Bankruptcy

When a small company is unable to generate a profit over a long period of time, business owners may go out of business or choose to reorganize their business. Although the lack of profitable cashflow is often the main reason that companies are forced to go down the bankruptcy path, other factors can also undermine the business success that eventually lead to bankruptcy.

It is worth noting that with bankruptcy the company does not cease automatically. In accordance to the CBCA a bankrupt company cannot request a business dissolution.

Bankruptcy

A company may declare a bankruptcy when:

  •  The company is unable to carry on the course of business as normal
  • The earnings from conducting the business activities cannot fully repay existing debt
  • The value of the remaining company’s assets is not enough to cover all of its debts