Explain the Bankruptcy and Insolvency Act

Question

Explain the Bankruptcy and Insolvency Act?

Answer 1

A person is insolvent when he is unable to meet his debts to creditors as they fall due or when his liabilities exceed realizable assets. The federal Bankruptcy and Insolvency Act (BIA):

1. Establishes a uniform practice in bankruptcy proceedings throughout the country.

2. Provides for an equitable distribution of a debtor's assets among creditors.

3. Provides a framework for preserving and reorganizing the bankrupt's affairs by working out an arrangement with the creditors.

4. Releases an honest but unfortunate debtor and permits a fresh start.