BUSINESS
Business in difficulty
The Act allows a company to place itself under protection for a period of thirty (30) days up to six (6) months , during which time the company must develop a restructuring plan for its business, as well as an offer to be presented to all of its creditors.
What is a concordat proposal ?
These mechanisms provide that a company, through a licensed insolvency trustee, can file a proposal (" an offer ") with the company's creditors, asking them to accept less than the amounts owed so that the company can survive.
The trustee works with company management to draft a proposal that presents the best alternative for both the creditors and the company. Typically, creditors will have to forgo a portion of the amounts owed to them, with the company offering to pay a certain percentage of its debts (for example, 25%) over a period calculated according to the company's financial capacity.
How does it work in practice?
The proposal for a settlement is the only mechanism that allows tax debts to be settled at less than 100% , and yes, governments accept such settlements.
The filing of a proposal halts all legal proceedings taken or contemplated by the creditors.
Filing a proposal gives the company some leeway to discuss with creditors, explain its financial situation and ask for their support for the proposal.
Filing a proposal also protects the company's directors from legal liability.
Main advantages
1. Significant debt reduction
2. Preservation of your assets
3. Cessation of interest
4. Protection against creditors
5. Simplified monthly payments