| Commercial Proposals |
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Commercial proposals are also known as Division I proposals. Division I proposals are not just for insolvent businesses; they may also be filed by insolvent individuals who do not meet the criteria for a Consumer Proposal.A commercial proposal of a business would typically be filed for a corporation that wants to remain in business and restructure their affairs. Joint Division I Proposals can be filed in certain circumstances.A Division I Proposal would be filed when the total debt, not including mortgages on your principle residence, exceeds $75,000 A Division I Proposal is similar to a Consumer Proposal in that you are offering a certain number of cents on the dollar to unsecured creditors, without interest, as full satisfaction of debts owed to them.Generally a Division I proposal is funded out of future income by monthly payments to the Trustee. The proposal may also be funded by a lump sum payment from a source which would not ordinarily be available to creditors in a bankruptcy situation, such as a third party deposit or the sale of exempt assets. The payments to the trustee include all costs, fees, taxes and dividends to creditors. When a Division I proposal is filed a meeting of creditors is scheduled. This meeting will be held within 21 days of the filing of the proposal.At this meeting the creditors will vote on the proposal. A Division I Proposal will be accepted if it is approved by a majority of creditors in number and 2/3 of the creditors by dollar value of claims.If it is rejected, there is an automatic assignment in bankruptcy. Once the proposal is accepted at the meeting of creditors it must be approved by the Court.When a Division I Proposal is accepted and approved by the Court it is binding on all Unsecured Creditors. Unlike a Consumer Proposal, a Division I Proposal must provide greater benefit to the creditors than a bankruptcy option.Like Consumer Proposals, the debtor continues to control all of his property and the creditors will receive only what is offered under the proposal. As soon as the Proposal is filed, you will have the protection of the Bankruptcy and Insolvency Act.Debtors who are individuals often prefer a Commercial Proposal over a bankruptcy to protect certain property which might be lost in a bankruptcy, such as vehicles, surplus equity in a home, or “surplus income”. continued ... |