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Corporate Insolvency in Canada

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What is corporate insolvency?

In short, a company becomes insolvent when it’s unable to pay its debts or has liabilities in excess of its assets. The purpose of the insolvency is for creditors to understand how much return they can expect from the insolvent/process, such as through assets and other forms of payment.

When a business realises it’s going to become insolvent, they usually contact a Licensed Insolvency Trustee to discuss options as being insolvent doesn’t always mean the end of a business. A Licensed Trustee can help you explore other debt relief options.

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What are your options for corporate insolvency?

Harris & Partners Inc. has been in business 30 years serving corporate and business clients. Cash flow problems and accumulated debts are common occurrences among corporations and other businesses alike.

Fortunately, there are several options available as recently the credit industry has become more flexible than ever. More creditors are allowing companies to make arrangements or proposals instead of going into corporate bankruptcy.

A struggling corporation may have the choice of informal payment arrangement, formal payment arrangement or proposal, protection through the Companies’ Creditors Arrangement Act (CCAA), receivership and/or bankruptcy.

Often, corporations and businesses that are insolvent will end up restructuring their debt, which can include filing a corporate proposal instead of filing for bankruptcy.

You or your Licensed Insolvency Trustee (LIT) can seek to work out a payment plan with your creditors or a refinancing that gives your company more time to pay its debts.


Division 1 Proposal

You can authorize your Licensed Insolvency Trustee (formerly trustee in bankruptcy) to make a proposal to your company’s creditors to pay a substantial portion of your unsecured debt over an extended time period.

Companies’ Creditors Arrangement Act

Available to businesses with $5 million in debt, you can receive short-term protection from your creditors to restructure your business and financial affairs. An initial application is made to the court to get protection.


A receiver is appointed by the secured creditor and represents the secured creditor’s interests. A receiver can be authorized to operate your business if it is necessary or advisable. For example, a receiver can be appointed to complete work in progress, carry out an important contract, or maximize the value of a business by selling it.

A receivership is usually initiated by court appointment but can be initiated privately. The receiver derives his or her rights through a court order or contractual agreement.


Bankruptcy proceedings are an option of last resort that can be initiated by a debtor or creditor. Bankruptcy also occurs automatically if a Division I Proposal under the Bankruptcy Insolvency Act fails.

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Support across Canada

Why Harris & Partners

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Remove up to 80% of your debt

Our Licensed Insolvency Trustees provide a customized service that could remove up to 80% of your debt and stress, so you can breathe easier.

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We speak your language

Our multilingual team provides support in many languages, from Farsi and Portuguese to Italian and Tamil, leaving out complicated jargon, so you understand everything, every step of the way.

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Debt support across nine provinces

Want to speak to someone in person? Our team is on hand to help at a Harris & Partners office near you.

Corporate insolvency FAQs

How do you qualify for insolvency?

Simply put, if you owe more than your assets or business is worth, you can file for insolvency. This is done through a Licensed Insolvency Trustee who can guide you through the process, while also exploring other debt relief options that may be more manageable.

Are insolvency and bankruptcy the same thing?

No, there is a difference between bankruptcy and insolvency.

If you’re bankrupt, you’re insolvent. However, you can be insolvent, but not bankrupt. This is because bankruptcy is the process of liquidating assets to pay off a debtor’s debt. Insolvency is the point at which a company’s debts outweigh their assets.

What does insolvent trading mean?

Insolvent trading means a company is no longer able to pay its debts, but continues trading and operating otherwise normally.

How long does insolvency take?

There’s no set or legal timeframe for the insolvency process and it depends on the size and state of the business, so it can take anything from weeks to years. In general the process will take between 6 months to 2 years to complete.

Book your free corporate insolvency consultation

Corporate and business financial challenges can be quite involved and diverse and so the options available for resolution can be equally diverse. Speaking with a licensed insolvency trustee can help you make the appropriate decision that is best for your organization.

At Harris & Partners Inc., our Licensed Insolvency Trustees have extensive experience with corporate insolvency. Over our three decades in business we have seen a wide range of companies – everything from small independent companies to franchises to companies with hundreds of employees and up to $15 million dollars of debt. We handle all corporate cases, and there is no business bankruptcy case we would turn away. Insolvency recovery is one of our key areas of specialty.

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Shahrad Nakhaie
Shahrad Nakhaie
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Kim Brown
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