Considering declaring your small business bankrupt? How to avoid unexpected personal liabilities

With Michael Hack, lawyer at Iler Campbell LLP; and Angela K. Pollard, Licensed Insolvency Trustee, Pollard & Associates Inc. (Our apologies to Michael - the recording cut off the very beginning of his introduction.) In addition to the significant health implications of the COVID pandemic, the social distancing measures being ordered to address the pandemic are also affecting many small businesses, to the point that some are contemplating bankruptcy. As a small business owner, if you are reaching the point where you are thinking about having your business declare bankruptcy, you need to give some consideration whether you have any exposure to personal liability. While you might think of your finances and your business’ finances as separate from each other, there are still many ways that you might be responsible for your business’ debts and liabilities. Even if your business is currently doing well, you should ensure that you are operating it in a way that will minimize any exposure you might have to personal liability if the business ever experiences financial difficulty. We will discuss various issues you should consider to minimize your risk of personal liability if your small business should ever declare bankruptcy, such as liability for unpaid wages to employees, whether you have personal exposure under any contracts, directors liability for payroll deductions and HST, possible liability for transfers of property to family, friends, or associates, and avoiding personal liability because you have treated some creditors more favourably than others. Our goal in this webinar is to make you aware of such issues so that you have a better idea about how to operate your business in a way that minimizes the chance that you will be personally responsible for business debts if the business ever becomes insolvent. Michael Hackl is a lawyer at Iler Campbell LLP, who assists clients with disputes regarding a wide variety of matters including contracts, leases, and employment issues. Angela K. Pollard is a Licensed Insolvency Trustee, and the principal of Pollard & Associates Inc., a boutique financial restructuring and insolvency firm operating in the GTA.