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Corporate bankruptcy in Canada

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Business bankruptcy - get the debt relief you deserve

Every business has its ups and downs. If your company is facing the possibility of bankruptcy, it can feel overwhelming. But remember, you don’t have to face it alone – we’re here to help.

Our team of Licenced Insolvency Trustees knows the ropes of business bankruptcy. We’ll take the time to understand your specific situation, explain your options in a straightforward way – minus all the legal jargon – and work together to find the best way forward.

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Filing corporate bankruptcy - it's a simple process


We’ll sit down with you for a friendly chat to really understand what you’re going through. Don’t worry, it’s a safe place to talk freely and we won’t judge. We’ll ask about your money, your debts, and who you owe – just so we can help you better. And remember, talking to us is free and private.


After we get the full picture of your situation, we’ll start making a plan that’s just for you. We’ll look at all the ways you can deal with your debt, but we’ll only choose what makes you feel comfortable. We won’t push you into anything. Everything we do is about what works best for you.


When you’re happy with the plan, we’ll get it going. We’re here to make sure you’re okay financially, and we’ll be with you the whole time, giving help and advice. We care about making things easier and less stressful for you.

Shahrad Nakhaie
Shahrad Nakhaie
They are so great, every thing was so easy for me. Unbelievable, All my debt are gone now and I feel like I'm free, thanks Osman Ali for all you did for me, at the first time it's even hard to believe that was real, but it's real and easy. Thank you bro for your help.
Osman is a professional and you cant find anybody better. He really cared about my situation and paid attention to every little detail so he can help me best. Thank you osman and the rest of the team for helping me through my struggles.
Banda Gueye
Banda Gueye
Osman is a vert nice gentlemen, he was polite sweet and gentle. He really cared about my situation and paid attention to every little detail so he can help me best. Thank you Osman and the rest of the team for helping me through my struggles.
Kim Brown
Kim Brown
So far this has been a great company, I have been with them over a year. Every time I have an issue Josh jumps right on it and helps me out. He never makes me feel like I'm being a pain in the butt 🙂 I definitely recommend them, I have referred two of my family members to get help and now Josh is helping them as well. I thank you Josh for all the hard work and responding so quickly to all my messages.⭐️⭐️⭐️⭐️⭐️
Ajanthan Murugananthan
Ajanthan Murugananthan
Staff members Samuel and Josh were both amazing. Both very friendly, professional, and efficient. They took care of my credit card issues and line of credit and made it manageable. I would highly recommend Harris & Partners Inc. They have given me a new life in my financial life to success.
Paul Woo
Paul Woo
Staff members Yasan and Josh were both amazing. Both very friendly, professional, and efficient. They took care of my credit card issues and made it manageable. I would highly recommend Harris & Partners Inc.
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What is corporate bankruptcy in Canada?

Corporate bankruptcy is a formal process for incorporated businesses that find themselves unable to pay their debts. They offer these businesses a chance to wind-up operations, so they can manage their debt more effectively.

This form of bankruptcy will develop a reorganization plan and is different from the process for sole proprietorships and partnerships. Since Canada doesn’t have a designated bankruptcy court, corporate bankruptcies are dealt with in our provincial courts.

We understand that this is a lot of information to digest, so don’t worry if you’re left with questions. Our team is always ready to help, and can give you the answers you need. Get in touch with our Licensed Insolvency Trustees today to find the best debt solution for your business.

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Is corporate bankruptcy in Canada worth it?

If your company is struggling to pay off its debts, it’s important to seek specialist guidance to find the best way forward. Filing for business bankruptcy is certainly one option, but it’s typically viewed as a final measure.

The good news is, corporations are set up in a way that shields their owners from a number of financial responsibilities. This is because, under Canadian law, the Bankruptcy a corporation is its own legal identity, separate from its owners. As a result, there are tailored corporate bankruptcy options in Canada.

It’s important to understand, though, that if you choose corporate bankruptcy, the business won’t continue; employees will likely lose their jobs, though may be able to recover severance through a government program called WEPPA.

Want to talk it through before you make a decision? That’s where our Licensed Insolvency Trustees come in. We know there is a lot at stake and can answer any questions you may have about corporation bankruptcies in Canada, helping you find the best path forward for your business.

Declaring corporate bankruptcy in Canada – what are my options?

There are three ways your business can become bankrupt:

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Option 1. Voluntary assignment

The most common type of business bankruptcy and involves you assigning your company’s assets to the general benefit of your creditors. Your company would need to be insolvent for this to happen.

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Option 2. At a creditor’s initiation

In a petition for a bankruptcy order (involuntary assignment), your creditors would file a petition in a provincial court to seize your assets. They would also have to state that you have committed an act of bankruptcy within the last six months.

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Option 3. Division I Proposals

If a restructuring plan is voted down in a Division I Proposal or does not receive court approval, your company will be deemed bankrupt.

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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.

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Personal assets and business bankruptcy

Bankrupting an incorporated company in Canada doesn’t necessarily put your personal assets at risk. However, there are a couple of scenarios to be aware of:

  • Personal Guarantees: If you’ve vouched for a loan using your personal assets as security (for example, a home), these assets might be at risk if the loan isn’t paid.
  • Director Responsibilities: If you hold a director’s position in the corporation and there are certain outstanding payments to the government (like unpaid source deductions, HST, GST, and others), you could be held accountable.

It’s always wise to be informed and proactive, but you don’t have to face it alone; we’re here to support and guide you every step of the way.

Meet our licensed insolvency trustees across Canada

We have been helping businesses just like yours since the 1960’s. Give our specialists a call today and we can help you find the best path forward for you and your company.

  • Jay harris
    Jay T. Harris
    Licensed Insolvency Trustee
  • kyle
    Kyle Harris
    LL.B., CIRP, LIT
    Licensed Insolvency Trustee
  • adam
    Adam Fisher
    Licensed Insolvency Trustee
  • Joshua Harris
    Joshua Harris
    Licensed Insolvency Trustee
  • advisor
    David Adams
    Licensed Insolvency Trustee
  • doug
    Doug Loiselle
    Licensed Insolvency Trustee
  • Rob McLernon
    Robert McLernon
    BComm, CIRP, LIT
    Licensed Insolvency Trustee
  • shelley
    Shelley Koehli
    Licensed Insolvency Trustee
  • Jill Strueby
    Licensed Insolvency Trustee
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Sole proprietorship bankruptcy in Canada

When a sole proprietor in Canada faces financial challenges and considers bankruptcy, it’s important to recognize that personal and business finances are legally the same. This means if you declare bankruptcy as a sole proprietor, it includes both personal and business debts.

The process involves surrendering certain personal assets to a Licensed Insolvency Trustee. The trustee then sells these assets to pay off as much debt as possible. We understand that this can be a stressful and scary thought. But certain personal assets, like a portion of your home equity or your car, may be exempt from seizure depending on provincial laws. We will explain all of your options, because a Consumer Proposal may suit you better.

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Partnership bankruptcy in Canada

Bankruptcy for partnerships in Canada can be slightly more complicated than sole proprietorships, as it involves multiple individuals. But don’t worry – that’s where our team comes in. With years of experience, you can count on us to guide and support you, every step of the way.

When a partnership declares bankruptcy, it affects both the business and the personal finances of each partner. Like in sole proprietorship, the partners’ personal assets might be at risk, depending on their liability in the partnership agreement.

The process requires a Licensed Insolvency Trustee to take control of the partnership’s assets, liquidating them to pay off the debts. However, as each partner may also be responsible for the partnership’s debts, their personal assets could be used to settle these debts if the partnership’s assets are insufficient.

If you’re considering bankruptcy as a solution for your partnership, get in touch with our Licensed Insolvency Trustees today. They will take the time to understand your unique situation, finding the best solution for your business.

Corporate bankruptcy FAQs

Can a company file for bankruptcy in Canada?

Yes, a company can file for bankruptcy in Canada. The process is similar to personal bankruptcy, but there are some additional requirements. To file for bankruptcy, a company must be insolvent, meaning that it cannot pay its debts. The company must also have a minimum of $1,000 in debt.

What happens when a company files for bankruptcy in Canada?

In a liquidation business bankruptcy, a company stops its operations completely and a trustee will be appointed.

Am I eligible to file for corporate bankruptcy in Canada?

To be eligible for corporate bankruptcy in Canada, you must meet the following criteria:

  • Owe at least $1,000
  • Have debt greater than the sale value of your assets
  • You’re unable to pay debts when they’re due

It’s worth knowing that, even if you meet the above criteria, there are other options available and bankruptcy should be treated as a last resort.

This includes debt relief options such as debt consolidation and corporate proposal, both of which can help you avoid corporate bankruptcy.

To find out more about the alternatives to corporate bankruptcy, get in touch with us today. Our Licensed Insolvency Trustees can help you find the best path towards financial security for your business.

How do I avoid corporate bankruptcy in Canada?

A commercial proposal is one alternative. This is used to pay creditors a specified amount of debt over an agreed period of time, allowing your business to continue operating.

We understand that navigating through tough financial times can be challenging, especially when your business is involved. And, while business bankruptcy is an option, it should always be kept as a last resort.

What happens in business bankruptcy in Canada?

When a company files for bankruptcy, a Licensed Insolvency Trustee (LIT) is appointed to oversee the process. The LIT will assess the company’s assets and liabilities and develop a plan to repay creditors. The plan may involve selling the company’s assets, restructuring its debt, or winding up the business.

How common is bankruptcy in Canadian business?

Business bankruptcy in Canada may be more common than you think. According to the Office of the Superintendent of Bankruptcy, there were 2,621 business bankruptcies in Canada in 2022 – up 35% from 2021.

What is the difference between corporate insolvency and bankruptcy?

Corporate insolvency is a financial state in which a company is unable to pay its debts as they become due. Bankruptcy is a legal process that happens when a company is declared insolvent, allowing it to discharge its debts.

What does a corporate bankruptcy trustee do?

In the event of corporation bankruptcies in Canada, a trustee will manage the company’s assets. They will distribute corporate assets to secured and unsecured creditors, according to bankruptcy law. The sale’s proceeds will then be used to settle the company’s debts.

Can a Ltd company declare bankruptcy?

Yes, a Ltd company can declare bankruptcy – the process is the same for any other incorporated company.

What is exempt from bankruptcy in Canada?

There are no exemptions for assets in a corporate bankruptcy, however, the bankruptcy only relates to the corporation, so if a director or shareholder has assets, those remain unaffected.

What is the number one cause of bankruptcy in Canada?

The number one cause of bankruptcy in Canada is over-extension of credit. This means that people or businesses are borrowing too much money and are unable to make their repayments. Additionally, businesses cycle through the economy, for example a restaurant may be very popular for a period of time, but not remain sustainable in the long run.

How long does it take to clear bankruptcy in Canada?

A corporate bankruptcy will not show on a director or shareholder’s credit report. A corporate bankruptcy only gets a discharge if all debts have been paid in full through the process.

Is bankruptcy free in Canada?

Bankruptcy is not free in Canada. There is a filing fee of $200 and you will also need to pay the fees of your Licensed Insolvency Trustee. To get a more detailed quote, give our team of specialists a call today.

Does corporate bankruptcy affect personal credit?

In most cases, corporate bankruptcy will not affect your personal credit rating or score as the bankruptcy will only relate directly to the interests of the corporation.

The only ways in which your personal credit may be affected is if you signed any personal guarantees of the debt, if you were a director responsible for things such as wages, or if you were a director paying yourself dividends from the company.

In these scenarios, your personal credit may be affected by the corporation’s bankruptcy.

Does corporate bankruptcy affect personal assets?

Corporate bankruptcy will not affect your personal assets in the majority of cases. However, exceptions to this rule occur if a business owner has put any personal assets and property as collateral against business debts, in which case they will be subject to forfeiture.

Can I get a business loan after filing for corporate bankruptcy?

Technically, you can start a business as soon as you file for bankruptcy or after the bankruptcy process has been completed.

In the same vein, you can apply for a loan after filing for bankruptcy, but it will be more difficult to obtain one as creditors will need to be convinced you won’t default. These loans may also come with higher interest rates if they deem you to be financially risky.

File for business bankruptcy with Harris and Partners

A Licensed Insolvency Trustee (previously known as a Trustee in Bankruptcy), can conduct a review of your corporate finances to help you determine if there is another option that is suitable besides declaring bankruptcy. Often there is another option available to you even if your corporation has been insolvent for an extended period of time.

If there is no other option but bankruptcy, your trustee will administer the process, complete the necessary forms, and handle all communications with creditors. Company assets will be liquidated to pay creditors as much as possible.

If you need help from those who specialize in solving debt problems, contact us at Harris & Partners Inc. Licensed Insolvency Trustee. Across Canada, our federally Licensed Insolvency Trustees can help you achieve long-lasting financial solutions.

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Where you can find our corporate bankruptcy services in Canada

We operate across all provinces in Canada except Quebec, so help is always available at a Harris & Partners office near you.

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