Business restructuring: a complete legal guide
Types of restructuring
- Corporate reorganization: creation of a holding company, amalgamation, winding-up of subsidiaries, share exchanges (often with tax rollovers, ss. 85, 86, 87 ITA);
- Operational restructuring: closure of sites, outsourcing, workforce reduction;
- Financial restructuring: renegotiation of debts, new financing, conversion of debt to equity.
Insolvency proceedings
- Proposal under Part III of the Bankruptcy and Insolvency Act: the business proposes an arrangement to its creditors, with a stay of proceedings, under the supervision of a licensed insolvency trustee;
- Companies’ Creditors Arrangement Act (CCAA): for companies with debts over $5 million, a flexible court-supervised process with a monitor.
Employees
Workforce reductions require individual notices and, where applicable, collective dismissal notices (ss. 82 and 84.0.4 Act respecting labour standards). In a unionized setting, the collective agreement and s. 45 of the Labour Code must be respected.
Role of the lawyer
Plan the sequence of operations, obtain the necessary approvals (board, shareholders, lenders, regulators), negotiate with creditors and protect directors from personal liability.
