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I have a question about corporate bankrupcy in Canada

I have a question about corporate bankrupcy in Canada
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Answered in 38 minutes by:
3/8/2018
Legal Ease
Legal Ease, Lawyer
Category: Canada Tax
Satisfied Customers: 105,510
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Hello! My name is Debra (formerly known as Legal Ease). Thank you for your question. I'm reviewing it now, and will post back again shortly.

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Please provide me with the basic facts and then your specific question please.

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Customer reply replied 4 months ago
I have a corporation. Currently I have accumulated much debt, which is personally guaranteed. I have the opportunity to take advantage of an unsecured business loan. My question is, if my business does not pick up or turnaround in the next year or so, I may have to file bankrupcy on my corporation. If this is the case, what happens to the unsecured loan? I do not want a loan that is personally guaranteed and since a corporation is a separate legal entity, what happens to the loan if it does not get paid off?

If the loan doesn't get paid off by the corporation then whomever guaranteed the loan has to pay the debt off unless they too declare bankruptcy.

If you are asking if corporate bankruptcy will extinguish personal liability on the part of the guarantor it does not.

Does that fully answer your question?

Please feel free to post back with any follow-up questions you may have. If you don't have any then I hope I have earned a 5 star rating but if you don't feel that I have please don't hesitate to reply back and let me know what more I can do to assist you. Finally, please know that even after you rate me I will be here for you and you can ask follow-up questions if you think of them later on at no further charge of course.

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Customer reply replied 4 months ago
Thanks - I realize it would not extinguish personal liability, however the corporation itself would be the guarantor, not a director or person within the corporation. A signing officer would sign for the loan.

If it is solely a corporate debt then it is extinguished by a corporate bankruptcy.

If someone signs on behalf of the corporation they are not personally liable.

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