Winding-up and Restructuring Act
The Act - originally known as An Act Respecting Insolvent Banks, Insurance Companies Loan Companies, Building Societies and Trading Corporations (eventually shortened to the Winding-Up Act) - was originally enacted in 1882. Until the passage of the Bankruptcy Act in 1919, it was the only federal statute governing bankruptcy and insolvency, and it only extended to corporations. The 1919 Act covered individuals and corporations, so corporations had a choice as to how to proceed with the liquidation of their affairs.
In 1996, the Bankruptcy Act was amended to give precedence to its proceedings over those of the Winding-Up Act. In 1996, the Act was retitled as the Winding-up and Restructuring Act.
The Act applies to:
- all corporations incorporated under federal jurisdiction,
- banks and savings banks,
- authorized foreign banks,
- trust companies,
- insurance companies,
- certain loan companies,
- building societies with share capital, and
- incorporated trading companies doing business in Canada wherever incorporated,
- building societies without share capital,
- railway or telegraph companies, or
- corporations incorporated under the Canada Business Corporations Act or the Canada Not-for-Profit Corporations Act
where any of those bodies are:
- in liquidation or in the process of being wound up, and any interested party petitions to be brought under the act, or
- a financial institution, which is under the control, or its assets are under the control, of the Superintendent and is the subject of an application for a winding-up order,
and a company is deemed insolvent when:
- it is unable to pay its debts as they become due (and a debt over $200, for which a demand in writing to pay the amount is not settled within 60 days, is deemed to be so),
- it calls a meeting of its creditors for the purpose of compounding with them,
- it exhibits a statement showing its inability to meet its liabilities,
- it has otherwise acknowledged its insolvency,
- it disposes (or attempts or is about to dispose) of any of its property, in order to defraud or avoid any or all of its creditors,
- it has procured the seizure of any of its assets through any process of execution,
- it has made any general conveyance or assignment of its property for the benefit of its creditors, or, where it cannot pay its debts in full, it conveys any of its assets without the consent of its creditors or without satisfying their claims,
- the Canada Deposit Insurance Corporation, in its capacity as a receiver,
- is unable to arrange a transfer of a financial institution's business to a bridge institution
- is unable to arrange a restructuring plan for such a financial institution
- is only able to transfer part of a financial institution's business to a bridge institution
The Act is the only route for insolvent financial institutions to take, as they are not covered by the BIA. It also offers a little-used route for corporations (other than those governed by the CBCA or the CNPCA) to seek liquidation or winding-up that does not necessarily call for being insolvent (except for provincially incorporated companies, where the insolvency requirement is mandatory).
- "Winding-up and Restructuring Act (R.S.C., 1985, c. W-11)". Retrieved December 31, 2011.
- "Canada Business Corporations Act , S. 3(3)(b)".
- "Canada Not-for-Profit Corporations Act, S. 3(2)(c)".
- "Winding-up and Restructuring Act, S. 6(1)".
- "Winding-up and Restructuring Act, S. 3(1)".
- "Winding-up and Restructuring Act, S. 4".
- "Bankruptcy and Insolvency Act, S. 213".
- "Bankruptcy and Insolvency Act, S. 2, definition of "corporation"".
- Welling, Bruce L.; Thomas G. W. Telfer (September 1, 2008). "The Winding-Up and Restructuring Act: Realigning Insolvency's Orphan to the Modern Law Reform Process". Banking & Finance Law Review. 24: 233. SSRN .