The Winding-up and Restructuring Act () ("WURA") (the Act) is a statute of the Parliament of Canada that provides for the winding up of certain corporations and the restructuring of financial institutions. It was passed in 1985, and has been amended since. Predecessors of the act date back to 1882.
History
Following the 1880 repeal of Canadian insolvency law at the federal level, the Parliament of Canada returned to the field in 1882, passing legislation "for the purpose of winding-up insolvent banks, and insolvent trading companies," known as An Act respecting Insolvent Banks, Insurance Companies, Loan Companies, Building Societies and Trading Corporations. Until the passage of the Bankruptcy Act in 1919, it was the only federal statute governing insolvency, and it only extended to corporations. The 1919 Act covered individuals and corporations, so corporations were given a choice as to how to proceed with the liquidation of their affairs.
In 1899, provision was made for compromises and arrangements to be made during winding-up proceedings, subject to the approval by the creditors and the court.
In 1966, bankruptcy proceedings were given precedence over winding-up proceedings, and any of the latter instituted prior to a bankruptcy petition or assignment coming into effect had to be abated forthwith.
In 1996, the Act was retitled as the Winding-up and Restructuring Act, and provision was made for the restructuring of insurance companies.
Application
A company is deemed insolvent when:
it is unable to pay its debts as they become due (and a debt over $200, for which a demand in writing to pay the amount is not settled within 60 days, is deemed to be so), it calls a meeting of its creditors for the purpose of compounding with them, it exhibits a statement showing its inability to meet its liabilities, it has otherwise acknowledged its insolvency, it disposes (or attempts or is about to dispose) of any of its property, in order to defraud or avoid any or all of its creditors, it has procured the seizure of any of its assets through any process of execution, it has made any general conveyance or assignment of its property for the benefit of its creditors, or, where it cannot pay its debts in full, it conveys any of its assets without the consent of its creditors or without satisfying their claims, the Canada Deposit Insurance Corporation, in its capacity as a receiver, is unable to arrange a transfer of a financial institution's business to a bridge institution is unable to arrange a restructuring plan for such a financial institution is only able to transfer part of a financial institution's business to a bridge institution
Exceptions
The Act cannot be used when proceedings have already been instituted under the Bankruptcy and Insolvency Act, but it is the only route for insolvent financial institutions to take, as they are not covered by the BIA.
It also offers a little-used route for corporations (other than those governed by the CBCA, CCoopA or CNPCA) to seek liquidation or winding-up that does not necessarily call for being insolvent (except for provincially incorporated companies, where the insolvency requirement is mandatory). Companies for which there is no provision for winding-up either within their native statutes or under applicable provincial legislation comprise those incorporated under:
Special Acts of Parliament
Special Acts of the Legislative Assembly of Alberta
the Canada Corporations Act
the Defence Production Act
the Pension Fund Societies Act
Operation
Nature relative to the Bankruptcy and Insolvency Act
The WURA contains several provisions that stand in contrast to the BIA: