A Notice of Intention to Make a Proposal, commonly referred to as an “NOI”, is a powerful option for companies and for individuals (with unsecured debts over $250,000), to restructure their affairs.
The NOI is the first step in a larger restructuring process under The Bankruptcy and Insolvency Act (“BIA”) where corporations or individuals offer a Proposal to their creditors.
Proposals are an alternative to filing for bankruptcy.
- Corporations are able to continue operating with minimal supervision, keep individuals employed, and offer their creditors a better return than in a bankruptcy.
- Individuals maintain control of their assets, and are given an opportunity to restructure their debt obligations.
Once the NOI is filed with the Office of the Superintendent of Bankruptcy (“OSB”) the debtor is automatically protected from their creditors continuing or commencing any lawsuits for claims provable in the Proposal. The debtor obtains a “stay of proceedings” under the provisions of the BIA immediately upon filing the NOI.
The NOI filing automatically results in a stay of proceedings on the exercise of remedies by secured and unsecured creditors (subject to some exceptions) for a period of 30 days. The debtor must then file a Proposal to its creditors, unless it obtains an extension of time from the Court. The extensions may be given in 45-day increments for a total period of no more than six months, also subject to certain conditions.
A NOI is extremely beneficial as it allows a debtor time to review his or her affairs and/or operations, meet with their advisors and Licensed Insolvency Trustee, and to compose a Proposal to its creditors. The granting of the stay of proceedings gives breathing space to the debtor with a view that this period of time will end in a successful restructuring plan that benefits all parties more than a bankruptcy.
This article has been prepared for the general information of our clients. Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article. Please note that this publication should not be considered a substitute for personalized tax advice related to your particular situation.
