1E9Ct5D

Because the BIA and CCAA are federalstatutes, each contains provisions requiringthat orders made by provincial superiorcourts sitting in bankruptcy are recognizedand enforced by courts in other provinces.Nevertheless, an application to a provincialsuperior court may be necessary to giveeffect to the orders of another province’ssuperior court.REORGANIZATIONIt is always open to debtors to informallyagree with their creditors on a method torestructure the debt. However, the BIA andCCAA provide formal means by whichdebtors may propose arrangements (CCAA)or proposals (BIA) with their creditors.BIA ProposalA proposal pursuant to Part II of the BIA is awritten document by which the debtormakes an offer to settle its creditors’provable claims. Under the BIA, a debtor’sproposal must include an arrangement withboth the preferred creditors and unsecuredcreditors. The proposal may also includesecured creditors. Preferred creditors mayinclude the trustee, employees and/or alandlord.A trustee appointed under a proposal mustcall a meeting of the creditors of the debtorto be held within 21 days after the filing of aBIA proposal. All unsecured creditors andthose secured creditors in respect of whosesecured claims the proposal was made areentitled to vote. All creditors vote by classexcept that all unsecured claims shallconstitute one class unless the proposalprovides for more than one class ofunsecured creditors.CCAA Plan of ArrangementUnder the CCAA, a debtor is able to make aplan of arrangement with any particularclass of creditors, although it is often thecase that a plan will be proposed to most, ifnot all, of the creditors of the applicant.Similarities between the BIA and CCAAOnce a proposal or arrangement isproposed, the debtor’s creditors vote on theproposal or plan of arrangement. In order tobe successful, both a majority in number ofcreditors and two-thirds of the value of theclaims of each class voting in person or byproxy must be attained. If the vote on theproposal or plan of arrangement issuccessful, an application is made to thecourt for approval.The restructuring of a debtor is monitoredby a neutral party under both the BIA andCCAA. Under the BIA, the proposal mustinclude provision for the appointment of atrustee. Under the CCAA, a monitor (whomust be a licensed trustee in bankruptcy) isappointed. Both the trustee and monitorfulfill a similar role: monitoring the debtor’sbusiness and/or financial affairs during therestructuring process, reporting to the court(and also the creditors) on any materialadverse changes affecting the debtor andreporting on the reasonableness of thedebtor’s cash flow statement.Differences between the BIA and CCAAAs indicated above, there are manysimilarities between the BIA and CCAA.However, there are also importantdifferences which may influence one’sdecision about which act to use:Commercial Reorganization and Insolvency Law 125