In these tough financial times, a number of companies are trying to reorganize themselves in order to avoid insolvency or bankruptcy. In Canada, there are several laws that help facilitate this process: the Companies Creditors Arrangement Act (CCAA) and the Bankruptcy and Insolvency Act (BIA). For the most part, employees are often left high and dry during these restructurings, as these laws don’t offer them much protection.
The CCAA is a federal law that allows financially troubled companies that owe in excess of $5 million the opportunity to restructure their affairs. The CCAA process is court-driven, giving judges a high degree of flexibility to decide how best to deal with the specific cases before them. A monitor is appointed to oversee the restructuring and to report to the court when necessary about the restructuring.