You Owe Money —
Restructure your Business through the Companies' Creditors Arrangement Act (CCAA)

What is the CCAA?


The Companies’ Creditors Arrangement Act (CCAA) is a federal law that applies to insolvent corporations that owe in excess of $5 million. The law gives these companies short-term protection from their creditors so they can restructure their businesses and financial affairs.

The main purpose of the CCAA is to enable financially distressed companies to avoid bankruptcy, foreclosure or the seizure of assets while maximizing returns for their creditors and preserving both jobs and the company’s value as a functioning business.

CCAA proceedings are carried out under court supervision.

Filing requirements

The process begins when a company makes what is known as an “initial application” to the court for protection under the CCAA. The application must be made in the province or territory where the company’s head office or chief place of business is located. Subsequent court orders arising from the application are binding in all provinces and territories.


When the initial application is filed, the company is required to provide the court with a projected cash-flow statement and copies of all financial statements for the year prior to the application. If no financial statements were prepared the previous year, the company must provide a copy of the most recent statement.

In addition, a senior official from the company must provide the court with an affidavit that gives a brief history of the company, the reasons for the financial difficulties, the nature of its assets and liabilities, a list of the creditors affected and the proposed classification of creditors.

The company must also show it is acting in good faith and must satisfy the court that it is capable of proposing a viable restructuring plan.

The stay

If the application is accepted, the court issues an initial order that typically gives the company and its directors 30 days’ protection from its creditors. This is known as a "stay."

The stay gives the company time to prepare a proposal called a Plan of Compromise or Plan of Arrangement. If the company needs more than 30 days to prepare the Plan, the court can be asked to grant an extension. There is no time limit on how long a stay can be extended; however, interested parties are free to approach the court to have the stay varied or lifted altogether.


Generally, a company will continue operating during a stay, but is shielded from any legal actions by creditors during that time.

The Plan of Compromise or Plan of Arrangement

A Plan of Compromise or Plan of Arrangement is a proposal the company presents to its creditors on how it will deal with the debts it owes as of the date of filing. Where applicable, it also explains how the company plans to restructure its business and operations. There are no statutory restrictions on the structure or content of the Plan.

As an example, a company may suggest any of the following compromises:


  • offering creditors less than 100 cents on the dollar
  • downsizing
  • extending the time for debt payment
  • selling assets
  • finding third parties to inject capital
  • canceling existing shares and creating a new share structure
  • transferring the business to a new company that would be controlled indirectly by its major secured creditors


How the process affects employees

During the CCAA process, collective agreements between the company and its employees remain in effect unless amended with the agreement of all parties.

In the case of source-deduction payments (e.g., employee income tax withholdings, Canada Pension Plan contributions and Employment Insurance premiums), the Plan must include a provision specifying the company will begin making such payments within six months after the court has approved (sanctioned) the Plan.

In addition, employee wage claims of up to $2,000 are secured against current assets (cash, receivables, inventory). The Plan of Compromise or Plan of Arrangement must provide for payment of these claims immediately following court approval of the Plan.

The role of the monitor

A monitor is a Licensed Insolvency Trustee (LIT) who is appointed by the court in the initial order.


As an officer of the court, their role is to monitor the company’s business and financial affairs to ensure it complies with the law, the court orders and the terms of the Plan.

The monitor may also: help the company prepare the Plan, prepare reports for the court, provide information to creditors about the claims process and creditors’ meetings, and oversee voting at the meetings. The monitor’s reports and other public documents must be posted on the monitor’s website.

The claims process

The court establishes the claims process and may appoint a claims officer to adjudicate disputed claims by creditors.

Creditors are responsible for proving their claims. An important part of the monitor’s role is to inform the creditors about the claims process and provide instructions on how to file proofs of claim. In some cases, there may be a deadline for filing the proof of claim. This deadline is known as the "claims bar" date.

To vote at a creditor’s meeting, a creditor must file a completed proof of claim and supporting documents before the start of the meeting.

Classes of creditors

For a Plan to be accepted, it must be approved by a majority of the creditors in each class who are present and voting (either in person or through a proxy). In addition, the creditors voting to accept the Plan must represent at least two-thirds of the total value of the creditors’ claims in that class.

To obtain the best possible vote for the Plan of Compromise or Plan of Arrangement, the company may choose to set up and divide creditors into separate classes. For example, the company may group the secured creditors into one or several classes.

The meeting of creditors

Once the Plan has been prepared, it is presented to creditors for their review and consideration. The creditors may then be invited to attend a meeting to vote on whether or not the Plan is acceptable.

If the Plan is accepted, the creditors will be paid or treated in accordance with the terms of the offer contained in the Plan.

If it is not approved, the stay—and, therefore, the company’s protection from creditors—is usually lifted. The company does not automatically become bankrupt if the creditors reject the Plan.

Approval of the plan/Distribution of payment

Within days of the vote to accept the Plan, the company applies to the court for its approval (sanction).

In sanctioning the Plan, the court must determine, among other things, that the Plan is fair and reasonable, that it complies with all statutory requirements and that it respects any previous orders of the court.

If the court determines that the Plan is not feasible, it can refuse to sanction the Plan. The company does not automatically become bankrupt if the court refuses to sanction its Plan.

Once the Plan is sanctioned by the court, it becomes binding on the company and on all creditors affected by the Plan.


Feel free to contact us if you have

  • questions about the CCAA process; or
  • a complaint against a monitor.

The OSB keeps records of all complaints and can investigate any complaint against a monitor.

To find information on companies that have been granted protection under the Companies’ Creditors Arrangement Act as of , consult the CCAA Records.