Types of Bankruptcy in Canada
Within bankruptcy there are two main types of bankruptcy. One covers business bankruptcy and personal bankruptcy and the other covers personal bankruptcy only.
It’s important to know how bankruptcy works and also to find out all of the options that are available for you. When you go to meet with your Trustee, your financial information will be reviewed to help determine which avenue is the best for you. See our page on the personal bankruptcy process for more information on this topic.
Small Business Bankruptcy
If a business is working under sole proprietorship or as a partnership, then the business bankruptcy is essentially treated as a personal bankruptcy. In the case of sole proprietorship or partnership, the people are acting as the business, and their personal assets are not separated from their business assets.
Incorporated Business Filing bankruptcy
If the company in question is an incorporated business, then the assets and the business are their own entity. Having a business incorporated helps to protect the personal assets from the business creditors.
If your corporation is having financial difficulties, the earlier that you make an appointment to meet with a Trustee, the more options there may be to deal with your case. We can review all the options available to help see what the best solution is and possibly avoid a bankruptcy.
Bankruptcy Protection and Insolvency
While the term Bankruptcy Protection is a U.S. term, it is referring to when a business/company is declared insolvent. Insolvency is the failure of a business or an individual or to pay their debts when they are due. In the case of a business – it can also occur if the total value of debts is larger than the total value of the assets.