What is a Division 1 Proposal filed under the Bankruptcy and Insolvency Act?
• A Proposal can be filed by a person or a corporation but only through a Trustee in Bankruptcy. • The filing of a Proposal stops all collection and legal actions by unsecured creditors. • A Proposal, if accepted by the creditors and approved by the Court, is a binding agreement between the debtor and all creditors that are a party to the Proposal. • Secured creditors can be named in a Proposal and can be stayed, but their accepted terms of the Proposal is required or their rights are revived. • The creditors must be better off under a Proposal than under a bankruptcy. • Creditors vote on the Proposal, in person or by mail, at a creditors’ meeting held within three weeks of the filing of the Proposal. • The Trustee must file a report to the creditors on the affairs of the debtor person or company, and the causes of financial difficulty. • In order to be accepted by the creditors, the Proposal must receive approval by at least 66.7% (2/3) in dollars and 50% plus one in number of eligibl
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