I n t e r n at i o n a l F e at u r e
Getting To Know You
A Primer on Canadian Bankruptcy
J a c o b Ba r r o n
2009 was to Canada what 2005 was to the U.S., at least in terms of bankruptcy. A previously passed sweeping reform to the Bankruptcy Code went into effect in the fall, in September 2009 for Canada and October
2005 for the U.S., preceded by a massive increase in filings that colored the statistics for the whole year.
Additionally, just as the U.S.-approved Bankruptcy Abuse Prevention and Consumer Protection Act of
2005 (BAPCPA) was considered a tightening of the bankruptcy rules, so were Canada’s amendments to its
governing legislations. In both instances, the insolvent, both consumer and business, rushed to the courts
to take advantage of the more lenient laws before they expired. The total number of insolvencies in Canada
in September 2009 was 28.4% higher than the month before, while liquidations, simply called bankruptcies
in Canada, increased by 29.1%.
Bankruptcy proceedings are currently stabilizing in Canada, but the new rules have affected proceedings in
a number of different ways. When an insolvent debtor becomes a bankrupt debtor in Canada, U.S. creditors
and their companies doing business with them may face a number of unique differences between the two
neighboring nations’ bankruptcy systems. Instead of one governing Code in the U.S., Canada has multiple
pieces of legislation governing various portions of the proceedings. An unprepared creditor unfamiliar
with the occasionally subtle nuances of Canada’s bankruptcy system may wind up missing something, and
missing their money in return.
Les Trois Amis
A discussion of Canadian bankruptcy as it relates to creditors begins and ends with the nation’s three bankruptcy laws. “We have three legislations that deal with bankruptcy,” said Hubert Sibre, a partner at BCF LLP
in Montreal. “One is the Winding Up Act [technically named the Companies Winding Up Act], then we
have the Bankruptcy and Insolvency Act (BIA) and then we have the CCAA, the Companies’ Creditors
Arra