Creditor protection under the Companies Creditors Arrangement Act (CCAA) is a federal law allowing insolvent corporations that owe its creditors in excess of $5 million dollars to restructure their company and financial affairs.

The complex process allows a company to continue in business while it seeks to develop and obtain the approval of alternative payment arrangements with its creditors.

It will generally be necessary for the directors to show that:

• The problem which caused the difficulties has been corrected

• The company can in future be profitable

• The creditors will receive a greater return than they would if the company was to be liquidated

• The creditors will generally receive a reasonable percentage of their money back from the proposal

There are several other factors which will affect the likelihood of the success, such as:

• The percentage of their debt the creditors would recover

• The existence of secured creditors

• The existence of Trust debts such as payroll deductions or GST/HST debt owed to the Government

• Actions already taken by the creditors