The purpose of the bankruptcy proposal is to carry out a financial reorganization using the Bankruptcy and Insolvency Act. To do so, an agreement is reached with your creditors. Thanks to this solution, the company is freed from the procedures that have been initiated against it (seizures, collection measures, legal proceedings.) Furthermore, it can continue its operations, and as a result, have time to reorganize financially.

Bankruptcy

As mentioned earlier, bankruptcy is a last resort. However, it can be less expensive than other debt management solutions. Like a bankruptcy proposal, bankruptcy results in the termination of proceedings against the business and cessation of its activities.

Call on a professional

To get your business back on track, you’ll need a trusted partner who understands your situation and has the expertise to help you. Our business recovery professionals and licensed insolvency trustees meet all of these criteria.

Don’t wait for the situation to get worse. Ask one of our experts to assess your company’s situation. Together, you can choose the best solution to get you back on your feet.

Has your SME accumulated debts and you don’t know how to get out of it? Book an appointment with one of our insolvency experts. They will help you find solutions. It’s confidential, judgment-free and the first meeting is free.