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The federal Insolvency and Bankruptcy Act governs Canadian bankruptcy with the goal of providing a new start to people burdened with debt, who cannot meet their obligations. The death of someone during the bankruptcy period can have implications on payment of debt owed and eligible assets.
Bermuda adopted bankruptcy law from England and will look to English case law to the extent their legislation is similar. Bermuda bankruptcy law is based on four pieces of legislation. The Bankruptcy Act 1989 and Bankruptcy Rules 1990 govern personal bankruptcy. The Companies Act 1981 and the Companies (Winding-Up) Rules 1982 govern corporate bankruptcy.
As a U.S. territory, Puerto Rico follows many of the same guidelines for corporation bankruptcies as the mainland U.S. However, the territory does have some rules of its own. Bankruptcy laws for insolvent corporations in Puerto Rico include regulations for filing for bankruptcy, businesses protocols when bankruptcy arises and outline the procedure of the bankruptcy in partnerships and liquidation of assets. Corporations face penalties if these bankruptcy laws are not observed and fraudulent practices take place.
Regardless of a business' legal formation such as S corporation, C corporation, proprietorship or partnership, bankruptcy protection is sought through the federal court system. However, states can extend further protections to individuals and businesses but cannot limit the rights and protections set forth in federal bankruptcy laws. In Ohio, the business bankruptcy code almost exclusively conforms to federal law, and S corporations and other businesses can voluntarily file or be forced into bankruptcy.
Bankruptcy is a last resort remedy that provides a way out of debt for debtors who can not afford to pay their bills. Bankruptcy laws are structured to treat debtors and their creditors equally, and to resolve the situation in a way that is fair to both parties. Canadian bankruptcy laws are very similar to those used in the United States, with the exception that there is not a “Bankruptcy Court” that specializes in these cases. The bankruptcy laws in Canada are governed by three specific acts that address all matters on the topic.
In Canada, corporate bankruptcy is governed by three federal acts: the Bankruptcy and Insolvency Act (BIA), the Companies’ Creditors Arrangement Act (CCAA) and the Winding-up and Restructuring Act (WURA). It is defined as a legal proceeding in which a company's assets are sold off and the proceeds used to pay its debts. Companies wishing to avoid bankruptcy may attempt to restructure their debt before being forced into bankruptcy.
Corporation bankruptcy laws are similar to personal bankruptcy regulations, but offer a major difference. Businesses can file for Chapter 7 bankruptcy, as many individuals do. But, they also may file bankruptcy under Chapter 11, which allows companies to continue operating while providing them with protection from creditors' actions. This is an important corporate life-saving ability.
