Examines director liability exposure arising from inadequate creditor notification during the 2023 wind-up of an Alberta nonprofit with $6,950 in outstanding obligations to three known creditors.
Faculty of Risk Management
Process Controls for Creditor Notification in Organizational Wind-Up
What this course covers
Scenario
In March 2023, a community arts society based in Innisfail, Alberta initiated voluntary dissolution after 18 years of operation. The board of 5 volunteer directors followed the statutory wind-up procedure, publishing the required notice in the Alberta Gazette. However, the directors did not send direct written notice to 3 known creditors—a local print shop owed $4,200, a venue holding a $1,800 deposit, and a graphic designer with $950 in outstanding invoices.
7 months after dissolution completed, the print shop owner discovered the society had ceased to exist. With the organization no longer a legal entity, the creditor's counsel initiated personal claims against the former directors totalling $6,950. The directors now face individual exposure for obligations they believed extinguished by the formal wind-up process.
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