Bankruptcy - How To Succeed 5

Geographical Interpretations

Brazil

In the case of Brazil, the Bankruptcy Law applies solely to private companies. However, there are a few specified categories that are deemed to constitute an exception, and these include:
Financial institutions, credit cooperatives, those designated as a consortium, and a society that operates a health care plan.
On the other hand, the law does not apply to public companies.

The law embraces three types of legal proceedings:

The first relates to the bankruptcy itself. This refers to the judicial liquidation process in the case of an insolvent merchant. The aim is to separate the debtor from the trading activities in order to maintain and maximise the effective use of the available assets and productive resources of the company, including any intangible assets. The ultimate objective of the bankruptcy is the liquidation of all of the company assets and the payment of outstanding debtors.

The second involves the Judicial Recuperation. This refers to assisting the debtor to overcome the prevailing financial predicament in order that production can be maintained thus ensuring continuity of employment for the workers together with the interests of the creditors. In this way, the company may be preserved along with its social and economic functions. It is a judicial procedural requirement that the company must have been trading for at least 2 years. In the final analysis, this has to be approval by the judge.

The third is called the Extrajudicial Recuperation. This refers to a private arrangement which has been agreed between the creditors and debtors. As in the case of the Judicial Recuperation, the terms of the arrangement must be approved by the Judiciary.

Canada

Overview

Bankruptcy relating to the consumer is covered by the Bankruptcy and Insolvency Act, or BIA. It contains the following provisions:
(1) It contains complementary provisions covering both federal and provincial legislation
(2) It allows a person who is deemed insolvent (which means unable to pay debts and liabilities) to assign himself, or be petitioned by the creditors, into bankruptcy. This involves the surrender of all property into the care of a trustee who administers its liquidation and subsequent distribution amongst the creditors. Such an allocation of funds is conducted in accordance with legislative priority contained in the scheme of distribution. This process is dependent upon the bankrupt’s compliance with bankruptcy procedures.
(3) It contains a condition in which the bankrupt can be discharged, or excused, from the payment of all or part of the outstanding debts and liabilities.

The legislation may be augmented by regulations from the Office of the Superintendent of Bankruptcy, or OSB, who can provide guidelines to the trustees on various matters related to the BIA. The role of the Superintendent is to monitor bankruptcies and insolvencies in Canada and ensure that they are conducted in accordance with the regulations.

The procedures involved in the bankruptcy process are currently under review. Bill C-12 is a comprehensive insolvency reform bill, put forward by the Parliament, with a view to updating the BIA and related Acts. Accordingly, in April 2008, the Bill received Royal assent. However, as of this date, it was still awaiting the instigation of its legislative and regulatory amendments.

Bankruptcy – How To Succeed