The situation experienced since March 2020 has caused many upheavals and will no doubt continue to have repercussions in the months and years to come. The many measures put in place by the various levels of government have certainly provided oxygen to many individuals and businesses experiencing financial difficulties with the help of an M&A advisor. However, the laws of the market will sooner or later take over, fortunately for some and unfortunately for others.

Some companies have done great business in the pandemic and others have survived thanks to the programs offered and will soon return to certain normality. However, the closure awaits a significant number of more fragile businesses struggling with significant financial issues.

The team of licensed insolvency trustees is empowered to design crisis exit plans and strategies, particularly in the presence of financial difficulties. Whether in the context of a reorganization mandate or by using the legislative means available to us, in particular those provided for in the law on bankruptcy and insolvency, be aware that proposals and arrangements ordered to reduce the liabilities of companies can be piloted by managers.

Bankruptcy and insolvency of your business: what about your financial responsibility?

Although the decision to incorporate a company may have turned out to be the best or the only option to start your project, this decision alone is not enough to separate the debts of the company and your debts very tightly. personal.

There are indeed two types of debts which, insofar as they are not paid by your company, will become your responsibility:

1- those that you have endorsed or guaranteed;

2- those that the law imposes on you.

Debts endorsed or guaranteed

The first category is quite simple and quick to verify, either by consulting the financing documents (loans, lines, and credit cards or the forms for opening accounts with suppliers). Have you, in addition to having signed as an officer of the company, signed as surety, guarantor, and/or endorser of your company? If the answer is YES, you will have deduced that in the event of a default in payment by your company, even if the latter has implemented a plan of arrangement with a licensed insolvency trustee, your liability is very likely to be engaged for cover part or all of the loss that the lender or supplier may incur. Your commitment may therefore be limited to a fixed amount or even a percentage of the debt.

Debts imposed by law

The second category also called “statutory liability”, relates to the debts that the law assigns to you. Certain deadlines or terms and conditions may have an impact, but here are the main examples of debts that will become your liability: GST/QST, DAS (deductions at source on employees' salaries), CNESST, and unpaid salaries to your employees.

Important: you should know that the aforementioned statutory responsibility lies with the managers of the company. Thus, it is not the simple fact of being a shareholder of a company in financial difficulty that will engage your liability, but rather the fact of being one of its managers through leadership coaching near me. It is also essential to remember that if you have been appointed manager of the company, without being involved in the day-to-day management of the business, you will have a hard time getting rid of your statutory responsibility.

Expert advice: before agreeing to serve on the board of directors of a company, take the time to think carefully about the possible impacts, including those related to your financial responsibility.