# Corporate insolvency in Canada: trustees, BIA and CCAA

> How corporate insolvency works in Canada: licensed insolvency trustees, BIA proposals, bankruptcy, receivership, CCAA, directors' liability, staff and records.

Canonical: https://origindatapartners.com/guides/corporate-insolvency-canada
By: Origin Data Partners
Status: Published
Published: 2026-11-05
Updated: 2026-11-05
Sources checked: 2026-11-05

## Quick answer

Under the Bankruptcy and Insolvency Act (BIA), a company is insolvent when it owes at least $1,000 and cannot meet its obligations as they generally become due, has stopped paying them in the ordinary course of business, or has property that would not cover all its obligations. It then has four formal routes, and each needs a licensed insolvency trustee (LIT). A BIA proposal, often started with a notice of intention that stops creditor action, gives the company 30 days to file its offer, extendable by up to five more months. In bankruptcy the company's property vests in the trustee, who sells it for creditors. In receivership a secured creditor puts a receiver in control of the business assets. A company with claims of more than $5 million can restructure under the Companies' Creditors Arrangement Act (CCAA), with an LIT as court-appointed monitor. Proposals and CCAA plans pass with a majority in number and two thirds in value of each class of creditors voting. Directors can be personally liable for unremitted source deductions and GST/HST and, in a federal corporation, up to six months' unpaid wages. Employees can claim up to $9,275.00 (2026) from the Wage Earner Protection Program. In a bankruptcy the trustee also takes possession of the company's books and records, and personal information in them can only change hands under privacy law.

## Key points

- The route depends on size and control: a BIA proposal (any size) and a CCAA restructuring (claims over $5 million) keep the company running, while bankruptcy and receivership put a licensed insolvency trustee in control of the assets.
- Directors stay exposed: unremitted source deductions, GST/HST and, for federal corporations, up to six months of wages. The CRA can assess a director for two years after they leave, and due diligence is the defence.
- Records go to the trustee with the company's property. Keep them intact, hand them over and check what they are worth before the filing.

## Corporate insolvency in Canada: the checklist for directors

Before you call a trustee or file a notice of intention, check what the company's records are worth. AI developers now pay for the operational records of closing and insolvent companies, such as tickets, work orders, email and chat archives and code ([public deals](https://origindatapartners.com/guides/ai-data-licensing-deals)). Once a trustee or receiver takes control, those records sit with the property they sell for creditors; knowing their value first means they are counted rather than deleted. A [free valuation](https://origindatapartners.com/check-fit) takes six questions about the business and no files.

This page is for owners and directors of an incorporated business that cannot pay its debts. If you are an individual with personal debt, the Office of the Superintendent of Bankruptcy (OSB) explains consumer proposals and personal bankruptcy on its [own pages for individuals](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money).

The steps below run in roughly this order. The trustee administers the formal process; what directors do before and during it affects how much creditors recover and what the directors themselves may owe. Each rule is sourced in the sections below.

| Step | What to do | Rule or deadline |
| --- | --- | --- |
| 1. Test for insolvency | Check the BIA test: at least $1,000 of debts, and unable to pay them as they fall due, stopped paying them, or property worth less than the obligations | BIA section 2 |
| 2. Speak to a licensed insolvency trustee | Find one in the OSB directory; bring a list of debts, secured lenders, assets and employees | Only LITs can administer proposals and bankruptcies |
| 3. Keep remitting trust amounts | Pay source deductions and GST/HST and record the steps the board took | Directors can be assessed up to 2 years after they leave; due diligence is the defence |
| 4. Watch for a secured creditor's notice | A notice of intention to enforce security starts a short clock | 10 days before enforcement, unless the company consents |
| 5. Choose the route | Proposal (any size), CCAA (claims over $5 million), bankruptcy or receivership | Proposals and CCAA plans need a majority in number and two thirds in value of each voting class |
| 6. Keep the records intact | Do not delete systems or archives; list where each record is held | A trustee in bankruptcy takes possession of the books, records and property |
| 7. Check the records' value | See whether operational records could be licensed, before the filing | Proceeds are company property and go to creditors |
| 8. File | Notice of intention or proposal with the official receiver, an assignment in bankruptcy, or a CCAA initial application to the court | After a notice of intention: cash-flow statement within 10 days, proposal within 30 |
| 9. Look after employees | Issue records of employment; employees file proofs of claim and apply to the Wage Earner Protection Program | WEPP: apply within 56 days; up to $9,275.00 for 2026 |
| 10. Tell the CRA | If bankrupt, send the tax services office the assignment in bankruptcy, bankruptcy notice or first meeting of creditors letter | A proposal does not close the GST/HST account automatically |

Source: [Office of the Superintendent of Bankruptcy: Bankruptcy and insolvency at a glance](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/bankruptcy-and-insolvency-glance)

## What does insolvency mean in Canada?

Insolvency is a legal test, not just a cash crunch. Under the [Bankruptcy and Insolvency Act](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-2.html) (BIA), an insolvent person is one that is not bankrupt, resides, carries on business or has property in Canada, has liabilities to creditors provable under the Act of at least $1,000, and meets one of three tests:

- Cash flow: it is for any reason unable to meet its obligations as they generally become due.
- Payment record: it has ceased paying its current obligations in the ordinary course of business as they generally become due.
- Balance sheet: its property, at a fair valuation, or if sold at a fairly conducted sale under legal process, would not be enough to pay all its obligations, due and accruing due.
- Insolvent is not the same as bankrupt. In the OSB's words, a debtor is an insolvent person who is unable to pay their debts when they are due, and a bankrupt is an insolvent person who has filed for bankruptcy. Corporations have business-specific options because they are legally recognized as persons separate from the individuals who own them ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/bankruptcy-and-insolvency-glance)).
- Insolvency law: the OSB lists three statutes, the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Wage Earner Protection Program Act. The OSB supervises the administration of bankruptcies and proposals under the BIA, licenses trustees and keeps records of BIA and CCAA proceedings ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/bankruptcy-and-insolvency-glance)).

Source: [Bankruptcy and Insolvency Act, section 2 (definitions of insolvent person and property)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-2.html)

## BIA proposal, bankruptcy, receivership or CCAA: the routes compared

Which process fits depends on whether the business can be saved, how much it owes and who starts it. Every formal route needs a licensed insolvency trustee: as trustee under a proposal or bankruptcy, as receiver ([BIA s. 243](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html)) or as CCAA monitor ([CCAA s. 11.7](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.7.html)).

- Sources for the comparison table below: the [OSB on Division I proposals](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-division-i-proposals); BIA sections [43](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-43.html), [49](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-49.html), [50.4](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.4.html), [57](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-57.html), [62](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-62.html), [71](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-71.html), [169](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-169.html) and [243](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html); CCAA sections [3](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-3.html) and [6](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-6.html); the [OSB on the CCAA](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa); and [Corporations Canada](https://ised-isde.canada.ca/site/corporations-canada/en/business-corporations/guide-dissolving-business-corporation) on dissolution.
- Insolvent companies cannot take the dissolution route. A corporation that is bankrupt, has a trustee under a proposal or has an interim receiver under the BIA cannot voluntarily dissolve, and bankruptcy does not end a corporation's existence ([Corporations Canada](https://ised-isde.canada.ca/site/corporations-canada/en/business-corporations/guide-dissolving-business-corporation)).
- Consumer or commercial proposal: a consumer proposal is for individuals who owe less than $250,000, excluding mortgages. A commercial proposal has no limit on how much is owed ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/bankruptcy-and-insolvency-glance)).
- Is a company already in a proceeding? The OSB's Bankruptcy and Insolvency Records Search covers bankruptcies and proposals registered since 1978, receiverships since January 1993 and CCAA protection since September 18, 2009. It costs at least $8 a search, except for CCAA records ([OSB](https://www.ic.gc.ca/app/scr/bsf-osb/ins/login.html?lang=eng)), and the list of CCAA proceedings can be consulted free of charge ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/companies-creditors-arrangement-act-general-information)).
- Company in the US or UK? See [business bankruptcy and company data in the US](https://origindatapartners.com/guides/business-bankruptcy-company-data) or [liquidation and administration in the UK](https://origindatapartners.com/guides/liquidation-administration-company-data-uk).

| Route | Who starts it | Who controls the company | Size limit | Usual outcome |
| --- | --- | --- | --- | --- |
| BIA Division I proposal | The insolvent company, through an LIT, either directly or after a notice of intention | The company keeps running the business; the trustee monitors it, with access to its books and records | None: no limit on how much is owed | If creditors accept and the court approves, it binds the unsecured creditors; if creditors refuse, the company is deemed bankrupt |
| Bankruptcy | The company, by an assignment; or a creditor owed $1,000 or more, by a court application after an act of bankruptcy in the previous six months | The trustee: the company's property vests in it | None | The trustee sells the property for creditors. A bankrupt corporation cannot be discharged unless it pays its creditors in full |
| Receivership | A secured creditor, by a court application or under its security agreement | The receiver, over all or substantially all of the inventory, receivables or other business property | None | The receiver takes possession of the property and can control the business, as the court order or security agreement allows |
| CCAA restructuring | The debtor company, by an initial application to the court | The company generally keeps operating, under court supervision, with an LIT as monitor | Total claims over $5,000,000, counting affiliated companies | A plan of compromise or arrangement voted by creditors and sanctioned by the court; a plan can include selling assets |
| Solvent dissolution | The directors and shareholders | The directors | Only once property is distributed and liabilities discharged | The corporation is dissolved: see the [Canada closing checklist](https://origindatapartners.com/guides/close-a-business-canada) |

Source: [Office of the Superintendent of Bankruptcy: Division I proposals](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-division-i-proposals)

## What is a licensed insolvency trustee, and how do you find one?

Licensed insolvency trustees (LITs) are federally regulated professionals who provide advice and services to individuals and businesses with debt problems, and the only professionals authorized to administer government-regulated insolvency proceedings ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/what-licensed-insolvency-trustee)). They are licensed by the OSB and are officers of the court. An LIT administers proposals and bankruptcies, protects the rights of creditors, investigates the affairs of the debtor and ensures the rights of the debtor are not abused ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/bankruptcy-and-insolvency-glance)).

- How they are licensed: the Superintendent of Bankruptcy grants trustee licences under the BIA ([section 13](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-13.html)). Candidates must, for example, be of good character and reputation, be solvent, complete the Chartered Insolvency and Restructuring Professional (CIRP) Qualification Program, the CIRP National Insolvency Exam and an insolvency counselling course, and pass an Oral Board of Examination ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/licensed-insolvency-trustees/how-become-licensed-insolvency-trustee)). The Superintendent may refuse a licence to an applicant who is insolvent or has been found guilty of an indictable offence that, in the Superintendent's opinion, would impair their capacity to perform a trustee's fiduciary duties.
- Oversight: LITs are subject to ongoing OSB oversight and must follow federal standards of practice, including the Code of Ethics for Trustees. If you have a difficulty with an LIT that you cannot resolve, you can file a complaint with the OSB ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/what-licensed-insolvency-trustee)).
- Finding one in Toronto, Calgary, Edmonton or anywhere else in Canada: use the OSB's [Licensed Insolvency Trustee directory](https://www.ic.gc.ca/app/scr/tds/web/?lang=eng). It contains the office coordinates of all active LITs, can be searched by name or location, and shows the services each office offers, including corporate insolvency. It works the same way for every province and territory.
- First meeting: typically, LITs do not charge for the first consultation, the OSB says ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/what-licensed-insolvency-trustee)).
- Independence: without the court's permission, a CCAA monitor cannot be a trustee who in the previous two years was a director, officer or employee of the company, or its auditor, accountant or legal counsel ([CCAA s. 11.7](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.7.html)).

Source: [Office of the Superintendent of Bankruptcy: What is a Licensed Insolvency Trustee?](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/what-licensed-insolvency-trustee)

## How much does a licensed insolvency trustee cost a business?

Federal fee regulation covers consumer insolvencies: the fees an LIT charges individuals are regulated by the federal government ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/what-licensed-insolvency-trustee)). For a company, the fee depends on the LIT's role, and the BIA and CCAA leave it to the creditors, the company or the court ([BIA s. 39](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-39.html), [BIA s. 243](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html), [CCAA s. 11.52](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.52.html)). Who appoints the LIT also differs ([BIA s. 49](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-49.html), [BIA s. 50.4](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.4.html), [CCAA s. 11.7](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.7.html)).

Ask for the fee basis in writing at the first meeting, and for an estimate of the total cost of the route the LIT recommends.

| Role | Who appoints the LIT | How the fee is set |
| --- | --- | --- |
| Trustee in bankruptcy | The official receiver, on an assignment, choosing as far as possible by reference to the wishes of the most interested creditors | Voted by the creditors by ordinary resolution. If not fixed, up to 7.5% of what remains from realizing the property after secured creditors are paid, plus any special remuneration creditors or inspectors authorize for carrying on the business. The court can increase or reduce it |
| Trustee under a proposal | The company, which names an LIT who has consented in writing | Special remuneration agreed with the company or, without agreement, approved by the court |
| Receiver | The court, on a secured creditor's application, or the secured creditor under its security agreement | For a court-appointed receiver, the court can order payment of fees and disbursements secured by a charge that can rank ahead of secured creditors |
| CCAA monitor | The court, in the initial order | The court can secure the monitor's fees, and those of the company's financial, legal or other experts, with a charge that can rank ahead of secured creditors |
| Consumer insolvency (individuals) | The individual | Regulated by the federal government |

Source: [Bankruptcy and Insolvency Act, section 39 (remuneration of trustee)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-39.html)

## CCAA proceedings: how a CCAA restructuring works

The Companies' Creditors Arrangement Act (CCAA) is a federal law that applies to insolvent corporations that owe more than $5 million. It gives them short-term protection from their creditors so they can restructure, and its main purpose is to let them avoid bankruptcy, foreclosure or the seizure of assets while maximizing returns for creditors and preserving jobs and the company's value as a functioning business ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)). In the Act, the test is that total claims against the debtor company or affiliated debtor companies are more than $5,000,000 ([CCAA s. 3](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-3.html)).

The stages below follow the [OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa) and CCAA sections [6](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-6.html), [10](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-10.html), [11.001](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.001.html), [11.01](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.01.html), [11.02](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.02.html), [11.2](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.2.html), [11.7](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.7.html), [23](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-23.html) and [36](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-36.html).

| Stage | What happens | Rule |
| --- | --- | --- |
| Initial application | Filed in the province or territory of the head office or chief place of business; later orders bind across Canada. It comes with a weekly cash-flow forecast, a report on how it was prepared and the past year's financial statements, and a senior official's affidavit on the company's history, the reasons for its difficulties, its assets and liabilities and its creditors | CCAA s. 10; OSB |
| Initial order | A stay of proceedings for up to 10 days, limited to relief reasonably necessary to keep operating in the ordinary course. The court appoints an LIT as monitor at the same time | CCAA ss. 11.001, 11.02 and 11.7 |
| Extensions | Further stays for any period the court considers necessary, if the company shows it has acted, and is acting, in good faith and with due diligence. The OSB says there is no time limit on how long a stay can be extended | CCAA s. 11.02; OSB |
| Notice to creditors | The monitor publishes a newspaper notice once a week for two consecutive weeks and, within five days, makes the order public and notifies every known creditor with a claim of more than $1,000 | CCAA s. 23 |
| During the stay | The company generally keeps operating. Suppliers can require immediate payment for goods and services provided after the order. The court can approve interim financing secured by a priority charge, and any sale outside the ordinary course needs its authorization | CCAA ss. 11.01, 11.2 and 36; OSB |
| Reporting | The monitor reviews the cash-flow statement, reports any material adverse change without delay and files a report within 45 days after each fiscal quarter ends | CCAA s. 23 |
| Plan and vote | The company presents a plan of compromise or arrangement. It can be sanctioned if a majority in number representing two thirds in value of the creditors in each class, present and voting, agree | CCAA s. 6 |
| Sanction | The court must find the plan fair and reasonable. Unless the Crown agrees otherwise, the plan must pay in full, within six months of sanction, outstanding Crown claims of the kind collectable under subsection 224(1.2) of the Income Tax Act and the matching Canada Pension Plan and Employment Insurance provisions | OSB; CCAA s. 6(3) |

Source: [Office of the Superintendent of Bankruptcy: Restructure your business through the CCAA](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)

## CCAA plans, monitors and claims: what to expect

Once the initial order is made, three things shape the case: what the plan offers, what the monitor reports and how creditors prove their claims.

- What a plan can do: there are no statutory restrictions on its structure or content. The OSB's examples include offering creditors less than 100 cents on the dollar, downsizing, extending the time for payment, selling assets, finding third parties to inject capital, cancelling existing shares, or transferring the business to a new company controlled indirectly by its major secured creditors ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)).
- The monitor: an officer of the court who monitors the company's business and financial affairs and may help prepare the plan, report to the court, inform creditors about the claims process and meetings, and oversee voting. The monitor's reports and other public documents must be posted on the monitor's website ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)).
- Claims: the court sets the claims process, and there may be a deadline, the claims bar date. To vote, a creditor files a completed proof of claim before the meeting starts ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)).
- If creditors reject the plan, the stay is usually lifted, but the company does not automatically become bankrupt ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)).
- Ten days or thirty? The OSB's explainer says an initial order typically gives 30 days' protection; the Act now limits the first order to 10 days ([CCAA s. 11.02](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.02.html)), so plan for an early return to court.
- Public record: the OSB lists every company granted CCAA protection since September 18, 2009, with the date of the initial order and the appointed monitor ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/ccaa-records-2021-to-present)).

Source: [Office of the Superintendent of Bankruptcy: Restructure your business through the CCAA](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)

## BIA proposals: the notice of intention, cash-flow statement and creditor vote

A Division I proposal is a formal procedure under the BIA, available to businesses and individuals, with no limit on how much is owed ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-division-i-proposals)). It is an offer to creditors to pay a percentage of what is owed over a specific period, to extend the time to pay, or both ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/bankruptcy-and-insolvency-glance)). The company can file the proposal directly, or start with a notice of intention (NOI), which stops creditor action while the proposal is prepared.

The deadlines below come from BIA sections [50.4](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.4.html), [51](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-51.html), [54](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-54.html), [58](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-58.html) and [69](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-69.html).

| When | What happens | Rule |
| --- | --- | --- |
| Filing | The company files the NOI with the official receiver, naming an LIT who has consented in writing and listing creditors with claims of $250 or more | BIA s. 50.4(1) |
| From filing | A stay: creditors cannot pursue remedies against the company or its property, or start or continue proceedings to recover claims provable in bankruptcy, subject to the Act's exceptions | BIA s. 69(1) |
| Within 5 days | The trustee sends a copy of the NOI to every known creditor | BIA s. 50.4(6) |
| Within 10 days | The company files a monthly cash-flow statement reviewed and signed by the trustee, the trustee's report on its reasonableness and the company's own report on how it was prepared | BIA s. 50.4(2) |
| Within 30 days | The trustee files the proposal; otherwise the company is deemed to have made an assignment in bankruptcy | BIA s. 50.4(8) |
| Extensions | The court can extend by up to 45 days at a time, to no more than five months in total after the 30 days, if the company is acting in good faith and with due diligence, would likely be able to make a viable proposal, and no creditor would be materially prejudiced | BIA s. 50.4(9) |
| Within 21 days of filing the proposal | Meeting of creditors, called at least 10 days ahead with a condensed statement of assets and liabilities, the creditor list and a copy of the proposal | BIA s. 51(1) |
| At the meeting | Accepted only if every class of unsecured creditors votes for it by a majority in number and two thirds in value of those present and voting | BIA s. 54(2)(d) |
| Within 5 days of acceptance | The trustee applies for the court's approval; notice of the hearing goes out at least 15 days before it | BIA s. 58 |

Source: [Bankruptcy and Insolvency Act, section 50.4 (notice of intention to make a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.4.html)

## During a BIA proposal: monitoring, asset sales and the outcome

The company keeps running the business during a proposal, but within limits the trustee and the court police.

- Monitoring: from the NOI until a proposal is filed, the trustee has access to the company's property, premises, books, records and other financial documents, and must report any material adverse change in its cash flow or financial circumstances ([s. 50.4(7)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.4.html)).
- Selling assets: a company under an NOI or proposal may not sell or dispose of assets outside the ordinary course of business without court authorization. The court considers, among other things, whether the process was reasonable, whether the trustee approved it and whether the trustee reports that the sale beats a sale in bankruptcy ([s. 65.13](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-65.13.html)).
- Interim financing: the court can give a lender a charge on the company's property, which can rank ahead of secured creditors ([s. 50.6](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.6.html)).
- At the meeting, the LIT must present an estimate of what creditors would realize in a bankruptcy compared with what the proposal offers ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-division-i-proposals)).
- If creditors refuse, the company is deemed to have made an assignment in bankruptcy ([s. 57](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-57.html)). If they accept and the court approves, the proposal binds creditors for all unsecured claims, and for secured claims in classes that voted for it ([s. 62](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-62.html)).
- GST/HST: making a proposal is not the same as filing for bankruptcy, and the GST/HST account is not closed automatically ([CRA](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-account/close-account.html)).

Source: [Bankruptcy and Insolvency Act, section 65.13 (selling assets during a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-65.13.html)

## Corporate bankruptcy in Canada: what the trustee does

A company can make an assignment of all its property for the general benefit of its creditors, with a sworn statement of its property and creditors. It is filed with the official receiver, who appoints a licensed trustee, chosen as far as possible by reference to the wishes of the most interested creditors ([BIA s. 49](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-49.html)). A creditor owed $1,000 or more can instead apply to court for a bankruptcy order if the company committed an act of bankruptcy in the previous six months ([s. 43](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-43.html)). A failed proposal also ends in bankruptcy (see above).

- Control passes at once: the bankrupt ceases to have any capacity to dispose of or deal with its property, which vests in the trustee, subject to the rights of secured creditors ([s. 71](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-71.html)).
- The trustee takes possession of the deeds, books, records and documents and all property of the bankrupt as soon as possible and makes an inventory ([s. 16](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-16.html)).
- Creditors: within five days of appointment, the trustee sends notice of the bankruptcy and of the first meeting of creditors, which is held within 21 days of the appointment ([s. 102](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-102.html)).
- Selling: with the inspectors' permission, the trustee can sell all or part of the property, including goodwill and book debts, by tender, public auction or private contract, as a whole or in parcels, and can carry on the business as far as necessary for the beneficial administration of the estate ([s. 30](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-30.html)).
- Officers' duties: for a corporation, the officer who signed the assignment, or another officer or person in control whom the official receiver specifies, performs the bankrupt's duties ([s. 159](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-159.html)). They include delivering all property and all books, records, documents and papers to the trustee, attending an examination under oath about the causes of the bankruptcy, and submitting a statement of affairs within five days of the bankruptcy ([s. 158](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-158.html)).
- No fresh start: a bankrupt corporation may not apply for a discharge unless it has satisfied the claims of its creditors in full ([s. 169](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-169.html)).
- GST/HST: send your tax services office a copy of the court-issued assignment in bankruptcy, the bankruptcy notice or the correspondence entitled First Meeting of Creditors ([CRA](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-account/close-account.html)).

Source: [Bankruptcy and Insolvency Act, section 71 (property vests in the trustee)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-71.html)

## Receivership in Canada: when a secured creditor takes control

A secured creditor that intends to enforce security on all or substantially all of a business's inventory, accounts receivable or other property must first send the company a notice, and must then wait 10 days unless the company consents to earlier enforcement. That consent cannot be obtained before the notice is sent ([BIA s. 244](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-244.html)).

- Two kinds of receiver: one appointed by the court on a secured creditor's application, which can take possession of that property, control the business or take any other action the court considers advisable, and one appointed under the security agreement itself. Only a licensed trustee may act in either role ([s. 243](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html)).
- Timing: the court cannot appoint a receiver before the 10-day notice period ends unless the company consents or the court considers it appropriate ([s. 243](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html)). Once the notice has been or is about to be sent, the court can appoint an interim receiver where that is necessary to protect the estate or the creditor; the appointment ends when a receiver or trustee takes possession, or after 30 days or a period the court specifies, whichever comes first ([s. 47](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-47.html)).
- Notice: within 10 days of becoming receiver, the receiver notifies the Superintendent, the company and all the creditors it has identified, and the company must give the receiver the names and addresses of all its creditors ([s. 245](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-245.html)).
- Fees: a court-appointed receiver's fees and disbursements can be secured by a charge ranking ahead of secured creditors, once those creditors have had reasonable notice ([s. 243](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html)).
- Wages: unpaid wages for the six months before the receivership are secured, up to $2,000 per employee, on the current assets in the receiver's possession or control ([s. 81.4](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-81.4.html)).
- Proposal still possible: a receiver can make a proposal in relation to the insolvent company ([s. 50](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.html)).

Source: [Bankruptcy and Insolvency Act, section 243 (court-appointed receiver)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html)

## Directors' personal liability when a company is insolvent

Insolvency does not end a director's exposure. Directors continue to be directors, although with reduced rights and powers, after a trustee, receiver or liquidator is appointed ([CRA IC89-2](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic89-2/director-s-liability.html)). The table below sets out the three liabilities that matter most.

- Sources for the table below: [CRA IC89-2](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic89-2/director-s-liability.html) for source deductions and GST/HST; [CBCA section 119](https://laws-lois.justice.gc.ca/eng/acts/C-44/section-119.html) for wages. A provincially incorporated company is governed by its province's corporations act, so check that act's rules on directors and wages too.
- In a CCAA case, the initial order can stay actions against directors over pre-filing company obligations they are liable for as directors, until a plan is sanctioned or refused. It does not cover actions on guarantees directors gave for the company's obligations ([CCAA s. 11.03](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.03.html)).
- Practical step: keep remitting source deductions and GST/HST while options are assessed, and minute each board decision about trust payments, since due diligence is the defence the CRA looks at.

| Liability | What directors can owe | Limits and defences |
| --- | --- | --- |
| Source deductions (income tax, CPP and EI withheld from pay) | Directors in office when the corporation fails to remit can be personally liable, together with the corporation, for the unpaid amount plus related penalties and interest | The CRA must first show it cannot recover from the corporation, for example by proving a claim in the bankruptcy, and must assess within two years after the director last ceased to be one. A director who exercised due diligence is not liable |
| GST/HST | The same personal liability for GST/HST the corporation failed to remit | The same three rules |
| Wages (federal corporations) | Up to six months' wages per employee for services performed while they were directors, jointly and severally | In a bankruptcy, the claim must be proved within six months of the assignment or bankruptcy order, and the director must be sued while a director or within two years after |

Source: [CRA: Information Circular IC89-2R3, Directors' liability](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic89-2/director-s-liability.html)

## Employees: unpaid wages and the Wage Earner Protection Program

The Wage Earner Protection Program (WEPP) pays outstanding eligible wages to people whose employer is bankrupt, in receivership or in another qualifying insolvency proceeding: a BIA Division I proposal (including a notice of intention), certain CCAA proceedings and certain foreign proceedings. For those other proceedings, the employer must have terminated all its employees in Canada other than any retained to wind down the business ([ESDC](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee/eligibility.html)).

The table at the end of this section compares WEPP with the other sources of unpaid wages.

- Who cannot claim WEPP: officers and directors of the former employer, people with a controlling interest in the business, managers whose responsibilities included binding financial decisions or decisions on paying wages, and anyone not dealing at arm's length with them ([ESDC](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee/eligibility.html)).
- How to claim: file a proof of claim with the trustee or receiver as soon as possible ([ESDC](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection.html)), then apply within 56 days of the latest of the bankruptcy or receivership date (or the date the court found all employees in Canada had been terminated), the date your employment ended, or the date the receiver terminated you ([ESDC](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee/before-applying.html)).
- No trustee or receiver? If there is no bankruptcy, receivership or other qualifying proceeding, WEPP does not apply, but federal or provincial labour standards offices may help ([ESDC](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee.html)).
- Records of employment: when an employer declares bankruptcy and a receiver takes over the business, the employer usually has to issue ROEs to all employees ([ESDC](https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/roe-guide.html)).
- In a CCAA, collective agreements remain in effect unless amended with the agreement of all parties ([OSB](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)).

| Source | What it covers | Limit |
| --- | --- | --- |
| WEPP | Wages and vacation pay earned in the 6 months before the qualifying proceeding, plus termination and severance pay | [A one-time payment of up to 7 times the maximum weekly insurable earnings: $9,275.00 for 2026](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee/benefit-amount.html) |
| BIA priority in a bankruptcy | Wages, salaries, commissions or compensation for services in the six months before the bankruptcy, secured on current assets | [$2,000 per employee, plus $1,000 of a travelling salesperson's disbursements](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-81.3.html) |
| BIA priority in a receivership | The same for the six months before the receivership, on current assets the receiver holds | [$2,000 per employee, plus $1,000 of disbursements](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-81.4.html) |
| CCAA plan | Employee wage claims secured against current assets, paid immediately after court approval of the plan | [Up to $2,000](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa) |
| Directors of a federal corporation | Wages for services while they were directors | [Up to six months' wages](https://laws-lois.justice.gc.ca/eng/acts/C-44/section-119.html) |

Source: [Employment and Social Development Canada: WEPP eligibility](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee/eligibility.html)

## What happens to company assets and records in an insolvency

The BIA defines property to include money, goods, things in action, land and every description of property ([BIA s. 2](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-2.html)). Records travel with it: a trustee in bankruptcy takes possession of the company's books, records and documents along with its property ([s. 16](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-16.html)), and a proposal trustee has access to them to monitor the business ([s. 50.4](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.4.html)). Who can sell them, and what check applies, depends on the route.

| Procedure | Who sells | The check on the sale |
| --- | --- | --- |
| Bankruptcy | The trustee, including goodwill and book debts, by tender, public auction or private contract | [The inspectors' permission and the price they approve](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-30.html) |
| Proposal or NOI | The company | [Court authorization for sales outside the ordinary course; the court looks at the process, the trustee's approval and whether the sale beats a bankruptcy](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-65.13.html) |
| CCAA | The company | [Court authorization for sales outside the ordinary course, including whether the price is reasonable and fair given market value; extra tests for sales to related persons](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-36.html) |
| Receivership | The receiver takes possession and control of the secured property | [The court order or the security agreement](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html) |

Source: [Bankruptcy and Insolvency Act, section 30 (trustee's powers, including selling property)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-30.html)

## Can company data be sold in a Canadian insolvency? PIPEDA and Quebec rules

Data archives can be sold in insolvencies, but personal information inside them sets the limits on who can buy them and for what.

- Buyers pay for this kind of archive. As part of Spirit Airlines' US bankruptcy, the carrier's decades of data, including 100 million emails, 500 million Teams messages and 176,000 employee records, sold for $10 million, [MIT Technology Review reported](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/). It added that the proceeds of such sales typically flow to senior creditors and investors, not employees.
- PIPEDA's business-transaction rule: a business transaction includes the sale of an organization or any of its assets, and the lease or licensing of its assets ([PIPEDA s. 2](https://laws-lois.justice.gc.ca/eng/acts/P-8.6/section-2.html)). Parties to a prospective transaction may use and disclose personal information without consent if they sign an agreement limiting it to the transaction, protecting it and returning or destroying it if the deal does not proceed, and the information is necessary for the deal. After completion they may keep using it only under an agreement to use it for the purposes it was collected for, if it is necessary to carry on the business that was the object of the deal, and if individuals are notified within a reasonable time ([PIPEDA s. 7.2](https://laws-lois.justice.gc.ca/eng/acts/P-8.6/section-7.2.html)).
- The exception that matters for data sales: none of that applies to a transaction whose primary purpose or result is the purchase, sale or other acquisition or disposition, or lease, of personal information ([s. 7.2(4)](https://laws-lois.justice.gc.ca/eng/acts/P-8.6/section-7.2.html)). Outside the exception, the Privacy Commissioner's guidance is that personal information may be used or disclosed only for the purposes it was collected for, unless the person consents or the law requires it ([OPC](https://www.priv.gc.ca/en/privacy-topics/privacy-laws-in-canada/the-personal-information-protection-and-electronic-documents-act-pipeda/p_principle/principles/p_use)).
- Insolvency sales: section 7.2 does not mention insolvency. Writing jointly with the UK regulator to the US trustee in 23andMe's 2025 Chapter 11 case, the Office of the Privacy Commissioner said PIPEDA allows parties to a completed business transaction, such as the sale of a business, to use and disclose necessary personal information without consent if certain conditions are met, and that any purchaser must comply with PIPEDA, including if it proposes to use the information for purposes other than those it was originally collected for ([OPC](https://www.priv.gc.ca/en/opc-news/news-and-announcements/2025/let_23andme_250428/)).
- Quebec: the private-sector privacy act lets an enterprise disclose personal information without consent where it is necessary to conclude a commercial transaction, which includes the alienation or leasing of all or part of an enterprise or its assets. The other party must first agree to use it only for concluding the transaction, protect it and destroy it if the deal does not close; afterwards it may use the information only in accordance with the Act and must notify the people concerned within a reasonable time ([section 18.4](https://www.legisquebec.gouv.qc.ca/en/document/cs/P-39.1)).
- The practical route is de-identified operational records: suppliers employ data scientists to scrub personally identifiable information and exclude HR records, according to [MIT Technology Review](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/). See [how to de-identify company data](https://origindatapartners.com/guides/de-identify-company-data-before-licensing) and [selling company data in Canada](https://origindatapartners.com/sell-company-data/canada).

Source: [PIPEDA, section 7.2 (prospective and completed business transactions)](https://laws-lois.justice.gc.ca/eng/acts/P-8.6/section-7.2.html)

## Before you delete company systems, check what the records are worth

A struggling company cancels subscriptions to save cash, and that deletes the email, chat, ticketing and code archives with them. In an insolvency there is a second reason to stop: in a bankruptcy the records go to the trustee with the company's property, and the officers must deliver them (see above).

Checking the value takes minutes: [see what your company's records are worth](https://origindatapartners.com/check-fit) from six questions about the business, before any system is switched off or a trustee is appointed.

- Retention: keep everything the trustee, receiver or monitor may need to investigate the company's affairs, and anything tied to a claim or dispute. CRA retention periods are in the [Canada closing checklist](https://origindatapartners.com/guides/close-a-business-canada).
- Value: operational records such as support tickets, work orders, email and chat archives and code repositories can be licensed to AI developers. AI labs are buying data from dead startups to train their models, [MIT Technology Review reported](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/) in October 2026.
- Timing: once appointed, the trustee or receiver decides what is sold and how. Tell the LIT early that the records may have value, so the systems are kept long enough to be valued. See [how to export company records before closing](https://origindatapartners.com/guides/export-company-records-before-closing).
- Hands off: do not sell or copy the records yourself on the eve of a filing. A bankrupt company has no capacity to deal with its property, and under an NOI, a proposal or a CCAA order a sale outside the ordinary course needs the court's authorization.


## How directors can help the trustee get value for the records

The trustee often arrives knowing little about the company's systems. Directors and officers can close that gap, and in a bankruptcy delivering the books and records is a legal duty anyway ([BIA s. 158](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-158.html)).

- List the systems: each tool, what it holds, the years covered and the approximate volume, plus the admin accounts and who holds the logins. The [data inventory template](https://origindatapartners.com/blog/company-data-inventory-template) gives the columns.
- Flag the personal information: which archives hold customer or staff details and what people were told when it was collected, because use is limited to the purposes it was collected for unless the person consents ([OPC](https://www.priv.gc.ca/en/privacy-topics/privacy-laws-in-canada/the-personal-information-protection-and-electronic-documents-act-pipeda/p_principle/principles/p_use)).
- Flag the contracts: customer agreements or software terms that limit how data can be used or transferred.
- Ask for the records to be valued with the other assets. In a CCAA sale, the court considers whether the price is reasonable and fair, taking market value into account ([CCAA s. 36](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-36.html)).
- Money from licensing records is company property like any other sale proceeds, so it goes to creditors in the order the law sets. The [deals tracker](https://origindatapartners.com/guides/ai-data-licensing-deals) lists public prices as reported; for timing, see [selling company data after closing](https://origindatapartners.com/guides/sell-company-data-after-closing) and [how Origin helps companies winding down](https://origindatapartners.com/who-we-help/companies-winding-down).

Source: [Bankruptcy and Insolvency Act, section 158 (duties of bankrupt)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-158.html)

## How long insolvency takes in Canada: the deadlines

Each process runs on its own clock. These are the fixed points, each sourced in the sections above.

| When | What | Rule |
| --- | --- | --- |
| 10 days after a secured creditor's notice | Earliest enforcement against the business assets, unless the company consents | BIA s. 244 |
| Within 5 days of an NOI | Trustee sends the NOI to every known creditor | BIA s. 50.4(6) |
| Within 10 days of an NOI | Cash-flow statement and reports filed | BIA s. 50.4(2) |
| 30 days after an NOI | Proposal filed, or deemed bankruptcy | BIA s. 50.4(8) |
| Up to 5 more months | Court extensions of up to 45 days each | BIA s. 50.4(9) |
| Within 21 days of filing a proposal | Meeting of creditors, on at least 10 days' notice | BIA s. 51 |
| Within 5 days of acceptance | Trustee applies for court approval; hearing on at least 15 days' notice | BIA s. 58 |
| Within 5 days of a bankruptcy | Statement of affairs to the trustee; trustee's notice to creditors (5 days from appointment) | BIA ss. 158 and 102 |
| Within 21 days of the trustee's appointment | First meeting of creditors | BIA s. 102 |
| Within 10 days of a receiver's appointment | Receiver's notice to the Superintendent, the company and creditors | BIA s. 245 |
| Up to 10 days | Length of a CCAA initial order | CCAA s. 11.02 |
| Within 5 days of a CCAA initial order | Monitor makes the order public and notifies creditors owed more than $1,000 | CCAA s. 23 |
| 45 days after each fiscal quarter | Monitor's report to the court | CCAA s. 23 |
| Within 6 months of plan sanction | Outstanding Crown source-deduction claims paid in full | CCAA s. 6(3) |
| Within 56 days | Employees apply to WEPP | ESDC |
| 2 years after leaving the board | CRA deadline to assess a director; limit for suing a federal director for wages | CRA IC89-2; CBCA s. 119 |


## Next step

Start with a call to a licensed insolvency trustee and one list of every creditor, employee, asset and system. If the company holds years of tickets, work orders, chat or code, describe them before anything is switched off or a filing is made; no export is needed to find out whether they are worth licensing.

This guide is general information about federal insolvency law in Canada, not legal or insolvency advice. Provincial corporate, employment and privacy rules also apply; take advice on your own company before acting. If the company can pay its debts and you only want to close it, use the [Canada closing checklist](https://origindatapartners.com/guides/close-a-business-canada).

Origin Data Partners is independent and is not affiliated with any AI data buyer. We help owners compare buyers and find the best fit for their records. [See what your data is worth](https://origindatapartners.com/check-fit).


## Questions and answers

### What does insolvency mean in Canada?

Under the Bankruptcy and Insolvency Act, an insolvent person is one that is not bankrupt, resides, carries on business or has property in Canada, owes at least $1,000, and either cannot meet its obligations as they generally become due, has stopped paying its current obligations in the ordinary course of business, or has property that, at a fair valuation, would not cover all its obligations. Insolvency is the condition. Bankruptcy is one of the processes an insolvent company can enter, alongside a proposal, receivership or, for larger companies, a CCAA restructuring.

### What is a licensed insolvency trustee?

A licensed insolvency trustee (LIT) is a federally regulated professional, licensed by the Office of the Superintendent of Bankruptcy and an officer of the court, who advises individuals and businesses with debt problems. LITs are the only professionals authorized to administer government-regulated insolvency proceedings. For a company, an LIT acts as trustee under a proposal or bankruptcy, as receiver, or as monitor in a CCAA case. To find one in Toronto, Calgary, Edmonton or anywhere else in Canada, search the OSB's directory of active trustees by name or location.

### What is the CCAA?

The Companies' Creditors Arrangement Act is a federal law that lets an insolvent company, or a group of affiliated companies, with total claims of more than $5 million restructure under court supervision. The first court order stays creditor proceedings for up to 10 days and appoints a licensed insolvency trustee as monitor, and the court can extend the stay for as long as it considers necessary. The company presents a plan of compromise or arrangement, which needs a majority in number representing two thirds in value of each class of creditors voting, and then the court's sanction.

### What is the difference between a BIA proposal and a CCAA restructuring?

Both let an insolvent company keep operating while it offers creditors a deal, and both need a majority in number and two thirds in value of each class voting. A BIA proposal has no minimum debt and runs on fixed deadlines: after a notice of intention the company has 30 days to file the proposal, with court extensions of up to five more months, and if creditors refuse it the company is deemed bankrupt. The CCAA is for companies with claims over $5 million, places no statutory limits on what the plan contains, lets the court extend the stay with no fixed time limit, and a rejected plan does not automatically make the company bankrupt.

### Do I need an insolvency lawyer or a licensed insolvency trustee?

Start with a licensed insolvency trustee: LITs are the only professionals authorized to administer government-regulated insolvency proceedings, so a proposal, a bankruptcy, a receivership and a CCAA monitorship all need one, and the OSB says LITs typically do not charge for the first consultation. The court steps are different. A CCAA case starts with an application to the court by petition, originating summons or notice of motion, and a court-appointed receivership starts with a secured creditor's application, so expect to instruct an insolvency lawyer for those as well as the LIT.

### Can directors be personally liable when a company goes bankrupt in Canada?

Yes, for certain debts. Directors in office when a corporation fails to remit source deductions or GST/HST can be personally liable, together with the corporation, for the unpaid amounts plus penalties and interest. The CRA must first show it cannot recover from the corporation, must assess within two years after the director last ceased to be one, and a director who exercised due diligence is not liable. Directors of a federal corporation can also owe employees up to six months' unpaid wages. Directors remain directors, with reduced rights and powers, after a trustee or receiver is appointed.

### Do employees get paid if their employer goes bankrupt?

Partly, through two routes. Unpaid wages for the six months before a bankruptcy or receivership are secured on the company's current assets up to $2,000 per employee. The Wage Earner Protection Program also pays eligible employees a one-time amount of up to $9,275.00 for 2026 for unpaid wages, vacation pay and termination or severance pay, in a bankruptcy or receivership, or in a qualifying proposal or CCAA case once the employer has terminated all its employees in Canada other than those kept to wind down. Employees file a proof of claim with the trustee or receiver and apply within 56 days.

### Can a trustee or receiver sell company data in Canada?

A trustee in bankruptcy takes possession of the company's books, records and property and, with the inspectors' permission, can sell property by tender, public auction or private contract; under a proposal or CCAA, sales outside the ordinary course need the court's authorization. Personal information inside the records is the limit. PIPEDA lets parties to a business transaction, including a sale of assets, share necessary personal information without consent under a protective agreement, but not where the deal's primary purpose is to buy or sell personal information. That is why suppliers scrub personally identifiable information before records are licensed.

## Sources

- [Bankruptcy and Insolvency Act, section 2 (definitions of insolvent person and property)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-2.html)
- [Bankruptcy and Insolvency Act, section 13 (licensing of trustees)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-13.html)
- [Bankruptcy and Insolvency Act, section 16 (trustee takes possession of books, records and property)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-16.html)
- [Bankruptcy and Insolvency Act, section 30 (trustee's powers, including selling property)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-30.html)
- [Bankruptcy and Insolvency Act, section 39 (remuneration of trustee)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-39.html)
- [Bankruptcy and Insolvency Act, section 43 (creditor's bankruptcy application)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-43.html)
- [Bankruptcy and Insolvency Act, section 47 (interim receiver)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-47.html)
- [Bankruptcy and Insolvency Act, section 49 (assignment in bankruptcy)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-49.html)
- [Bankruptcy and Insolvency Act, section 50 (who may make a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.html)
- [Bankruptcy and Insolvency Act, section 50.4 (notice of intention to make a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.4.html)
- [Bankruptcy and Insolvency Act, section 50.6 (interim financing in a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-50.6.html)
- [Bankruptcy and Insolvency Act, section 51 (meeting of creditors on a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-51.html)
- [Bankruptcy and Insolvency Act, section 54 (creditor vote on a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-54.html)
- [Bankruptcy and Insolvency Act, section 57 (refused proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-57.html)
- [Bankruptcy and Insolvency Act, section 58 (court approval of a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-58.html)
- [Bankruptcy and Insolvency Act, section 62 (filing and effect of a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-62.html)
- [Bankruptcy and Insolvency Act, section 65.13 (selling assets during a proposal)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-65.13.html)
- [Bankruptcy and Insolvency Act, section 69 (stay of proceedings on a notice of intention)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-69.html)
- [Bankruptcy and Insolvency Act, section 71 (property vests in the trustee)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-71.html)
- [Bankruptcy and Insolvency Act, section 81.3 (unpaid wages in a bankruptcy)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-81.3.html)
- [Bankruptcy and Insolvency Act, section 81.4 (unpaid wages in a receivership)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-81.4.html)
- [Bankruptcy and Insolvency Act, section 102 (first meeting of creditors)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-102.html)
- [Bankruptcy and Insolvency Act, section 158 (duties of bankrupt)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-158.html)
- [Bankruptcy and Insolvency Act, section 159 (bankrupt corporation)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-159.html)
- [Bankruptcy and Insolvency Act, section 169 (discharge of a bankrupt corporation)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-169.html)
- [Bankruptcy and Insolvency Act, section 243 (court-appointed receiver)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-243.html)
- [Bankruptcy and Insolvency Act, section 244 (notice of intention to enforce security)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-244.html)
- [Bankruptcy and Insolvency Act, section 245 (receiver's notice)](https://laws-lois.justice.gc.ca/eng/acts/B-3/section-245.html)
- [Companies' Creditors Arrangement Act, section 3 (the $5,000,000 threshold)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-3.html)
- [Companies' Creditors Arrangement Act, section 6 (creditor vote and court sanction)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-6.html)
- [Companies' Creditors Arrangement Act, section 10 (initial application)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-10.html)
- [Companies' Creditors Arrangement Act, section 11.001 (relief in the initial order)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.001.html)
- [Companies' Creditors Arrangement Act, section 11.01 (rights of suppliers)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.01.html)
- [Companies' Creditors Arrangement Act, section 11.02 (stays of proceedings)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.02.html)
- [Companies' Creditors Arrangement Act, section 11.03 (stays for directors)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.03.html)
- [Companies' Creditors Arrangement Act, section 11.2 (interim financing)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.2.html)
- [Companies' Creditors Arrangement Act, section 11.52 (charge for the monitor's and advisers' fees)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.52.html)
- [Companies' Creditors Arrangement Act, section 11.7 (court appoints the monitor)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-11.7.html)
- [Companies' Creditors Arrangement Act, section 23 (monitor's duties)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-23.html)
- [Companies' Creditors Arrangement Act, section 36 (selling assets)](https://laws-lois.justice.gc.ca/eng/acts/C-36/section-36.html)
- [Canada Business Corporations Act, section 119 (directors' liability for wages)](https://laws-lois.justice.gc.ca/eng/acts/C-44/section-119.html)
- [PIPEDA, section 2 (definition of business transaction)](https://laws-lois.justice.gc.ca/eng/acts/P-8.6/section-2.html)
- [PIPEDA, section 7.2 (prospective and completed business transactions)](https://laws-lois.justice.gc.ca/eng/acts/P-8.6/section-7.2.html)
- [Quebec: Act respecting the protection of personal information in the private sector, section 18.4](https://www.legisquebec.gouv.qc.ca/en/document/cs/P-39.1)
- [Office of the Superintendent of Bankruptcy: Bankruptcy and insolvency at a glance](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/bankruptcy-and-insolvency-glance)
- [Office of the Superintendent of Bankruptcy: What is a Licensed Insolvency Trustee?](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/what-licensed-insolvency-trustee)
- [Office of the Superintendent of Bankruptcy: How to become a Licensed Insolvency Trustee](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/licensed-insolvency-trustees/how-become-licensed-insolvency-trustee)
- [Office of the Superintendent of Bankruptcy: Find an active Licensed Insolvency Trustee (directory)](https://www.ic.gc.ca/app/scr/tds/web/?lang=eng)
- [Office of the Superintendent of Bankruptcy: You owe money (options for individuals)](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money)
- [Office of the Superintendent of Bankruptcy: Division I proposals](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-division-i-proposals)
- [Office of the Superintendent of Bankruptcy: Restructure your business through the CCAA](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/you-owe-money-restructure-your-business-through-companies-creditors-arrangement-act-ccaa)
- [Office of the Superintendent of Bankruptcy: Companies' Creditors Arrangement Act, general information](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/companies-creditors-arrangement-act-general-information)
- [Office of the Superintendent of Bankruptcy: CCAA records (2021 to present)](https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/ccaa-records-2021-to-present)
- [Office of the Superintendent of Bankruptcy: Bankruptcy and Insolvency Records Search](https://www.ic.gc.ca/app/scr/bsf-osb/ins/login.html?lang=eng)
- [Corporations Canada: Guide on dissolving a business corporation](https://ised-isde.canada.ca/site/corporations-canada/en/business-corporations/guide-dissolving-business-corporation)
- [CRA: Information Circular IC89-2R3, Directors' liability](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic89-2/director-s-liability.html)
- [CRA: Close your GST/HST account (including bankruptcy and proposals)](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-account/close-account.html)
- [Employment and Social Development Canada: About the Wage Earner Protection Program](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection.html)
- [Employment and Social Development Canada: WEPP for an employee, overview](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee.html)
- [Employment and Social Development Canada: WEPP eligibility](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee/eligibility.html)
- [Employment and Social Development Canada: WEPP, how much you could receive](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee/benefit-amount.html)
- [Employment and Social Development Canada: WEPP, what you need before you apply](https://www.canada.ca/en/employment-social-development/services/wage-earner-protection/employee/before-applying.html)
- [Employment and Social Development Canada: How to complete the record of employment (ROE)](https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/roe-guide.html)
- [Office of the Privacy Commissioner of Canada: PIPEDA Fair Information Principle 5](https://www.priv.gc.ca/en/privacy-topics/privacy-laws-in-canada/the-personal-information-protection-and-electronic-documents-act-pipeda/p_principle/principles/p_use)
- [Office of the Privacy Commissioner of Canada and UK ICO: Joint letter on privacy during the 23andMe bankruptcy (April 2025)](https://www.priv.gc.ca/en/opc-news/news-and-announcements/2025/let_23andme_250428/)
- [MIT Technology Review: AI labs buying data from dead startups (Oct 2026)](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/)

## Related reading

- [How to close a business in Canada: dissolve a corporation](https://origindatapartners.com/guides/close-a-business-canada)
- [Business bankruptcy: Chapter 7, Chapter 11 and your data](https://origindatapartners.com/guides/business-bankruptcy-company-data)
- [Closing a software business: what could have value beyond the code?](https://origindatapartners.com/guides/sell-company-data-after-closing)
- [AI data licensing deals tracker: who paid what, 2023 to 2026](https://origindatapartners.com/guides/ai-data-licensing-deals)