Debt Restructuring

Corporate Debt Restructuring

Businesses sometimes suffer temporary financial difficulty which, if left unchecked, can lead to turmoil or possibly even business failure. Often, the solution is a matter of restructuring the business’s debt to allow it to continue its operations and prosper into the future.

Options for Business Owners

When restructuring corporate debt, business owners have options: they can go it alone, approach creditors themselves and try to independently structure settlements with each of their creditors, or under certain circumstances, they can file a formal restructuring plan (called a Division I Proposal) and benefit from legal protection from their creditors while they continue their business unhindered.

If the financial difficulty is likely to be short-lived, and business owners know their creditors well and have established relationships with them, the independent approach can often lead to a desirable outcome. Where creditors have already commenced legal action against the business, where the landlord has threatened to terminate the lease, where bank accounts have been frozen, or where the CRA has taken action, the independent approach will often not lead to a stabilization of the business's operations. In this situation, businesses often need legal protection from their creditors while a formal restructuring plan is formulated.

Division I Proposal - Legal Protection from Creditors

A formal restructuring plan can begin with the filing of a Notice of Intention to Make a Proposal or a Division I Proposal. Filing either will provide immediate protection to the business from any action taken by its creditors, including legal action, lease termination, bank freeze, third-party demand, or any other collection activity. If unsecured creditors have already commenced action against the business, the action will stop immediately. The ultimate goal in the process is to provide the business the breathing room it needs, free from action taken by its creditors, while the creditors are provided with a restructuring plan that works for them.

Ross Advisory Group

Business owners in the Greater Toronto Area who are struggling in their operations turn to Ross Advisory Group to lead them through the formal debt restructuring process. We work collaboratively with business owners to develop a restructuring plan that will allow operations to continue under protection from creditors. Call us today at 416-800-8756 to find out more about debt restructuring options available to your business.