AFM231 Chapter 27: Chapter 27

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM231
• Professor: Robert Timberg

Document Summary

2 primary pieces of legislation that govern insolvency law are bankruptcy and insolvency act (bia) and companies" creditors arrangement act (ccaa) First to try to solve financial problems by way of negotiated settlement. Creditors will agree to a settlement if they believe that it will likely produce better results for them in long run than legal proceedings or bankruptcy. Using facilitators will help identify and deal with risks (professional facilitator accountant, lawyer, debt counsellor, etc. ) If informal negotiations fail, then will need to explore formal proceedings. Trustee in bankruptcy: the person who has legal responsibility under the bia for administering bankruptcies and proposals. Will agree if no conflict of interest and debtor can pay the trustee for its services. Trustee will assess estate (all assets of a bankrupt individual or corp) and prepare preliminary statement of assets and liabilities. Insolvent: unable to meet financial obligations as they become due or having insufficient assets, if liquidated, to meet financial obligations.