October 15th, 2009 by Questions
Are formal valuations required for private company shares and real estate when calculating what a reasonable proposal might be?
Posted from: Manitoba
October 16, 2009 at 2:12 pm, A licensed trustee said:
The trustee assisting you with the filing will require some form of independant valuation for your assets – they can’t simply “take your word for it”. As to whether ro not that means a formal valuation on the business and/or a detailed appraisal for real property, well, it is up to the individual trustee to determine what they will accept in each of these cases.
I’ll tell you why we ask for these things – it’s to reducve the chance of someone esles (ie a creditor) coming along and stating that the asset in question is worth significantly more. When you are offering a proposal you need to be consider how your creditors might react if you tried to “low ball” an asset and offer them significantly less that they might recover in a bankruptcy. If they suspect you’ve done this they will reject the proposal and you might end up in bankrutpcy. If you become bankrupt then your trustee may be required to seize and sell those asstes – whihc is probably what you were trying to avoid when you offered the proposal.
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