Proposal in bankruptcy

A proposal in bankruptcy is not a bankruptcy.

A proposal is when the insolvent debtor offers to repay, in whole or in part, the amounts owing to his creditors.

The two types of proposals are:

  • Division I (Commercial Proposal). This type of proposal can be filed by:
    • the insolvent person
    • a receiver, within the meaning of the Bankruptcy Insolvency Act, subsection 243(2), but only in relation to an insolvent person's property
    • a liquidator of an insolvent person's property
    • a bankrupt
    • a trustee of the estate of a bankrupt

Applicability is determined by the amount of debt and also known as the reorganization proposal.

  • Division II (Consumer Proposal). This type of proposal can only be filed by a natural person who is bankrupt or insolvent. Applicability is determined by the amount and type of debt owed by the debtor.

You have to send a copy of the proposal to your Insolvency Intake Centres.

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