Are creditors threatening collections or legal action?
Struggling small businesses can fall behind on payments to suppliers or other creditors. They may also get into disputes with suppliers and creditors which can result in legal action.
Calls from collection agencies, threat of legal action or being sued can be very stressful for a small business owner. One of the best solutions to provide protection from creditors is to file a Proposal with a Licensed Insolvency Trustee.
- Under Canadian federal legislation, once a Proposal is filed by a Licensed Insolvency Trustee, all calls, legal actions and attempts to collect unsecured debts must stop.
- This legal protection from creditors is called a Stay of Proceedings. Even if legal action has already started, a Proposal stops it.
- Further, the protection from creditors allows the small business owner to restructure operations and put together a plan to repay a portion of the debts over time (typically over 5 years).
- Best of all, the business owner retains control of their company and the Proposal provides them with breathing room and a plan to move forward.
If an entrepreneur determines that the business is not viable, or if they do not have the money or energy to continue with the business, then the business can be put into bankruptcy. A bankruptcy provides the same Stay of Proceedings and protection from creditors as a Proposal. Either a Proposal or Bankruptcy can only be filed with a Licensed Insolvency Trustee.
For almost 40 years Farber’s experienced federally Licensed Insolvency Trustees have given small business owners breathing room and protection.
Contact a senior member of our Small Business Restructuring team, or call us at +1 (855) 416–3328 and ask for Andy Fisher, the Leader of the Small Business Restructuring team.