Ontario Barrister and Solicitor Practice Exam

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What is generally the first step in a corporate reorganization under the BIA?

  1. Liquidation of assets

  2. Debt consolidation

  3. Making a proposal to creditors

  4. Selling the company

The correct answer is: Making a proposal to creditors

Making a proposal to creditors is generally the first step in a corporate reorganization under the BIA. This is because a proposal involves negotiating with creditors to come up with a plan for repaying debts and restructuring the company's finances. Liquidation of assets and selling the company may be considered as last resort options if the proposal is not successful. Debt consolidation may also be an option considered in the proposal, but it is not the first step in the process.

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