Dissolving a Corporation...

What is dissolution?

Definition

It is the legal termination of a corporation. In other words, dissolution is the act of ending the existence of a corporation. To dissolve a corporation, the applicant must respect the CBCA formalities that will lead to the issuance of a certificate of dissolution. The corporation is dissolved as of the effective date of the certificate of dissolution.

Bankrupt or Insolvent Corporation

The fact that a corporation is bankrupt or insolvent does not end its existence. A corporation that is insolvent or bankrupt under the Bankruptcy and Insolvency Act cannot voluntary dissolve.

A corporation is insolvent under the Bankruptcy and Insolvency Act if:

i) it is unable to meet its obligations as they generally become due;

ii) it has ceased paying current obligations in the ordinary course of business as they generally become due; or

iii) the aggregate of the corporation's property is not, at a fair valuation, sufficient; or if disposed of at a fairly conducted sale under legal process, it would not be sufficient to enable payment of all obligations, due and accruing due.

If you file Articles of Dissolution with Corporations Canada for a corporation that is bankrupt or insolvent, the application will be rejected.

For any questions regarding a bankrupt or insolvent corporation, please contact the Office of the Superintendent of Bankrupty Canada.