CIRA common mistakes
CIRA · Understand the traps and how to avoid them.
Treating the stay of proceedings as automatic and absolute, so the candidate answers that a secured creditor can never enforce its security or that no court application is ever needed once a proposal or bankruptcy is filed.
Candidates memorize 'filing triggers a stay' but skip the statutory exceptions, the court's power to grant relief from the stay, and the different treatment of secured creditors, landlords, and regulatory proceedings. The mental shortcut feels efficient under time pressure and produces confidently wrong answers.
What to do instead
Build a one-page matrix of stay scope: what is stayed, who is bound, which activities are carved out, and the procedure and grounds for lifting or varying the stay. For each practice question, ask which exception or leave requirement the fact pattern is testing before selecting an answer.
Applying the wrong ranking to preferred, secured, and ordinary unsecured claims, for example placing wage claims or municipal taxes in the wrong priority tier or assuming preferred claims rank ahead of secured creditors' charge on the collateral.
Priority schemes are layered and differ between bankruptcy and receivership, and between federal and provincial entitlements. Candidates learn the list once and then apply it without checking which regime the question describes or whether the asset is charged.
What to do instead
Draw the waterfall for each regime separately and annotate it with the statutory source and any super-priority (wages, pension, environmental). Practice by classifying ten mixed claims into the correct tier and stating which statute creates each ranking.
Conflating restructuring with liquidation: recommending a sale of assets or wind-up when the fact pattern calls for a going-concern reorganization, or proposing a proposal/plan when the company is plainly insolvent with no viable business.
Candidates latch onto the first technical term they recognize in the stem and stop reading for viability indicators such as positive cash flow, lender support, or a credible plan sponsor. The exam tests whether the candidate can match the remedy to the diagnosis.
What to do instead
Before answering, write one line of diagnosis: is the business viable, is there liquidity, is there creditor support, is there a going-concern option? Then select the process that fits that diagnosis, and justify why the alternative process is inferior in that fact pattern.
Building a restructuring analysis without a realistic 13-week cash flow, treating the projected income statement as sufficient evidence of liquidity.
Candidates with accounting backgrounds default to accrual profit-and-loss thinking. They miss that restructuring liquidity is about weekly receipts and disbursements, borrowing base availability, and the timing of professional and payroll costs.
What to do instead
Practice constructing a 13-week direct cash flow from a short fact pattern, separating operating, investing, and financing lines, and flagging the week in which the minimum cash or covenant breach occurs. Always state the assumptions driving receipts and the sensitivity to a delay in collections.
Using a single valuation method and presenting the output as a precise number, without a range, without a discount for lack of marketability or control, and without reconciling to the purpose of the valuation.
Candidates treat valuation as formula application and forget that the standard of value, premise of value, and intended use drive the method selection. They also confuse enterprise value with equity value and forget to bridge net debt.
What to do instead
For every valuation question, state the standard and premise of value, select and justify the method, apply discounts or premiums explicitly, and present a range with a sensitivity table. Practice the enterprise-to-equity bridge and check that the conclusion matches the purpose stated in the facts.
Misstating the claims process: missing the bar date, confusing a proof of claim with a notice of dispute, or failing to distinguish a claim that is provable from one that survives the insolvency as a non-provable or equity claim.
The procedural steps are numerous and similar-sounding, and candidates study them as a list rather than as a timeline. They also overlook that some claims, such as certain fines, penalties, or equity interests, are treated differently from ordinary provable claims.
What to do instead
Map the claims timeline: notice, bar date, proof of claim, review, dispute, and adjudication. For each step, note the responsible party and the consequence of missing it. Then classify a set of sample claims as provable, secured, preferred, or non-provable with reasons.
Ignoring the directors' and officers' exposure and the personal liability questions embedded in the facts, answering only about the corporation's obligations.
Candidates focus on the entity because the stem describes a company. They forget statutory liabilities for unpaid wages, source deductions, and dividends, and the due diligence defence that may relieve a director.
What to do instead
When a fact pattern names directors or officers, run a checklist: statutory liabilities, fiduciary duties to creditors in the vicinity of insolvency, due diligence defence, and indemnification or insurance. State who is liable, for what, and on what basis.
Confusing the roles and duties of the monitor, trustee, receiver, and proposal trustee, attributing the wrong powers or reporting obligations to the wrong officeholder.
The titles appear interchangeable in ordinary language, and candidates memorize definitions without linking each officeholder to the specific statute and stage of proceedings. Under time pressure they pick the most familiar term.
What to do instead
Create a comparison table: appointing authority, statutory source, primary duty, reporting to court and creditors, and powers over assets. Then answer role-identification questions by first naming the proceeding and stage, and only then naming the officeholder.
Treating the financial advisory engagement as a pure numbers exercise, omitting the covenant analysis, borrower reporting obligations, and lender communication strategy that the engagement actually requires.
Candidates separate the quantitative and advisory halves of the syllabus and rehearse calculations without practicing the judgment component. Exam stems that ask for the next step or the best recommendation then feel ambiguous.
What to do instead
For each advisory scenario, produce a short action plan covering covenant headroom, reporting deadlines, stakeholder communication, and contingency options. Practice ranking recommendations by urgency and feasibility rather than by technical sophistication.
Answering the question asked in general terms rather than the specific question, giving a textbook description of a process when the stem asks for the next procedural step, the best course of action, or the most likely outcome.
Candidates over-learn definitions and under-practice question interpretation. They recognize a topic, retrieve everything they know about it, and select an option that is true in general but not responsive to the stem's qualifier.
What to do instead
Underline the operative verb and any qualifier (first, best, most likely, next) before reading the options. Eliminate options that are accurate but non-responsive, and rehearse with stems that deliberately include a true-but-irrelevant distractor.