If we stop to think for a minute we can all think of Canadian Companies that have filed applications for and received protection from creditors under Chapter C-36 of the Bankruptcy and Insolvency Act, Companies Creditors Arrangement Act. If we think a little further we can come up with examples of Canadian Companies that have been ordered into bankruptcy by the court.
The Act provides that the Court can grant a stay preventing creditors from collecting on the outstanding debt or initiating/ continuing court actions against the applicant and its directors. As a result, millions in trade receivables and other debts will be uncollectable, causing losses to the companies’ creditors. These creditors include you.
The filings by a major Canadian airline and a national music retailer are examples of highly publicized cases. However, did you know that in Canada there have been over 10,000 commercial filings in one year under the Bankruptcy and Insolvency Act creating more than $375 million in liabilities? When there are bankruptcies in the “system”. You, the reader, suffer losses resulting from the insolvency of your customers. The only question is will these losses be small, large or catastrophic? This is where your knowledgeable insurance broker can help.
Credit Insurance is a guarantee that you will get paid for your products and services, whether sold in Canada, the United States or around the World, if your customers file for Bankruptcy, Bankruptcy Protection or simply fail to pay.
Chances are, some of you have already suffered losses due to Insolvency of your customers.
Be sure to seek advice and purchase insurance from those who understand your business!