Question: 2013 Business Bankruptcy in Canada question
I am looking for some Business Debt Solutions. I have a business in Canada, that has effectively ceased operation in 2012. I have a debt outstanding to a line of credit for 40 thousand dollars. The business was Incorporated and I am working elsewhere now, but I am finding it very difficult to pay this debt, I believe I am not attached personally to the debt. What are my options? Can I declare bankruptcy for the company? Also the business has very little market value assets. ?
Thank you for any info.
Answer: C. E Craig & Associates Inc.
Generally in Canada, if the business has ceased to operate and you have not guaranteed the debt personally, then Wells Fargo is limited with just going after the company (and any company assets) and you are not liable as director or shareholder.
On a weird note however, there has been recent change in the British Columbia Company Act that MAY end up with a shareholder liability if the company ceases to operate, has debts remaining and then is struck from the BC Company registry. My reading of this section does NOT end up with this specific conclusion, however, there are some lawyers who believe otherwise however, this section has not been tested in the courts yet nor do I believe that any creditor has yet clued into the change in the act.
Your best bet is to notify your creditors that the company has closed and wait to see what they do.
If they name you in any application before the courts, you should appear to ensure that they are not naming you Personally improperly.
Having said all of that, I would be very surprised if you have not indeed guaranteed the Line of Credit as large creditors usually requires this step.
If it ends up that you are personally guaranteed, then yes, you can go bankrupt which will allow you to get out of this debt