On May 13, 2026, Endo Networks, a sales and marketing agency in Oakville, Ontario, filed a notice of intention to make a proposal1. Thirty days later it made one. As amended before the vote, it offered unsecured creditors a fixed $300,000 fund, paid by a sponsor within 30 days of approval2. The creditors voted 18 to none3. On August 21, 100 days after the notice, the court approved it: "In a bankruptcy there would be no funds available for unsecured creditors"4.
That is a Division 1 proposal working as the Bankruptcy and Insolvency Act intends. The owners keep running the business while a licensed insolvency trustee watches, creditors are offered more than a bankruptcy would give them, and once creditors and the court approve, the deal binds them all. Many notices of intention end differently. Of the 272 company notices of intention in the record filed from January 2022 to March 2026, a court-approved proposal followed in at least 18%, and a sale of the business or its assets in 30%.
General information about how Canadian businesses have used proposals, drawn from the court record and the statutes. Not legal or financial advice about your situation.
The notice of intention to make a proposal#
It is the filing that starts most business proposals. A company that is insolvent files a short notice with the official receiver, an officer of the Office of the Superintendent of Bankruptcy, naming a licensed insolvency trustee that has agreed to act and listing creditors owed $250 or more (BIA s. 50.4(1); Form 33). No court hearing is needed. Pitter Patter Daycare's notice, in Conception Bay South, opens:
I, Pitter Patter Daycare Inc., an insolvent person, state, pursuant to subsection 50.4(1) of the Act, that I highlighted: intend to make a proposal to my creditors.
What the notice stops
From the moment it is filed, no creditor can sue, seize or keep enforcing a claim against the business or its property (BIA s. 69). The trustee writes to every known creditor within five days. Vandal Doughnuts' trustee told its creditors the day after filing that claims were "suspended and creditors are prohibited from continuing or commencing any actions or exercising any rights against the Company, except with leave of the Court"5.
Suppliers and landlords cannot end a contract or lease only because the business is insolvent or has filed (BIA s. 65.1). They can still insist on being paid for anything new they supply.
What it doesn't stop
- A lender that moved first. A secured lender that sent its 10-day notice to enforce, under section 244, more than ten days before the notice of intention, or that already took possession, is not stayed (s. 69(2)).
- Claims against the owners personally. Lawsuits against directors over company debts they are liable for as directors are paused until the proposal is approved or the company becomes bankrupt, but claims on their personal guarantees are not (s. 69.31).
Whether the stay reaches a regulator's decision can itself end up before the court. When CRA refused to renew the excise licence of Tantalus Labs, a licensed cannabis producer, one of its reasons was that "Tantalus had filed a NOI on June 28, 2023 as an insolvent person"6. The court ordered the status quo kept: the licence "maintained and renewed to July 27, 2023", and CRA "stayed from taking any actions against Tantalus with respect to the cannabis stamps and cannabis inventory", which had to be sold before the licence ran out7.
What a Division 1 proposal is, and who can make one#
A proposal is a deal the business offers its creditors to settle its debts for less, or over more time, than it owes. "Division 1" is the part of the Bankruptcy and Insolvency Act that governs proposals with no debt limit, for companies and individuals alike (BIA s. 50). Tundra Electric, a Saskatoon contractor, put the purpose in its own proposal:
The purpose of the Proposal is to enable the Company to continue its business operations as a going concern by retiring and/or compromising in an orderly and fair-minded fashion the debts owed by the Company to its Creditors, in order to permit the Company to highlighted: avoid bankruptcy (and the costs and professional fees associated with bankruptcy) and to provide the Creditors with the maximum recovery possible in regard to their respective Claims. If the Proposal is approved in accordance with the BIA, the Proposal (as so approved) is binding upon the Company and its Creditors.
Division 1 or Division 2?
Division 2 is the consumer proposal, open only to individuals whose debts, not counting a mortgage on their home, are $250,000 or less (BIA s. 66.11). Every company uses Division 1, and so does an individual over the limit. This guide is about businesses.
A proposal or the CCAA?
A company with more than $5 million in claims can use the Companies' Creditors Arrangement Act instead. It has no six-month limit, and a notice of intention can be moved into it before a proposal is filed. Iovate, the sports-nutrition company behind MuscleTech and Hydroxycut, made that switch partly to avoid "a return to Court every 45 days"10 (see our CCAA guide).
The first 30 days#
Two deadlines run from the notice:
- Within 10 days, the business files a cash-flow forecast, at least monthly, with the trustee's report on whether it is reasonable (s. 50.4(2)). Pitter Patter Daycare filed both four days after its notice11.
- Within 30 days, the trustee files the proposal, unless the court has extended the time (s. 50.4(8)). Endo Networks filed on day 3012, Tundra Electric on day 2913.
How long can a notice of intention last?#
About six months. The court can extend the 30 days by up to 45 days at a time, to a total of five more months, but only if it is satisfied, each time, that the business "has acted, and is acting, in good faith and with due diligence", "would likely be able to make a viable proposal", and that "no creditor would be materially prejudiced" (BIA s. 50.4(9)). The court's general power to extend time limits cannot be used to stretch it (s. 50.4(10)).
Most company notices of intention in the record show at most one extension, and fewer than one in seven ran all the way to the six-month limit. Where a proposal was filed, it tended to come at the two ends: about a third within the first 30 days, and a quarter in the last month before the limit.
Steve's Music, the Montréal music retailer, used all of it:
The company's case for its first extension was the usual one: without it, "the Business will terminate operations, jobs will be lost and the Liquidation Sale will be negatively effected, resulting in a poor recovery scenario"21.
Interim financing and the court-ordered charges#
A business in a proposal often needs money to keep going, and the people it needs, to stay. The court can grant charges on the business's property that rank ahead of existing lenders:
- Interim financing, a new loan the court approves against the cash-flow forecast (BIA s. 50.6).
- An administration charge, for the trustee's and the lawyers' fees (s. 64.2).
- A directors' charge, to cover what directors and officers may become personally liable for after the filing, where insurance at a reasonable cost isn't available (s. 64.1).
In Pitter Patter Daycare's case the order said each charge "shall rank in priority to all other security interests, trusts, liens, charges, and encumbrances, statutory or otherwise"22. At ATTAbotics, the Calgary robotics company, the directors' charge was sought because the workforce had fallen "from 203 people to 11 people" and the directors had waived their pay23.
Paying CRA inside a proposal#
CRA is treated differently depending on what it is owed.
- Source deductions, the income tax, CPP and EI a business withheld from pay, must be paid in full within six months of court approval, unless CRA consents to something else (BIA s. 60(1.1)). The court cannot approve a proposal that doesn't provide for it.
- Remittances after the filing must be kept current. A court cannot approve a proposal while the business is in default on them (s. 60(1.2)).
- GST/HST and other tax debts from before the filing are ordinary unsecured claims (s. 86), and CRA votes them like any other creditor.
Endo Networks' proposal put the rule in its own terms:
Proven Claims of Her Majesty in right of Canada or a province of all amounts of a kind that could be subject to a demand under subsection 224(1.2) of the Income Tax Act (Canada) or under any substantially similar provision of provincial legislation that were outstanding on the NOI Date shall be paid in full highlighted: within six (6) months of Final Approval of this Proposal unless Her Majesty in Right of Canada or a province consents to some other arrangement. The amount payable pursuant to this section of the Proposal will be paid directly by the Debtor to the CRA.
CRA can agree to more time. At Tundra Electric, "CRA has agreed to the extended repayment period" of 24 months24. Quality Pipefitting, a Mississauga plumbing contractor for car-wash construction that owed about half its debt to CRA, expected to pay its source deductions, about $147,000, in six monthly payments of $24,500 before anything went to other creditors25.
LG Projects' approved proposal had already changed shape once CRA's source-deduction claim came in at $951,414. As amended, it "does not provide for any recovery for the claims of unsecured creditors apart from full payment to the unsecured portion of CRA's claim related to payroll source deductions"28.
How do creditors vote on a proposal?#
At a meeting the trustee must call within 21 days of filing the proposal, chaired by the official receiver or its nominee (BIA s. 51); at Endo Networks' reconvened meeting, the trustee chaired29. The proposal passes if, in each class of unsecured creditors, a majority in number and two-thirds in value of those voting say yes (s. 54). Unsecured creditors are one class unless the proposal makes more.
In the record, the votes were lopsided:
- Steve's Music: 46 for and one against, 97.87% by number and 87.96% by value19.
- Endo Networks: 18 for, none against; a creditor whose claim the trustee had not yet ruled on "abstained from the vote"3.
- Tundra Electric: both voting creditors in favour, after the meeting broke for the afternoon so they could read an amended proposal31.
Meetings can be adjourned. Endo Networks' first meeting was put over two weeks at the bank's request, "to allow BNS (and its legal and financial advisors) additional time to consider the terms of the Initial Proposal"32.
Court approval#
Once creditors accept, the trustee asks the court to approve the proposal, on at least 15 days' notice to creditors (BIA s. 58). The court must refuse a proposal that is "not reasonable" or "not calculated to benefit the general body of creditors" (s. 59). It also checks that priority claims, the trustee's fees and the CRA and employee payments are provided for.
In approving Endo Networks' proposal, the court set out what it had weighed:
The Proposal sets up a fund for unsecured creditors which, when Trustee fees are removed will have a balance of approximately $225,000 available for unsecured creditors. In a bankruptcy there would be highlighted: no funds available for unsecured creditors.
The court was satisfied that the proposal was reasonable, "calculated to benefit the general body of creditors", met "the requirements of commercial morality and the integrity of the bankruptcy system", and was "made in good faith"33.
Once approved, the proposal binds every unsecured creditor, including those who voted no. When it has been fully carried out, the trustee issues a certificate that releases the business from the debts it covered (s. 65.3; OSB).
What do creditors get?#
What the proposal offers, which the trustee compares with what a bankruptcy would pay. The proposals in the record took different shapes:
- A fixed fund: Endo Networks, $300,000 from a sponsor, about $225,000 after the trustee's fees.
- A share of each claim over time: Tundra Electric, Crown claims plus 50% of proven claims over 60 months, which the trustee estimated, for the proposal as first filed, at 47 cents on the dollar against nothing in a bankruptcy34.
- Instalments after CRA: Quality Pipefitting, $165,000 in 18 quarterly payments starting in month seven, an estimated 17% against 7% in a bankruptcy35.
- A liquidating proposal: Steve's Music, after its stores had closed, a $750,000 dividend funded by the company's remaining cash and a loan from an entity related to it, while a group related to its owners gave up about $1.4 million of claims; estimated at 27.1% against 17.5% in a bankruptcy36.
If you are one of the creditors, our guide for creditors explains claims, voting and payouts.
What happens if the proposal fails?#
The business becomes bankrupt automatically. The Bankruptcy and Insolvency Act deems it to have made an assignment if:
- no proposal is filed within 30 days or the extended time (s. 50.4(8));
- the creditors vote it down (s. 57);
- the court refuses to approve it (s. 61(2)); or
- the court annuls it, on an application after a default or for another reason the Act allows (s. 63).
The official receiver's certificate for Vandal Doughnuts records the first of these:
the debtor has failed to file a cash-flow statement or a proposal within the provided period following the filing of the notice of intention or within any Court-granted extension and is thereupon highlighted: deemed to have made an assignment.
Creditors usually accept: of the company proposals in the record that reached a known vote from January 2024 to June 2026, about 48 were accepted and 6 refused, so about 1 in 9 was refused. A rejected proposal ends in bankruptcy, though, and those are the cases the record is least likely to follow. Far more common is no proposal at all: of the 272 company notices of intention in the record filed from January 2022 to March 2026, about 7 in 10 show no proposal filed, and about a third end in a bankruptcy.
A bankrupt company does not get a fresh start. It cannot be discharged unless its creditors are paid in full (BIA s. 169(4)).
Using a notice of intention to sell the business#
Many notices of intention never lead to a proposal. The stay gives a business time to sell itself in an orderly way, with court approval for any sale outside the ordinary course (BIA s. 65.13), and then, often, a bankruptcy.
- Ignite Technology, a Calgary IT firm, sold its business to MNP Digital under the stay37 and was deemed bankrupt on day 120, with no proposal filed38.
- ATTAbotics sold substantially all its assets and the court ended the stay on closing, "so as to result in the immediate and automatic assignment" into bankruptcy39.
- Pitter Patter Daycare sold its business. The trustee asked to pay the proceeds to the administration charge, the interim lender, CRA's source deductions and then the bank, with nothing left over40, and the court approved it41.
Each extension still has to meet the "viable proposal" test. Ignite's trustee argued that an extension would help:
the extension will enhance the likelihood of the Company being able to make a highlighted: viable proposal to its creditors by enabling the Company to finalize the MNP Transaction, or allow a third party to propose a superior transaction, which is in the interest of all stakeholders
For the owners, a sale through a notice of intention ends their ownership: the business, if it carries on, belongs to the buyer. Unsecured creditors are paid only if the sale brings in more than the court-ordered charges, the secured lender and CRA's source deductions take.
What to do now#
How to find the case#
Search the company's name on Proceedings: each proposal in the record has a case page with the notice, the trustee's reports and the court orders in date order. The trustee's own website has the proposal, the proof of claim form and the meeting details.
Questions people ask#
What is the difference between a Division 1 and a Division 2 proposal?
A Division 2 consumer proposal is for individuals with debts of $250,000 or less, not counting a home mortgage. A Division 1 proposal has no limit and is what companies use.
How long does a Division 1 proposal take?
Up to about six months to file it after a notice of intention, then a creditors' meeting within 21 days and a court hearing on at least 15 days' notice. The payments under it can run for years.
Does the owner keep running the business?
Yes. Management keeps operating while the trustee monitors the business and reports to creditors and the court. Sales outside the ordinary course need the court's approval.
Can CRA vote on a proposal?
Yes, for its unsecured claims, such as GST/HST. In the record, Tundra Electric's trustee left CRA's source-deduction claim out of the count: "For voting purposes, only the unsecured portion of the claim, $64,456.52, is considered"42. Source deductions must be paid in full within six months of court approval unless CRA agrees otherwise.
What happens if creditors reject the proposal?
The business is deemed bankrupt on the day of the vote.
Can a proposal stop my bank from enforcing?
A notice of intention stops most secured lenders, but not one whose section 244 notice was sent more than ten days before the filing, or one that already took possession.
How much does a Division 1 proposal cost?
The trustee's fees are paid out of the proposal ahead of unsecured creditors. In the record, Endo Networks' proposal fixed the trustee's fee paid from the fund at $60,000 plus HST, with expenses and legal fees on top, and let the trustee collect anything more from the company outside the proposal43; at Pitter Patter Daycare, a six-month notice of intention ending in a sale, the trustee's fees came to $99,715 before expenses and tax44.
Is a Division 1 proposal public?
Yes. Court orders are public, and every known creditor is sent the proposal and the trustee's report before the meeting.
Sources#
Court filings
Each source links to the filing's entry on its case page.
- Endo Networks. Certificate of Filing of a Notice of Intention, May 13, 2026 ↩
- Endo Networks. Amended Proposal, July 17, 2026, s. 5(a)–(b) ↩
- Endo Networks. First Report of the Proposal Trustee, Aug. 12, 2026, paras. 38–39 ↩
- Endo Networks. Endorsement, Aug. 21, 2026, para. 3 ↩
- Vandal Doughnuts. Notice to Creditors, Aug. 13, 2026 (no para.; "Stay of Proceedings" section) ↩
- Tantalus Labs. Application Response of the Attorney General of Canada, July 9, 2023, Part 4, para. 8 ↩
- Tantalus Labs. Second Report of the Proposal Trustee, July 26, 2023, paras. 5(a), 20 ↩
- Upper Canada Growers. Factum of the Applicant (bank), May 9, 2025, paras. 22, 37 ↩
- Upper Canada Growers. Second Report of the Receiver, Jan. 19, 2026, para. 2 ↩
- Iovate Health Sciences. Factum of the Applicants, Oct. 30, 2025, Part IV.B (no para.) ↩
- Pitter Patter Daycare. Form 29, Trustee's Report on Cash-Flow Statement, Mar. 31, 2026 ↩
- Endo Networks. Trustee's Report on Proposal, June 23, 2026, introduction (no para.) ↩
- Tundra Electric. Report of Trustee on Amended Proposal (Form 40), Apr. 19, 2023, para. 2 ↩
- Vandal Doughnuts. Certificate of Assignment (amended), Sept. 17, 2026, no para. ↩
- Steve's Music. Certificate of Filing of a Notice of Intention, Feb. 4, 2026 ↩
- Steve's Music. Report of the Trustee on the Financial Situation of the Debtor and on the Proposal, Aug. 4, 2026, para. 10 ↩
- Steve's Music. Report of Trustee on Proposal, Aug. 31, 2026, paras. 7–8 ↩
- Steve's Music. Report on the Financial Situation and on the Proposal, Aug. 4, 2026, para. 17 ↩
- Steve's Music. Report of Trustee on Proposal, Aug. 31, 2026, paras. 15–17 ↩
- Steve's Music. Order Approving Proposal, Sept. 10, 2026, paras. 8–9 ↩
- Steve's Music. Motion to Extend the Delay to Make a Proposal, Feb. 26, 2026, para. 15 ↩
- Pitter Patter Daycare. Order (Stay Extension and Administration Charge), May 6, 2026, para. 11 ↩
- ATTAbotics. Application, July 3, 2025, para. 12 ↩
- Tundra Electric. Report of Trustee on Amended Proposal (Form 40), Apr. 19, 2023, para. 13 ↩
- Quality Pipefitting. Report of Trustee on Proposal, Aug. 19, 2026, paras. 9, 14, 16, 19, 23 ↩
- LG Projects. Order Approving Proposal, Aug. 21, 2025 ↩
- LG Projects. Trustee's Report to Creditors (bankruptcy), Apr. 8, 2026, Assignment in Bankruptcy (no para.) ↩
- LG Projects. Trustee's Second Report to Creditors, July 21, 2025, Summary of Amended Proposal (no para.) ↩
- Endo Networks. First Report of the Proposal Trustee, Aug. 12, 2026, para. 36 ↩
- Quality Pipefitting. Report of Trustee on Proposal, Aug. 19, 2026, para. 36 ↩
- Tundra Electric. Report of Trustee on Amended Proposal, Apr. 19, 2023, Ex. E (minutes, Apr. 11, 2023) ↩
- Endo Networks. First Report of the Proposal Trustee, Aug. 12, 2026, para. 28 ↩
- Endo Networks. Endorsement, Aug. 21, 2026, para. 5 ↩
- Tundra Electric. Report of Trustee on Amended Proposal, Apr. 19, 2023, Ex. C3 (Trustee's Report to Creditors, Mar. 27, 2023), s. 6 ↩
- Quality Pipefitting. Report of Trustee on Proposal, Aug. 19, 2026, paras. 23, 35 ↩
- Steve's Music. Report on the Financial Situation and on the Proposal, Aug. 4, 2026, paras. 16, 24–27, 38–39 ↩
- Ignite Technology. Trustee's Report on Preliminary Administration, July 10, 2026, s. 1.1, paras. 2, 6 ↩
- Ignite Technology. Trustee's Report on Preliminary Administration, July 10, 2026, s. 1.2, para. 1 ↩
- ATTAbotics. Order, Oct. 14, 2025, para. 1 ↩
- Pitter Patter Daycare. Fourth Report of the Proposal Trustee, Sept. 15, 2026, paras. 27–30 ↩
- Pitter Patter Daycare. Administrative Charge, Distribution and Fee Approval Order, Sept. 16, 2026, para. 5 ↩
- Tundra Electric. Report of Trustee on Amended Proposal (Form 40), Apr. 19, 2023, para. 8 ↩
- Endo Networks. Amended Proposal, July 17, 2026, s. 1(n) ↩
- Pitter Patter Daycare. Fourth Report of the Proposal Trustee, Sept. 15, 2026, para. 35 ↩
Laws and official pages
- Bankruptcy and Insolvency Act: s. 50 (who can make a proposal), s. 50.4 (notice of intention, 30 days, extensions), s. 69 (the stay), s. 51 (the meeting), s. 54 (the vote), s. 59 (court approval), s. 60 (CRA, employees, pensions), s. 57 and s. 63 (failure), s. 50.6, 64.1, 64.2 (charges), s. 65.13 (sales), s. 66.11 (consumer proposal limit)
- Office of the Superintendent of Bankruptcy: Division I proposals, Form 33 (notice of intention) and Form 31 (proof of claim)
- Directors: Income Tax Act, s. 227.1, Excise Tax Act, s. 323 and CRA IC89-2R3
Official pages were checked on October 10, 2026.
The full record#
Every company notice of intention to make a proposal in the record filed between October 1, 2025 and March 31, 2026: 39 in all, followed in the record to October 10, 2026; for ten of them the record stops before any outcome. A court had approved a proposal in eight of them by then. The first ten, in order of filing:
| Company | Province | Notice filed | What happened | Days |
|---|---|---|---|---|
| 177 Cross Argus (Oakville development site) | ON | October 2, 2025 | Withdrawn (November 18, 2025) | 47 |
| 2213080 Ontario Corp. | ON | October 6, 2025 | Proposal filed, vote not shown | — |
| Artic Machinery (BC equipment dealer) | BC | October 10, 2025 | Proposal accepted, approval pending | — |
| C & D Makridis Holdings (laundry, Bedford) | NS | October 21, 2025 | Proposal approved (May 22, 2026) | 213 |
| Land-development group (1351637 Ontario) | ON | October 24, 2025 | Deemed bankrupt, no proposal (November 24, 2025) | 31 |
| Groupe Mayrand Alimentation | QC | October 28, 2025 | Moved to the CCAA (November 26, 2025) | 29 |
| Kindred Living | NS | October 31, 2025 | Sold, then bankrupt (February 26, 2026) | 118 |
| Morris Marketing Group | ON | November 14, 2025 | Proposal approved (January 28, 2026) | 75 |
| Jolcar Security Services | NS | December 1, 2025 | Proposal approved (July 17, 2026) | 228 |
| West Air Sheet Metal | AB | December 3, 2025 | Proposal filed, vote not shown | — |
The full table, all 39 notices with the extensions each got, the proposal and the vote, the outcome, the liabilities and what each proposal offered unsecured creditors, every figure cited to the filing it came from, is for subscribers.
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