Can a bankrupt or insolvent corporation dissolve under the Canada Not-for-profit Corporations Act (NFP Act)?
A corporation that is bankrupt, has a trustee under a proposal or an interim receiver under the Bankruptcy and Insolvency Act (BIA), cannot voluntary dissolve until three years after the trustee or interim receiver in bankruptcy has been discharged.
A corporation is bankrupt if it has made an assignment into bankruptcy under the Bankruptcy and Insolvency Act (BIA), or against whom a bankruptcy order has been made under the BIA, and who has not been discharged from bankruptcy
A corporation is insolvent under the BIA if:
- it is unable to meet its obligations as they generally become due;
- it has ceased paying current obligations in the ordinary course of activities as they become due; or
- the corporation's property is not sufficient, at a fair valuation, to allow payment of all obligations (i.e., even if all of the property was to be disposed of, there would not be sufficient cash to allow payment of all obligations, due or soon to become due.)
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