Analysts are predicting a challenging year for many business
owners. So what does this mean for you?
Picture that you are running a business. You've just had
your worst quarter in 10 years; you've lost a top client to a
rival firm. Key staff members have resigned, and your other
employees are suffering from a general malaise. On top of that, the
Canada Revenue Agency reassessed you for outstanding back
But you know that you can make this business work. If only you
could stop the clock and give yourself time.
For many, the phrase corporate restructuring conjures
up images of mass layoffs and elimination of departments. However,
'restructuring' should actually be viewed as a careful
cutting and pasting rather than a massive gutting. Restructuring
presents business owners with the opportunity to reorganize
operational and legal structures, and sometimes ownership, for the
sake of the company's future.
In fact, many corporate restructurings involve no staff or
department terminations. The key notion toward any restructuring
plan implies the continuation of the company, regardless of size.
Essentially, a restructuring plan buys a company time to
re-evaluate processes and recover.
Our group has assisted companies ranging from five to 500
employees. Most clients experience common problems for which there
are easy solutions. Our analysts review each aspect of the company
and suggest a 'turnaround' or 'workout' plan that
is tailored to the company's specific needs.
Once a plan is agreed upon, a receiver needs to be appointed by
either the directors of the corporation or one of its major
creditors. The receiver is an equivalent to a legal guardian for
the company. Once the court approves the appointment, the company
is now in the legal care and oversight of the receiver.
Appointing a receiver protects the company. The receiver
oversees the commencement of any legal proceedings and service
cancellations, such as telephone numbers or electricity. In
addition, vendors and suppliers are prohibited from discontinuing
their services to the company.
Furthermore, the receiver is empowered to collect all funds owed
and to employ all existing employees. But most importantly, all the
pre-receivership debts are placed on hold until the receivership
has been finalized.
With the receiver having dealt with the immediate problems, the
company is able to continue with the day-to-day operations under
the receiver's guidance. While this is happening, the receiver
works toward a more finite solution to assist the company for the
long term. The solutions normally available to a company are:
Conducting a formal sales process under the receivership to
source new investors or ownership;
Performing a formal reconstruction, during which Corporation A
is wound down via a bankruptcy filing, and Corporation B is opened
to continue the operations; or
Filing a proposal to settle all outstanding liabilities.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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