BIA Proposal

Our Trusted Financial Advisors Can Help With Your BIA Proposal

When small-to-medium-sized companies face financial challenges, they often turn to what is called a Proposal under the Bankruptcy & Insolvency Act (“BIA”) to effect a restructuring, instead of CCAA proceedings which are normally court driven and more complex. A company wishing to seek protection under the BIA can either immediately file a Proposal to its creditors (i.e., the plan is formulated in advance in concert with a firm such as GlassRatner and legal advisors), or it files a Notice of Intention to Make a Proposal (NOI), which provides an initial 30-day stay period, with the ability to extend the time for filing up to six months, with court approval. Importantly, this does not mean the company is bankrupt; rather the debtor remains in possession and control and the NOI buys additional time for the company to formulate its restructuring plan and/or orchestrate a going concern sale.

While an NOI proceeding with milestones prescribed by the BIA is a more streamlined process, with less court involvement, it provides many of the same benefits as the CCAA proceeding, including:

• A stay of proceedings
• The ability to obtain DIP funding to finance operations during the restructuring
• The ability to disclaim or assign major contracts
• The ability to conduct a SISP to find an investor or purchaser as part of a restructuring process
• The filing of a Proposal (or restructuring plan) to creditors

Similar to CCAA, the Proposal must be accepted by 50% in number and 2/3 in dollar value of the creditors voting in each class. Thereafter, the court will be required to approve the Proposal, assuming that the statutory provisions are met.

Role as the Proposal Trustee

In an NOI proceeding, the independent third party appointed is called a Proposal Trustee – a role similar to the Monitor in the CCAA proceeding. Its responsibilities include assisting with cash flow forecasting and reporting, conducting a SISP, and filing a Proposal with the creditors, among other duties.

GlassRatner (formerly B. Riley Farber) has acted as Proposal Trustee in many NOI proceedings to help successfully restructure companies/effect a sale, in a cost-effective and streamlined manner.