OWC Pharmaceutical Research Corp (OWCP)

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The newly introduced ‘protected negotiation' chapter includes built-in creditor protections, such as the appointment of a creditors' representative to conduct negotiations and to attend board of directors' meetings, who is entitled to information regarding the corporation other than with respect to the protected negotiation.

The creditors' representative shall report to the creditors with respect to any action of the corporation which is not for the benefit of the corporation or which may cause damage to the creditors, with its recommendation of the possible actions to be taken by the creditors.

Furthermore, a court may deny any of the protections prescribed under the law at the request of a creditor if:

there are real concerns that the corporation is trying to:
deceive its creditors;
transfer an asset illegally; or
make improper use of the protections granted; or
there is a real concern of damage to the value of an asset charged in favour of a creditor.

Under the new Insolvency Law, a public corporation may commence a process of protected negotiation as long as it is not breaching its payment obligations and can fulfil those obligations for an additional nine months. This process does not require a court process and provides protection from immediate repayment and freezing orders for six months.

This is not a mandatory pre-statutory process, but a means to encourage any such corporation to commence negotiations at earlier stages in order to increase its chances of recovery.

https://www.mondaq.com/insolvencybankruptcyre-structuring/989090/restructuring-insolvency-comparative-guide