Toronto Business Bankruptcy Alternatives for Your Small Business

Many small businesses are facing financial difficulties in these hard times, and many
entrepreneurs only see bankruptcy as the only option they have to pursue relief from
excessive levels of debt. But that shouldn’t be the case as there are many
Toronto business bankruptcy alternatives that are available for small business owners.

Filing for business bankruptcy in Canada can be very complex. There can be personal
implications that may affect your family, business partners and other people who are
in one or the other connected to the company. Much of the bankruptcy process has a
lot to do with the structure of your business and the types of creditors you have.

Partnerships and Sole Proprietorships

If your small business is legally set up as a partnership or as a sole proprietorship it
means that the business is structured in such a way that your personal assets and
liabilities are not legally separated from the business. As such, you as the business
owner is the one who goes bankrupt and not the business itself. This is treated as a
personal bankruptcy and your creditors are dealt with according to the laws under a
personal bankruptcy. As a consequence, any personal assets you have will be used
to limit the liabilities towards any creditors.

Incorporated Businesses

In an incorporated company, the business is considered a separate entity from the
person that operates the business. This means that your personal assets and liabilities
are legally detached from the business and, in turn, assets and liabilities of the business
are held separately from those of the business owner. The company can go bankrupt,
and the assets of the incorporated business will be sold to reduce the liabilities to your
creditors. Personal assets of the business owner will not be touched.

You will need to be very careful if you are thinking about bankrupting the business.
Another thing to weigh on is the possible implication if you have personally guaranteed
business debts. Creditors will no doubt go after you for the debts you have guaranteed
and this might force you to either negotiate repayment terms with creditors or to file for
personal bankruptcy as well.

If you assess that your small business will still be able to make money for the long term
and is merely facing hard times due to the economic downturn, you might want to consider
making a an informal or formal proposal with your creditors or finding another alternative
such as placing your business into receivership or sell the business without the help of a
secured creditor.

A small business bankruptcy can actually be very costly and, consequently, it can create
more problems than it solves. It’s not a solution for all and may not be the best option for
your small business. It’s crucial that  you as business owner understand all the other
Toronto business bankruptcy alternatives that are available to save the business before
deciding on bankruptcy. Consult with a licensed insolvency trustee or a lawyer to get
professional advice and more specific information about you can save your business from
insurmountable debt.

Does Your Small Business Need Business Bankruptcy Services In Toronto?

In Toronto, business bankruptcy services provide solutions to companies that are undergoing crippling debt and repayment issues and are considering filing for bankruptcy as a final option. These services are offered by a Licensed Bankruptcy Trustee who has extensive knowledge and experience in assisting companies through Division 1 Proposals and Bankruptcies under the Bankruptcy and Insolvency Act of Canada.

Some of the corporate bankruptcy services that a licensed Insolvency Trustee can offer may include:

•          Examining your current debt problems and their causes

•          Finding possible solutions and the implications of each

•          Providing assistance in the preparation of Division I Proposals

•          Filling of Proposals in the Office of the Superintendent of Bankruptcy

•          Representing the insolvent company as intermediary between their creditors

•          Managing company reorganizations

•          Developing and carrying out restructuring activities

•          Business consulting

•          Cash Flow Management

•          Collection Agency consulting

•          Receivership

•          Bankruptcy petition

The process involved in a corporate bankruptcy can differ greatly from one business to another, depending on the legal structure of the business. Under the Bankruptcy and Insolvency Act of Canada, partnerships and sole proprietorships are dealt with under personal bankruptcy, while incorporated companies or corporations may apply for bankruptcy as a business.

When the legal structure of a business is organized as a partnership or sole proprietorship, the setup does not legally separate business and personal assets/liabilities. This means that the business assets and debts are owned by the individuals that operate the business and all assets will be used to settle all debts in the same process as that of personal bankruptcy.

When the business is incorporated then the business is considered a separate entity from each of the individual owners. This means that the assets and debts of the business are legally separate from the personal assets and debts of the business owners. Therefore, a business bankruptcy can be filed without affecting the personal assets of the business owners and only the assets of the business will be sold to pay off creditors.

Business bankruptcies can be very complex. There are many factors to consider, such as the structure of the business and the types of creditors that the business is dealing with. It can also be very costly and can even create more problems than solutions for many small business owners.

It’s important to seek the advice of a professional business bankruptcy trustee to help you understand all the other options available and how each option can potentially affect you and your partners as well as your families. A trustee is licensed by the government of Canada to work with bankrupt companies, their creditors, the Office of the Superintendent of Bankruptcy, and the Courts to ensure an efficient and fair distribution of assets among creditors.

In a corporate bankruptcy process, the government will retain a bankrupt company’s assets and dispose of it quickly by distributing it as fairly as possible among the company’s creditors. The first step that the trustee will take is do a thorough evaluation of the business finances, assets, income and debts. From there, he will present you with all the options that the business has for managing the credit crisis. Once bankruptcy is decided as the best solution, he will then file the necessary documents to start liquidating the company's assets and to negotiate with your creditors. A bankruptcy trustee will be a fair and reliable ally from the beginning through the end until your business is released from its debts.

Business bankruptcy services in Toronto are not only beneficial to companies filing for bankruptcy in order to obtain a fresh start. These services are also useful to help diagnose financial problems early and increase the opportunity to find other options to restructure the debt that can be just as effective to get the business back on track.