Marc’s business closure and the GST-QST

For over fifteen years, Marc has run a distribution company based in the greater Quebec City area. The company employs a stable team and declares its GST and QST on a quarterly basis – significant rebates that regularly exceed several hundred thousand dollars per period. For a long time, everything works out: margins are tight, but profitability is there.

Then the market changes. Online competition and cost pressures eroded margins to the point where a turnaround was not an option. Marc has made an honest analysis with his partners: the company must close. He has already injected personal cash on several occasions to support operations, and legitimately refuses to go any further. The dialogue with his bankers is cordial – everyone recognizes that closure is inevitable. Marc has a limited bank guarantee, which he will be able to meet from his own resources.

There is one point that weighs heavily. In 48 hours, the company must pay Revenu Québec the considerable sum corresponding to the GST and QST collected for the quarter ended 28 days earlier. The sum is not available. And Marc, like any company director, can be held personally liable for taxes not remitted by the due date. It was with this sword hanging over his head that he walked through the door of the BRESSE office to meet Charles.

The objectives

• • Close the business in an orderly fashion, without having to deal with the day-to-day management of a liquidation.
  • Avoid personal liability for unremitted GST and QST
  • Honor the bank guarantee within the limits of your means, without touching the essentials of your personal assets

The solution

• • During the meeting, Charles immediately identifies the tipping point in the case:

the due date of the tax rebate

• • . He explains to Marc a reality that few directors are aware of – the provisions of the

Excise Tax Act

• • and equivalent Quebec rules make directors personally liable for GST and QST not remitted on the due date. But if the company’s bankruptcy is filed

before

• • • At that point, the debt becomes a provable claim in the bankruptcy file. The personal liability of the administrator is not engaged in the same way.

The clock is ticking. Charles and his team urgently prepare all the required documents. The company’s bankruptcy is filed with the Office of the Superintendent of Bankruptcy just hours before the fateful deadline. The amount owed in GST-QST becomes a claim against the bankruptcy estate – not a personal debt for Marc.

At the same time, Charles referred Marc to a tax accountant in his professional network. The accountant identified a significant tax credit to which Marc was entitled because of the loss incurred in the business – a benefit that would not have been identified without this referral. This is an aspect of the role of the syndic that often exceeds the customer’s expectations: knowing the right specialists, and activating them at the right time.

For the bank guarantee, Marc honors his commitment with his own personal resources. The bank, already informed and collaborative, agrees to a clean and rapid settlement. As for the closure itself – disposal of assets, communications with creditors, legal formalities, end of leases – everything was taken care of by the BRESSE office. Marc didn’t have to deal with calls, inventories or administrative formalities himself.

The result

• • • Thanks to Charles’ vigilance and the BRESSE team’s rapid execution, Marc avoided personal liability of several hundred thousand dollars. The tax credit identified by the recommended accountant was a significant additional benefit – an amount that would not have been recovered without this intervention.

The company was closed down in an orderly fashion. The bank was reimbursed according to the terms of the guarantee, from Marc’s personal funds, without damaging the bulk of his assets. Suppliers and creditors contacted the BRESSE team – not Marc.

Today, Marc is free of the pressure that once weighed on his shoulders. His personal assets remain intact for the future – whether that involves a new project, early retirement or simply taking a step back. A closure that initially seemed insurmountable has taken place within a controlled framework, supervised by a professional whose added value has been measured in concrete terms.

This is precisely what a licensed insolvency administrator can do that others can’t: know the critical deadlines, act fast, and mobilize the right networks at the right time.