Legal FAQs

What is the definition of insolvency under the Bankruptcy and Insolvency Act?

An “insolvent person” means a person who is not bankrupt and who resides, carries on business or has property in Canada, whose liabilities to creditors provable as claims under this Act amount to one thousand dollars, and

(a)  who is for any reason unable to meet his obligations as they generally become due,

(b)  who has ceased paying his current obligations in the ordinary course of business as they generally become due, or

(c)  the aggregate of whose property is not, at a fair valuation, sufficient, or, if disposed of at a fairly conducted sale under legal process, would not be sufficient to enable payment of all his obligations, due and accruing due.

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