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Informal Proposal to creditors

Region: Ontario Answer # 0281

Bankruptcy is only one of several available options for a business facing financial difficulties. Instead of bankruptcy, you may want to consider other options, such as:

  • making a making an informal proposal (a debt repayment plan) to creditors,
  • making a formal Division 1 Proposal to creditors,
  • selling only some of the assets, or
  • selling the business with or without the help of a secured creditor.

Credit Help

When you are in a situation of financial difficulty, there are many options to consider. For easy-to-understand debt solutions, including bankruptcy, contact an experienced and compassionate agency . Get the help you need to rebuild your financial future. It’s easier than you think.

Informal proposal to creditors

If you have only a small number of creditors you may want to make an informal proposal by calling your creditors and explaining your situation. This may be a good alternative for a business that has a steady income flow and some prospects for the future. You may want to make an informal proposal or arrangement with your creditors.

You can ask to:

  • pay lower monthly payments over a longer period of time,
  • reduced the amount owed, or
  • a combination of both.

Formal proposal to creditors

A Division 1 Proposal to creditors, also known as a Commercial or a Corporate Proposal, it is a formal procedure available to businesses with debts greater than $250,000 (excluding the mortgage on their main residence). A formal proposal is an offer under the Bankruptcy and Insolvency Act made by a business to it’s creditors to settle debts under conditions different than the original terms. This process is carried out through a Licensed Insolvency Trustee (LIT), who will help you and the creditors negotiate new terms that you both find reasonable.

The proposal must first be accepted by two-thirds of your creditors at a meeting of creditors. If it is accepted by the creditors, it must then be approved by the Court. If your proposal is not accepted, your business will automatically become bankrupt.

Get help

A criminal record will affect your ability to get a loan, a mortgage, or a job. To erase your criminal record, learn more at Pardon Partners. It’s easier than you think.

When you are in a situation of financial difficulty, there are many options to consider before filing for bankruptcy. For easy-to-understand debt solutions on your terms, contact our preferred experts 4Pillars and rebuild your financial future. With 60 locations across Canada, they will help you design a debt repayment plan and guide you with compassionate advice. No judgment. For help, visit 4Pillars or call toll-free 1-844-888-0442 .


4Pillars Credit & Debt All Provinces All Topics March 19, 20184Pillars Credit & Debt All Provinces All Topics March 19, 2018

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