You Owe Money—
When Bankrupts Fail to Respect their Obligations

What are the obligations of a bankrupt?

 

The main obligations of a bankrupt, as described in the Bankruptcy and Insolvency Act (sections 157.1 and 158), include:

What is considered misconduct?

The most common acts of misconduct are:

  • The bankrupt continued to trade or to borrow after realizing that he/she could not pay his/her debts;
  • The bankrupt caused the bankruptcy, or contributed to it, through reckless speculation or an extravagant lifestyle, gambling or negligence with regard to his/her financial affairs;
  • The bankrupt, although unable to pay his/her debts as they came due, gave undue preference to one of his/her creditors;
  • The bankrupt was guilty of fraud or fraudulent breach of trust;
  • The bankrupt failed to make the payments required by law to the LIT;
  • The bankrupt chose bankruptcy when he/she could have made a proposal to his/her creditors to repay part of the debts;
  • The bankrupt failed to respect his/her obligations as described above.

See the Bankruptcy and Insolvency Act (subsection 173. (1)) for a complete list of acts considered to be misconduct.

How is misconduct reported?

Creditors, LITs and the OSB may oppose the bankrupt's discharge when they believe that the bankrupt has committed one or more acts of misconduct. The Court will review the opposition and render a decision. Learn more about the rights and responsibilities of creditors, LITs and the OSB

What are the consequences of misconduct?

 

Consequences of misconduct are determined on a case-by-case basis. Misconduct may lead to refusal or suspension of the bankrupt's discharge or granting of a conditional discharge.

Below are summaries of some cases of bankrupts whose conduct was deemed to be inappropriate, as well as the related judgment handed down by the Court.


Case summaries

Summaries are written for ease of understanding. Users wishing full information on the cases should consult the court decision. The court decision prevails.

2023

Background

1983 – The bankrupt established Dowland Contracting Ltd.

2002 – While acting as the director of Dowland Contracting Ltd., the bankrupt signed indemnity agreements with Intact Insurance as a personal guarantor in order to obtain bonding for the performance of contracts.

2011 – The bankrupt resigned as a director of Dowland Contracting Ltd. but, overlooked approaching Intact Insurance to request to withdraw his personal guarantee on the indemnity agreements that he had signed with Intact Insurance.

2013 – The bankrupt was made aware of potential liability because of the indemnity agreements with Intact Insurance. In particular, for payments that Intact Insurance made to bond claimants.

2013 - Dowland Contracting Ltd. was placed into receivership.

2014 – The bankrupt received shares of Clipper Ltd. (a foreign company) from his brother who resides in the United Kingdom.

2014 – Dowland Contracting Ltd. was assigned into bankruptcy.

2015 – The bankrupt received $11,317,040.30 from Clipper Ltd.  

2016 (March)  – The bankrupt sold his two corporations; Beaufort Mechanical Services Ltd. and Tundra Drilling Services Ltd. (Tundra and Beaufort) to his friend for the total of $2,280,000.00. The bankrupt then instructed his friend to delay remitting the $2,280,000.00 until after his liability to Intact Insurance was resolved.

2016 (April) – Intact Insurance made a formal demand by way of a certified statement of surety for the payment of approximately $45 million by the bankrupt.

2016  (June) – The bankrupt sold his four-plex in Inuvik and received approximately $200,000.00.

2016  (June) – Intact Insurance sued the bankrupt for approximately $45 million and agree to an extension of time to allow the bankrupt file his statement of defence by November 3, 2016.

2016 (July) – The bankrupt liquidated his investment with Cedar Peaks Mortgage and received about $175,000.00.

2016 (August) – The bankrupt placed a $400,000.00 second mortgage against his home in favor of a corporation owned by another friend.

2016 (September) – The bankrupt transferred $10,200,000.00 to an HSBC account in Singapore. The account in Singapore belonged to his (the bankrupt) brother’s business associates who reside in Vietnam.

2016 (November 1) – The bankrupt instructs his friend to transfer $375,000.00 to the same account in Singapore. The $375,000.00 was the total of the sale of the Inuvik four-plex ($200,000.00) and the investment in Cedar Peaks Mortgage ($175,000.00).

2016 (November 2) – The bankrupt instructs his friend to transfer $2,280,000.00 to the same account in Singapore. The $2.8 million were the sale proceeds of Tundra and Beaufort to the friend.

2016 (November 3) – The bankrupt made a voluntary assignment into bankruptcy and declared liabilities totalling $45,929,482.63, ($45,090,482.63 to Intact Insurance) and assets of $1.372 million.

2017 (January) – The Licensed Insolvency Trustee (the LIT) made a request through the Debtor Compliance Referral Program (the DCRP) that the Office of the Superintendent of Bankruptcy (the OSB) commence an investigation of the bankrupt’s conduct. The LIT alleged that the bankrupt failed to respond to the LIT’s inquiries.

2017 (June) – The Official Receiver of the OSB examined the bankrupt, pursuant to section 161 of the BIA and issued a Report. The Official Receiver considered the LIT’s request by way of the DCRP and formed grounds to believe the bankrupt made material omissions on the Statement of Affairs and, that the bankrupt failed to perform his BIA duties.

2017 (August) – The Superintendent referred the conduct of the bankrupt to the OSB Special Investigation Unit (the OSB SIU).

2017 (September) – Intact Insurance obtained an order from the Court of King’s Bench of Alberta that lifted the automatic stay of proceedings in bankruptcy so they could commence proceedings to recover the funds sent to the HSBC account in Singapore, belonging to the bankrupt’s brother’s business associates who reside in Vietnam.

2017 (October) – The Registrar ordered that the bankrupt’s application for a discharge be adjourned until the OSB SIU completed its investigation.

2019 (September) – The OSB SIU concluded its investigation and recommended to the Public Prosecution Service of Canada (PPSC) that charges be laid against the bankrupt.

2020 (November) – The bankrupt’s brother entered into a ‘Settlement Agreement’ with Intact Insurance in the amount of $7,000,000.00 in order to avoid litigation.

2021 (October) – Notwithstanding the Order of October 2017, the bankrupt applied for his discharge from bankruptcy. The Registrar scheduled a Special Application Discharge Hearing and ordered a procedural guideline for the Special Application Discharge Hearing.

2021 (November) – The bankrupt was criminally charged with six offenses under the BIA. The procedural guideline for the Special Application Discharge Hearing was amended to enable the bankrupt attend to the criminal charges.

2022 (November) – The bankrupt pleaded guilty to failing to provide documents to the LIT in a timely manner, contrary to subsection 198(2) of the BIA. The bankrupt was sentenced to probation and community service.

2023 (January) – The bankrupt filed his affidavit according to the directive of the amended procedural guideline for the Special Application Discharge Hearing.

2023 (February & March) – Intact Insurance examined the bankrupt pursuant to section 163 of the BIA.

2023 (June) – The OSB, the LIT and Intact Insurance conducted oral questioning of the bankrupt about the contents of the Affidavit filed in January 2023.

2023 (June) – The bankrupt responded to undertakings and, confirmed that he was the owner of Clipper Ltd. The admission occurred seven years after the assignment into bankruptcy and, as a result, all relevant documentation concerning Clipper Ltd. had been destroyed.

2023 (August) – The bankrupt responded to written interrogatories and, confirmed that documentation for various transfers and accounts had been destroyed.

2023 (August 24, and August 31) – The Court of King’s Bench of Alberta held the Special Application Discharge Hearing. At the Special Application Discharge Hearing:

  • The Bankrupt submitted that the statutory requirement to refuse, suspend or make a conditional discharge, should be satisfied by imposing a suspension of ten days.
  • The OSB submitted that, as a minimum, the bankrupt’s discharge should be suspended for a six-year period, subsequent to the payment of a financial condition of $2.655 million.
  • Intact Insurance, submitted that the discharge should be refused or, alternatively, made conditional on the payment of $2.655 million.
  • The LIT submitted that the discharge from bankruptcy be suspended for thirty-six The LIT indicated that they did not oppose a financial condition of $2.655 million.

Facts/Reason to oppose the discharge

Paragraph 173(1)(a) the assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities, unless the bankrupt satisfies the court that the fact that the assets are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities has arisen from circumstances for which the bankrupt cannot justly be held responsible;

Paragraph 173(1)(b) the bankrupt has omitted to keep such books of account as are usual and proper in the business carried out by the bankrupt and as sufficiently disclose the business transactions and financial position of the bankrupt within the period beginning on the day that is three years before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included;

Paragraph 173(1)(c) the bankrupt has continued to trade after becoming aware of being insolvent;

Paragraph 173(1)(d) the bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities;

Paragraph 173(1)(h) the bankrupt has, within the period beginning on the day that is three months before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included, when unable to pay debts as they become due, given an undue preference to any of the bankrupt’s creditors;

Paragraph 173(1)(l) the bankrupt has committed any offence under this Act or any other statute in connection with the bankrupt’s property, the bankruptcy or the proceedings thereunder;

Paragraph 173(1)(o) the bankrupt has failed to perform the duties imposed on the bankrupt under this Act or to comply with any order of the court. In particular, that the bankrupt failed to perform the obligations imposed by subsections 158(a), 158(b), 158(d), 158(e), and 158(k) of the BIA.

Court Decision

  • Reasoning - In cases of egregious conduct by a bankrupt, of which this is one, the Court may impose financial conditions of discharge even in the absence of evidence of current assets to pay the amount of the condition.
  • Conditions – The bankrupt’s discharge should be conditional on his paying $2.655 million to the LIT in bankruptcy, with a further suspension of three years following such payment.

2022

Background

The bankrupt’s credit card statements for the 14-month period prior to filing showed a total of $159,364 in cash advances. At the bankrupt’s examination, the bankrupt acknowledged having used these funds for renovations for the home in which his ex-spouse lives.

In addition to the cash advances, the bankrupt also acknowledged having obtained 12 forms of credit in the two years prior to filing and admitted to maxing each in 2-4 months. This totalled approximately $263,300 in creditor claims.

The Official Receiver noted that the bankrupt had transferred an RESP valued at $107,000, and gifted a significant number of vehicles, all to his ex-spouse within a year-and-a-half of his filing. These vehicles are a 2001 GMC Yukon, 2004 GMC Sierra, 2001 Chevy Corvette, 1993 Mitsubishi Delica, 1998 Ford E350 Jayco RV, 2011 cargo trailer, and a 2009 skidoo trailer.

Facts/Reason to oppose discharge:

Paragraph 173(1)(a) – The assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities;

Paragraph 173(1)(e) – The bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs.

Court Decision (including decision link if available):

Court order a discharge conditional upon the payment of $27,000 (beginning October 2023) with income tax refund assignment. Court further ordered that the discharge be suspended for a period of 24 months from the date of the order (October 20, 2022).


Background

The debtor made a voluntary assignment into bankruptcy on March 11, 2021, with declared assets of $732,601.00 and unsecured liabilities of $412,575.51.

An examination of the bankrupt was held on December 20, 2022.

The debtor admitted using credit cards since 2020 to pay down other credit debts, mortgage and personal expenses. During a three month period, the debtor withdrew a total of $26,831.09 in cash advances from his credit cards, which was used to pay down his mortgage, other debts and family expenses.

The Official Receiver recommended to court that the bankrupt pay back $10,000.00.

Facts/Reason to oppose discharge:

  • S.173(1)(a) - the assets of the Bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities
  • S.173(1)(c) - the bankrupt has continued to trade after becoming aware of being insolvent
  • S.173(1)(e) - the bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt's business affairs
  • S.173(1)(h) – the bankrupt has, within the period beginning on the day that is three months before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included, when unable to pay debts as they become due, given an undue preference to any of the bankrupt’s creditors

Court Decision:

The court ordered the bankrupt to pay the sum of $10,000 to the Licensed Insolvency Trustee, by making minimum monthly instalments of $500.00, commencing April 15, 2023 and continuing every month thereafter paid in full, with the right to prepay in part or in full at any time.


Background

Related previously-bankrupt individuals had a history of accumulating liabilities while encumbering high-equity properties with sham trust agreements. Non-arms-length parties would also submit large claims using sham promissory notes. Hence, and individual would go bankrupt, keep their property, be discharged of their debts, and have a friend collect the dividends from the bankruptcy. This individual got caught.

Facts/Reason to oppose discharge:

173(1)

  • (a) the assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities, unless the bankrupt satisfies the court that the fact that the assets are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities has arisen from circumstances for which the bankrupt cannot justly be held responsible;
  • (d) the bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities;
  • (e) the bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs;
  • (o) the bankrupt has failed to perform the duties imposed on the bankrupt under this Act or to comply with any order of the court.

Court Decision (including decision link if available):

The Bankrupt to pay 100% of proven claims plus LIT fees, tax compliance, a three-year credit ban, a three-year gambling ban and a 12-month suspension:

  • The bankrupt pay to the Trustee, the total additional sum of $103,055, not already received by the Trustee from prior realizations in this estate.
  • The bankrupt execute an authorization and direction, directing that Great-West Life deliver up to the Trustee the sum of $40,620, being the settlement funds held net of legal fees of $9,259.22, being the amount equitably claimed by the bankrupt’s counsel on a claim for a charging Order for the costs of creating this fund in this litigation, and any amount received by the Trustee from Great-West Life shall be applied against the total amount owing under paragraph 1(a) of this Order.
  • The bankrupt keep current on the post bankruptcy CRA tax filings and payments, while undischarged.
  • The bankrupt provide a written undertaking not to use, possess, apply for, acquire or obtain any form of credit for a period of three years, and the Trustee is authorized to make enquiries to ensure compliance.
  • The bankrupt provide a written undertaking not to gamble or enter any gambling establishment, and to enrol into the casino’s self-exclusion list, for three years and the Trustee is authorized to make enquiries to ensure compliance.
  • 12-month concurrent suspension.

Background

The Bankrupt stated that the highest amount of income he has earned in the last five years was $30,000. There was $230,607.19 in proven unsecured claims. The Bankrupt appears to have used at least $136,019 in credit over the six-month period between July and December 2017. During this period, the Bankrupt appears to have made several dishonoured cheque deposits in order to increase his available credit. The Bankrupt also made several large purchases, including jewelry purchases in Singapore, houseware/renovation materials at The Brick, Home Depot and Lowes; and wireless technology/services with Fido, Rogers and Telus.

The Bankrupt attributed these activities to an individual (the individual) who was to assist him with his financial difficulties. The Bankrupt acknowledged that he did not believe the individual provided accurate information on the Bankrupt’s credit applications and he knew that the individual was “doing something wrong”. According to the Bankrupt, however, it was the Bankrupt who signed the credit applications (without reading them) and the Bankrupt who made the cash withdrawals and purchases using credit facilities. The Bankrupt stated that he has no contact information for the individual and he did not report the individual to the authorities. After the Bankrupt's assignment in Bankruptcy, his unemployed spouse purchased a home. In 2011/2012, a similar series of events occurred with the Bankrupt’s previously-bankrupt brother. However, in that case, the credit was alleged to have been obtained under the auspices of an individual using a different name than the individual who help the bankrupt.

Facts/Reason to oppose discharge:

173(1)

  • (a) the assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities, unless the bankrupt satisfies the court that the fact that the assets are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities has arisen from circumstances for which the bankrupt cannot justly be held responsible;
  • (d) the bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities;
  • (e) the bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs;
  • (o) the bankrupt has failed to perform the duties imposed on the bankrupt under this Act or to comply with any order of the court.

Court Decision (including decision link if available):

The Bankrupt to pay 50% of proven claims ($117,173.90) with minimum monthly payments of $400. In addition, post-bankruptcy tax compliance, a five-year unsecured credit ban and a 12-month suspension.


Background

This is the debtor’s first bankruptcy. Unsecured proven debts amount to $418,483, consisting of loans, margins, and credit cards.

The file was referred after a complaint was received from the debtor’s ex-husband, who alleged that the debtor had made fraudulent transactions.

Questioning took place on February 2018, during which the debtor stated that she had sold several properties shortly before the bankruptcy, including her company (a daycare centre), a house in Algeria and a condo in Spain. The last two transactions had not been reported to the LIT.

The automatic discharge was scheduled for March 29, 2028, but the LIT opposed discharge prior to this date.

The superintendent of Bankruptcy filed a 170(3) Report, and the ex-husband who was also a creditor in this bankruptcy eventually opposed the automatic discharge.

Facts/reasons for intervention as part of the discharge:

  • The bankrupt made false statements and failed to report significant assets on her bankruptcy balance sheet. She also sold 100% of her company’s shares 2 weeks before going bankrupt.
  • In fact, the bankrupt’s statements during questioning were dubious. In addition, during an initial hearing before Registrar Tremblay-Sylvestre in May 2019, the bankrupt contradicted herself many times about these transactions, suggesting that she still owned the properties. Doubts were also raised about the context in which she sold the day care and for what price. In fall 2020, the bankrupt produced documents that left little doubt that she still owned the foreign properties. As for the daycare, the evidence did not conclusively determine whether there was a nominee title holder or a payment of a significant consideration by the purchaser.
  • After 18 months of postponement, Justice Silvana Conte heard the case and delivered a judgment.

Court decision (including link, if available)

In essence, the court endorsed the R170(3) allegations and the analysis of additional documents presented at the hearing by the superintendent.

The bankrupt ultimately admitted that the daycare had been transferred in compensation for a loan of at least $31,000. The value of the foreign properties was also considered higher than what the bankrupt claimed.

Justice Silvana Conte suspended the bankrupt’s discharge until she repays $100,000 to the trustee.

2022 QCCS 939 (CanLII) | Syndic de Bettadj | CanLII (French only)


Background

It was the debtor’s second bankruptcy and the total of unsecured proven claims was at $595 401.85.

The bankrupt received $145,210 from the Ministère du Transport as compensation for a taxi permit. Instead of paying back his creditors, he sent $120,000 to his family in Algeria and he gambled $20,000. This occurred less than a month before he filed for bankruptcy.

The bankrupt also made false representations to at least five (5) creditors when he applied for credit.

The bankrupt claimed that he had been defrauded by a group of individuals who made him the president of a company in 2019 and then had him sign for a number of vehicles, tractors and a Rolex. After he signed for them, they disappeared. The facts revealed that he was in fact the president of the said company since 2015 as per the CIDREQ.

He travelled to Algeria the month before he filed for bankruptcy

There were several discrepancies in his claims and the facts

The bankrupt's debt increased significantly in the six (6) months prior to his bankruptcy. He spent at least $55,000 during this time period whereas he earned $10,000 / year.

Facts/Reason to oppose discharge:

173(1)

  • (a) the assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities, unless the bankrupt satisfies the court that the fact that the assets are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities has arisen from circumstances for which the bankrupt cannot justly be held responsible;
  • (e) the bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs;
  • (j) the bankrupt has on any previous occasion been bankrupt or made a proposal to creditors;
  • (k) the bankrupt has been guilty of any fraud or fraudulent breach of trust;
  • (l) the bankrupt has committed any offence under this Act or any other statute in connection with the bankrupt’s property, the bankruptcy or the proceedings thereunder;

Court Decision (including decision link if available):

The registrar commented on the bankrupt’s lack of credibility, accountability and remorse in the judgment. The bankrupt’s discharge was refused.

2022 QCCS 1021 (CanLII) | Syndic de Souaber | CanLII


2021

Background

A retiree made his first bankruptcy filing with 13 creditors listed on the Statement of Affairs with total unsecured liabilities of $164,438.93. Eleven of his creditors are credit card companies accounting for $84,436.93 of the total debt and the remaining debt of $80,000 is due to a liability with ICBC. The bankrupt withdrew $21,000 from his RRIF in April 2019 and this information was not disclosed on his Statement of Affairs. He subsequently advised the trustee that this amount was withdrawn in order to pay his bills. However, when questioned during the examination about this the bankrupt advised that the net proceeds of $15,000 were actually gifted to his 3 sons, admitting that he knew he would have to file for bankruptcy due to his large debt with ICBC and he wanted to protect the funds for his children.

Facts/Reason to oppose discharge:

  • Bankrupt is responsible for having less than half the value of her debts covered by the value of her assets.
  • Bankrupt brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living or by gambling.
  • Bankrupt failed to perform his duties as a bankrupt imposed under the Act.

Court Decision (including decision link if available):

The Court ordered the bankrupt to repay $15,000 at a rate of $100 per month.


Background

The individual had invested in a charitable tax shelter program that was later deemed illegitimate by Canada Revenue Agency (CRA), which resulted in a $90,000 debt owed to CRA by the individual. Additionally the individual reported other unsecured liabilities of approximately $323,000. Review determined that the majority of the unsecured debt has been incurred in the year prior to filing bankruptcy and included; cash advances, investments made on credit, travel, home furnishings and renovations.

Facts/Reason to oppose discharge:

  • Bankrupt is responsible for having less than half the value of their debts covered by the value of their assets.
  • Bankrupt brought on, or contributed to, the bankruptcy by rash or hazardous speculations and by unjustifiable extravagance in living.

Court Decision (attached):

Based on the unique circumstances of the bankruptcy, and the individual’s inability to pay, the court ordered that the debtor would be eligible to apply for discharge once he has met one of the following conditions

  1. Pay $45,000 and fulfil a two year suspension
  2. Pay $35,000 and fulfil a three year suspension
  3. Continue to report income to the LIT for a five year period, and pay any amounts required, calculated based upon the Superintendent’s surplus income standards.

Background

The bankrupt indicated that the reason for his bankruptcy was partying and poor money management. He had a very low annual income in the five years prior to his bankruptcy. Most of his credit facilities were opened in the three to seven years prior to his assignment. The bankrupt also invested a substantial amount of money obtained from credit with unidentified individuals. The bankrupt expected returns that would double his investment within two months. However, the funds were never recovered after the bankrupt lost contact with the individuals.

Facts/Reason to oppose discharge:

  • The bankrupt contributed to his bankruptcy by rash and hazardous speculations and unjustifiable extravagance in living. The bankrupt indicated that he would sometime spend up to $5,000 per night on entertainment.

Court Decision (including decision link if available):

The court granted a conditional discharge on payment to the trustee of $12,500.00. It also banned the bankrupt from obtaining or using unsecured credit for three years and suspended his discharge for three months.


Background

The debtor was reassessed by the tax authorities for expenses that he had claimed as a real estate agent. Basically they had disallowed them, hence resulting in taxes and penalties (because most were ineligible personal expenses). For three years, the debtor kept appealing the tax decision, while he was slowing using up all his credit cards one by one. At the time of bankruptcy, the amount owed to the government for the taxes represented only 17% of is total debts, mainly credit cards. He used the credit cards for cash advances ($119,000), and had no assets or valid explanations of where the money went. He also used the cards for a lot of renovations on the family home ($68,000) which was in his wife’s name alone. He was the only bread winner, his wife was home raising their children, but he had obtained a false record of employment in his wife’s name through a connection. This allowed the house to be bought only in her name. He further incriminated himself during the hearing. The OSB received a credit card statement after the examination, which revealed purchases of gold at Kitco. When the bankrupt was asked what he had used the gold for, he told the judge that he bought gold in order to be able to then sell it and obtain cash, since his cash advance limit was very low on the card. He also committed other offences such as exaggerating his income on credit card applications, and not surrendering all his cards to the trustee.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of his unsecured liabilities;
  • The bankrupt has failed to account satisfactorily for any loss of assets, or for any deficiency of assets to meet his liabilities;
  • The bankrupt has brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living;
  • The bankrupt has been guilty of fraud;
  • The bankrupt has failed to perform the duties imposed on the bankrupt or to comply with an order of the court.

Court Decision (including decision link if available):

The Court accepted the argument that all the money that went into renovations for the family home must be repaid. Therefore, the debtor was issued a conditional discharge order upon payment of $ 187,000 to the trustee ($ 119,000 $ and $ 68,000). The Court also denied any application for discharge by the bankrupt until full payment of the above amount.

2021 QCCS 758 (CanLII) | Syndic de Solomon | CanLII


Background

The debtor has been a recipient of social assistance for the past 14 years with a yearly income of less than $13,000. This second time bankrupt accumulated $395,807 of proven unsecured debt to 9 credit cards, 1 line of credit, 2 overdrawn bank accounts and a amount of $15,000 owing to 4 mobile companies. The bankrupt significantly increased his indebtedness in the 12 months prior to the bankruptcy. He used his credit cards to obtain cash advances, to gamble, to travel, and for extravagant purchases. There were false declarations of income on credit card applications as well as cheque kiting. The amounts were significant.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not of a value of fifty cents on the dollar on the amount of their unsecured liabilities;
  • The bankrupt has brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living and by gambling;
  • The bankrupt has on any previous occasion been bankrupt;
  • The bankrupt has been guilty of fraud.

Court Decision (including decision link if available):

Refuses the discharge of the bankruptcy;

Allows the bankrupt to submit a request for a new discharge hearing after a delay of 10 years of the present judgment.


2020

Background

The bankrupt was a self-employed IT Consultant with an average annual income of $40,000 to $60,000 in the 5 years preceding his bankruptcy. The bankrupt had a total of 28 creditors listed with total unsecured liabilities of $512,561 and only $300 in net realizable assets in comparison. Of those 28 creditors there are a total of 19 credit cards and 4 lines of credit. The OSB received copies of statements for 12 of the 19 credit cards and based on those statements and the bankrupt’s answers during the examination, it is estimated that approximately $351,358 of the bankrupts unsecured liabilities accrued within just the 18 months preceding his date of bankruptcy. The bankrupt’s credit cards show some significant expenditures in the year preceding his bankruptcy. In addition, the bankrupt took approximately $100,000 in cash advances and used the funds for excessive spending at restaurants and adult entertainment.

Facts/Reason to oppose discharge:

  • Bankrupt is responsible for having less than half the value of his debts covered by the value of his assets.
  • Bankrupt brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living or by gambling.

Court Decision (including decision link if available):

The Court ordered the bankrupt to repay $105,000 in minimum monthly instalments of $500 per month and was required to execute an undertaking not to apply for credit for a period of 5 years.


Background

The individual had invested in a charitable tax shelter program that was later deemed illegitimate by Canada Revenue Agency (CRA), which resulted in a $185,000 debt owed to CRA by the individual. Alongside this, the individual had accumulated $515,000 debt through nineteen credit card and Line of Credit accounts. Review of the credit card statements for the year prior to the bankruptcy filing indicated significant cash advances, balance transfers, and purchases with minimal monthly payments. These purchases included renovations and furniture for two homes, as well as numerous domestic and international flights for the bankrupt and several other individuals.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of his unsecured liabilities.
  • Bankrupt has brought on, or contributed to, the bankruptcy […] by unjustifiable extravagance in living.

Court Decision (including decision link if available):

The Court ordered the bankrupt’s discharge be conditional upon the further payment of $50,000 to the LIT.


Background

The bankrupt accumulated total liabilities of $33,625 in unsecured proven claims, comprising two credit cards. This is a first bankruptcy and the debtor was 75 years old at the time of the assignment. The bankrupt was questioned by an official receiver from the OSB, followed by an investigation request from the LIT under the Debtor Compliance Referral Program about the proceeds of $43,750 in lottery winnings (Poule aux œufs d’or). The bankrupt declared that she gave the cheque to a member of her family. This person cashed the cheque and gave the money to the bankrupt.

Facts/Reason to oppose discharge:

  • The debtor did not aid to the utmost of her power in the realization of her property and the distribution of the proceeds among her creditors, as she refused to give the LIT the proceeds of her $43,750 lottery winnings, thus violating her obligations under the BIA by disposing of property after the date of the initial bankruptcy event and to the detriment of her creditors.

Court Decision (including decision link if available):

The court suspended the bankrupt’s discharge for a period of two years starting from the date of the hearing. Furthermore, the court ordered the bankrupt to give the LIT the sum of $43,750 on behalf of the mass of creditors, without conditions or delay. This sum will be adjusted after the LIT calculates average monthly income. The court also ordered the bankrupt to give the LIT proof of all her income for the duration of her bankruptcy within 10 days of this judgement.


Background

This is a first bankruptcy and the debtor is 70 years old. She has been retired for five years and she receives approximately $20,268 per year. The reasons provided to the LIT about her financial difficulties are: since her retirement, her income has not been sufficient to pay her debts, and she took on too many credit cards. The total unsecured debt is $150,789 on 20 credit cards. There was a significant increase in debt in the six months preceding her bankruptcy, i.e. $46,048 to $110,712 (cash advances, trips, and alcohol). Over the year in which her bankruptcy occurred, the bankrupt took three trips to Cuba, for a total cost of $11,828. However, she continued to use her credit cards even though she was aware of her insolvability five years before declaring bankruptcy. Two months before her bankruptcy, the bankrupt consulted other bankrupts. She took their advice, cancelled her credit cards, and saved $4000.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities.
  • The bankrupt has brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living.

Court Decision (including decision link if available):

The court suspended the discharge for a period of 60 months starting from the date of this judgement and until payment of $4800 to the LIT (payable in advance or in instalments of $80 per month).

2020 QCCS 5104 (CanLII) | Syndic de Di Salvia | CanLII


2019

Background

The debtor is a first time bankrupt, having filed on May 3, 2012. In initial meetings with the LIT the day previous, the debtor advised that she had not cashed in any RRSPs in the one year prior to her bankruptcy. When reviewing her tax information, the LIT discovered that the debtor had received a T4RIF and corresponding monies of $14,884.68. The debtor spoke to the LIT on the telephone and provided one accounting. The debtor then met with the LIT and provided a written accounting including not only these details but also details of the Estate of her late husband. Finally, in response to the LIT ’s motion to annul the debtor’s automatic discharge the debtor has sworn an affidavit providing a third accounting of these funds. In addition, the debtor may have been entitled to an inheritance through any of will, intestacy, or a marital property equalization application post death which the debtor has not assisted in realizing for the estate.

Facts/Reason to oppose discharge:

Matter was referred to Special Investigation Unit and the following charges were laid:

  • The debtor, on or about May 3, 2012, at or near the City of Winnipeg, in the Province of Manitoba, made a false entry or knowingly made a material omission in a statement or accounting, contrary to section 198(1)(c) of the Bankruptcy and Insolvency Act;
  • The debtor, on or about May 3, 2012, at or near the City of Winnipeg, in the Province of Manitoba, failed to disclose all property disposed of within one year immediately preceding the date of the initial bankruptcy event as required by section 158(f) of the Bankruptcy and Insolvency Act and did thereby fail to perform the duties of a bankrupt, contrary to section 198(2) of the Bankruptcy and Insolvency Act;

The OSB also opposed the debtor’s discharge.

Court Decision:

On November 10, 2016, the debtor plead guilty to one count of 198(2) received a conditional discharged requiring restitution of $54,910.86 to be paid to LIT within the next 3 years and during the next 3 years she is on probation. This amount is far in excess of the initial amount non-disclosed and includes interest in her husband estate.

After the criminal matter was resolved the OSB withdrew its opposition to the debtor’s discharge. The debtor remains undischarged.


Background:

The first time bankrupt filed an assignment with unsecured debts totalled at $69,973.00. She is employed; however, has been on an extended leave of absence for health issues since November 2018 and is only earning 66% of her regular employment income. The bankrupt also operated a jewelry business from 2012 to 2014. She stated that her debt started to climb following the separation with her ex-spouse, as well as her health issues. She estimated her gross income to be approximately $60,000.00 per year.

Facts/Reason to oppose discharge:

  • Bankrupt brought on, or contributed to her bankruptcy by gambling.
  • Bankrupt contributed to her bankruptcy by unjustifiable extravagance in living.
  • The bankrupt has failed to perform her duties as a bankrupt imposed under the Act.

Court Decision (including decision link if available):

The court granted the bankrupt a conditional discharge. The bankrupt must self-exclude herself from the Rideau Carleton Raceway Casino and Akwesasne Mohawk Casino Resort indefinitely and provide proof to her trustee. She is also prohibited to gambling for a period of 5 years from the date of the court order.


Background:

The total proven debt amounts to $123,184, comprising 15 credit cards (and credit lines). The bankrupt declared poor financial management and a lack of income as reasons for his financial difficulties when submitting his bankruptcy. When questioned by an Official Receiver from the OSB , the bankrupt instead declared that his bankruptcy was caused by his bad habits (especially gambling and strip clubs). The money used for gambling and strip clubs came from his credit cards. Furthermore, although the bankrupt was insolvent, he transferred his undivided half of his house, where he is currently living, to his brother for $1. He also transferred large sums of money to members of his family instead of paying his creditors.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities.
  • The bankrupt has contributed to the bankruptcy by unjustifiable extravagance in living and by gambling.
  • The bankrupt has been guilty of fraud.
  • The bankrupt has failed to meet his obligations under the Act.

Court Decision:

During the hearing, the bankrupt submitted his casino self-exclusion form to the court (which had been filled out only a few days before the hearing) as a guarantee of his rehabilitation. This did not satisfy the court. The court refused to discharge the bankrupt but allowed him to submit a new application for discharge on December 18, 2021, at the earliest.


Background:

Prior to filing for bankruptcy, the debtor filed a consumer proposal in August 2016 which was then annulled in April 2018 (payments to the estate totalling $14,250). When filing for bankruptcy, the bankrupt declared having disposed of a property in April 2017 and received equity in the amount of $105,842.85. He declared having paid his wife half of the amount received and used the rest for personal living expenses. When the trustee sent a letter to the bankrupt’s wife demanding immediate reimbursement of the money received, she advised the trustee that she did not accept to take the money. The bankrupt was subsequently examined by an Official Receiver under oath, and when confronted about his two contradictory sworn versions, he declared that it was a misunderstanding with the trustee. He also declared that instead of paying off the rest of his proposal, the entirety of the sum (over $10,000) was spent in less than a year on various expenses including travel and renovations.

Facts/Reason to oppose discharge:

The debtor lied under oath and fabricated different versions, regarding the equity received from the disposition of the above-mentioned property, to hide the fact that he had entirely squandered the equity that would have been available to his creditors.

Court Decision (including decision link if available):

The Court granted the OSB ’s request to suspend the bankrupt’s discharge until payment in the amount of $38,825 within a delay of one year. This amount is equivalent to the sum remaining to pay to his consumer proposal that was annulled.


2018

Background

LIT requested an examination of the debtor to further review calculation of surplus income, possible under value sale of business, tax-driven bankruptcy, and one creditor indicated unusual purchases within three months prior to bankruptcy.

The bankrupt attended an examination on July 23, 2017.

The CRA, OSB and LIT all opposed the debtor discharge for unpaid surplus, undervalue transfer of a business ($1.00 sale price of law firm to her husband), personal travel expensed through a credit card 4 days prior to bankruptcy, and for the re-payment of funds received from the sale of a Harley Davidson motorcycle prior to bankruptcy.

The bankrupt did not feel she was required to pay surplus, that she had children and was trying to stay under the surplus guideline. She indicated being in bankruptcy was affecting her ability to operate her practice and thus wanted out within 9 months.

Facts/Reason to oppose discharge:

  • assets not equal to 50% of liabilities
  • rash spending (neglected tax obligations)
  • failed to perform duties

Court Decision (including decision link if available):

Conditional discharge –

  1. bankrupt to pay LIT $350,000
  2. pay surplus
    1. for Feb, Mar & Apr 2018 pay $750 per month
    2. for May to Dec 2018 pay $1,000 per month
    3. for Jan 2019 and onward pay $1,500 per month until $350,000 is paid in full.
  3. Submit income and expenses on a monthly basis
  4. Bankrupt to retire her post-assignment liability if any to CRA
  5. File all tax returns until $350,000 is paid in full
  6. If bankrupt carries on business as sole proprietor or in partnership, required to file all Excise Tax Act returns until $350,000 is paid inf full
  7. Remit all amounts payable to Receiver General as required by ITA, ETA, AB Personal Income Tax Act, Canada Pension Plan, and Employment Insurance Act including all taxes, interest and penalties assessed by CRA.
  8. If bankrupt carries on business or derives income through a corporation controlled directly or indirectly by herself or any “related person” (as described by the ITA) she is required to exercise all reasonable efforts to ensure the corporation files all returns as required by the ITA, ETA, and to pay all amounts payable to Receiver General as required by ITA, ETA, AB Personal Income Tax Act, Canada Pension Plan, and Employment Insurance Act including all taxes, interest and penalties assessed by CRA until the $350,000 is paid in full.
  9. Until she is discharged, files all Notice of Assessments or Notice of Re-Assessment issued by CRA to the LIT within 10 days of receipt. Registrar Schulz

Background

The bankrupt filed a voluntary assignment on December 12, 2017. The Statement of Affairs (SOA) lists exempt assets totalling $6,001 and unsecured liabilities of $103,000. $98,000 of unsecured liability is owed to 11 credit card issuers. The bankrupt indicated on her SOA the reason for her financial difficulty was “financial strain of operating business with spouse.” The bankrupt declared her total monthly income for a family of three was $2,800.The bankrupt was examined before an Official Receiver (OR) on November 2, 2018.

At the exam, the bankrupt described she had owned an internet-based flooring installation business operated from her home. The bankrupt stated the withdrawals made at casinos enabled her to obtain abundant amounts of cash from a credit card, and the cash was used to cover business expenses. She acknowledged that in July 2017 a $15,000 cash advance was taken while she was abroad for surgery, and was used toward the trip and to cover her expenses while abroad.

The bankrupt stated her business ceased operating around September 2017, at the same time she became aware that she was insolvent. Between October 26, 2017, and November 9, 2017, $73,963 was taken by way of cash advances using six credit cards. The bankrupt declared the cash withdrawals were used to pay off debt, pay bills, cover expenses for her minor son, and rent payments. She disclosed that she increased her credit limits after she became insolvent as she required money to cover her living expenses. She described that after she exhausted her existing credit limits, she applied for new credit cards.

She acknowledged that 2 to 3 months prior to bankruptcy, she purchased electronics and cell phones which she resold online for half the purchase price.

In the Superintendent’s report, it was submitted the bankrupt bought items using credit and sold at a discount with the intention to take advantage of creditors. The report submitted the cash advance withdrawals taken at casinos could have also been used for the purpose of gambling. Finally, the report submitted that over 15 days, and within 45 days prior to bankruptcy, the bankrupt withdrew $73,963 (72% of the bankrupt’s total liability) as cash advance transactions. This amount exceeded the bankrupt’s annual income of $40,000 to $60,000.

As well, the OSB referred the file to the Special Investigation Unit.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not equal to fifty cents on the dollar of his unsecured liabilities
  • The bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities
  • The bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs

Court Decision (including decision link if available):

The initial court date was set for December 3, 2018, but adjourned to September 26, 2019, where a compelling order was issued for the bankrupt to attend the first and the second counselling sessions and to provide the LIT with the financial statements for her business.

On January 17, 2022, a conditional order of discharge was issued ordering the bankrupt to pay $73,963 to the estate; attend counselling for gambling; and the bankrupt would not be granted an absolute discharge until after January 16, 2027, (a 5-year suspension).

The investigation was closed without recommending charges due to insufficient time to conduct the investigation before the summary limitation period expired in December 2020.


Background

The debtor filed a voluntary assignment on July 20, 2017, and the total unsecured liabilities on her Statement of Affairs were $ 23,809.05. The reasons for financial difficulties that was provided was “Bad financial planning and business difficulties”. This was the debtor’s 4th bankruptcy proceeding, after having filed previously in 1995, 2004, and 2010. The debtor, being a beautician, had signed a 3-year lease on April 1st, 2014, with a beauty salon, costing $ 497.84 per month, plus 30% commission on all business income generated. By January 2016, the debtor had not made 1 payment towards her lease agreement and was served with a demand letter. Not being able to pay, the beauty salon agreed to lend 12,000.00 to be reimbursed within 5 years at an interest rate of 3.7%. The debtor then completed 3 payments of $ 240.82, before leaving the beauty salon and never returning. It is unclear what the funds were used for.

Facts/Reason to oppose discharge:

  • Bankrupt contributed to his bankruptcy by unjustifiable extravagance in living; and 173.1 (j) - (j) the bankrupt has on any previous occasion been bankrupt or made a proposal to creditors.

Court Decision:

Discharge of bankrupt is suspended for 60 months


Background

The bankrupt is unemployed since 2014 and resides with his spouse and his two children. The bankrupt has total unsecured liabilities of $153,946, essentially comprising debts from at least 7 credit cards and 2 bank loans. He also had a $57,475 debt to the Ministère de l’Emploi et de la Solidarité sociale. It is his second bankruptcy (the first was in August 1997). The bankrupt claims that his financial difficulties are due to his loss of employment and a scam by his half-brother, who lives abroad. Specifically, his half-brother asked him to buy construction equipment in Canada. The debtor states that he bought the machine for $39,000 in cash (from various credit cards), in order to ship it abroad where it would be resold for $150,000. The machine in question was put in his half-brother’s name to facilitate customs clearance. The bankrupt states that he was never paid after the machine was sold abroad, that his half-brother scammed him and pocketed the sale price himself. Furthermore, the bankrupt made false statements (income and job status) to obtain credit cards.

Facts/Reason to oppose discharge:

  • The debtor’s assets are not of a value equal to fifty cents on the dollar on the amount of his liabilities.
  • The debtor has brought on the bankruptcy by rash speculations and unjustifiable extravagance in living.
  • The debtor has on any previous occasion been bankrupt.
  • The debtor has been guilty of any fraud.

Court Decision (including decision link if available):

The registrar noted that the bankrupt displayed serious lack of concern and rejected his discharge.


Background

When he filled for bankruptcy, the bankrupt had $170,162 of unsecured debt including 10 credit cards totalling $95,490. During the assignment of his property, the bankrupt declared to the trustee that the reasons for his financial difficulties were his separation and a decrease in his income. The bankrupt used his credit cards and credit line to make cash advances, go on trips, and pay for renovations and furniture. During the examination by the official receiver, the bankrupt declared that he used approximately $30,000 from cash advances to gamble at the casino and in bars. In the year of the initial bankruptcy event, the bankrupt sold a piece of land for $1000 to a third party (and did not declare this disposition of property to his trustee). According to the deed of sale, the municipal assessment was $10,000.

Facts/Reason to oppose discharge:

  • The debtor’s assets are not of a value equal to fifty cents on the dollar on the amount of his liabilities.
  • The debtor has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities.
  • The debtor has brought on the bankruptcy by unjustifiable extravagance in living and by gambling.

Court Decision (including decision link if available):

The court suspended the bankrupt’s discharge for a period of thirty (30) months following the order. The court ordered the bankrupt to pay $10,000 to the trustee in addition to what was already realized by the trustee as of the date of the order, in monthly instalments of a minimum of $150.


2017

Background

The debtor filed for bankruptcy on September 27, 2016 and it was the bankrupt’s second bankruptcy. The Statement of Affairs listed $1,350 in assets and $184,31.04 in liabilities; of which $171,685 was credit card debt. The bankrupt cited a loss of income and increase in expenses as the cause of insolvency. The OSB examined the bankrupt in February 2017, where the bankrupt stated his cause of bankruptcy was drinking and gambling. During the exam, the bankrupt said the cause of his first bankruptcy was drinking. The bankrupt stated during the examination that he was utilizing cash advances on his credit cards to gamble and estimated he had lost $80-90,000 in gambling. From the credit card statements received, the bankrupt withdrew $99,985.28 in cash advances and balance transfers. Not all credit cards companies provided the statements. The bankrupt had not sought counselling for gambling, however he had been attending counselling for alcohol dependency dating back to the 1980s.

Facts/Reason to oppose discharge:

  • assets less than fifty cents on the dollar of the amount of unsecured liabilities
  • bankrupt brought on or contributed to the bankruptcy by rash and hazardous speculations and by gambling
  • bankrupt gave undue preference to a creditor within three months of the bankruptcy
  • bankrupt was previously bankrupt

Court Decision (including decision link if available):

A conditional discharge was granted on October 31, 2018. The bankrupt has to pay $80,000, his discharge was also suspended for five years from date of the order and the bankrupt must complete Relapse Prevention Program within a year of the order.


Background

This second-time bankrupt made a voluntary assignment on December 1, 2014. Her Statement of Affairs listed assets with a total value of $2,000, and unsecured liabilities of $58,100. Her total monthly income was $0, but income for the family of two was $1,473. Her reasons for financial difficulty was cited as “overextension of credit and illness”.

The LIT informed the OSB through a DCRP that the bankrupt had abused credit cards within 3 months prior to bankruptcy.

On February 17, 2016 the bankrupt was examined by the OSB. During the exam, the bankrupt stated that she and her spouse were the previous owners of their current residence and had lived there for 17 years, but they sold the property to their son and had been renting from him for the past 3-4 years for $1,000/month. The OSB requested an Historical Land Title search which revealed the property was transferred several times while the bankrupt was residing in the property.

  • On April 4, 2000 the title to the property was transferred to the debtor and her spouse. The value of the property at the time of the transfer was the sum of $225,000.00.
  • On or around August 30, 2007 the debtor and her spouse transferred the property to their oldest son and the value of the property at the time was the sum of $650,000.00.
  • On or around August 15, 2013 the title to the property was transferred to their daughter in-law.
  • On or around January 21, 2015 the oldest son was no longer on title. The debtor’s daughter in-law remained on title and their youngest son was added to title.

The credit card statements showed a transfer of $16,500 to her son to pay for arrears in rent, yet the title search shows her son did not own the property at that time. The bankrupt confirmed that on September 5, 2014.

Upon review of two of the bankrupt’s credit card applications, it listed her income as $60,000/year as a Director at Deans Auto Sales in 2012, and $40,000/year as a Homemaker in 2014. During the exam the bankrupt stated she had not worked fulltime or made a substantial income since her arrival in Canada in 1993, and that she used her spouse’s income on her credit card applications. She said she applied for credit four or five months prior to bankruptcy, and that she was aware she was insolvent in 2013.

The OSB opposed the bankrupt’s discharge and referred the file to the Special Investigation Unit.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not equal to fifty cents on the dollar of his unsecured liabilities
  • The bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities
  • The bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs

Court Decision:

At the discharge hearing on December 11, 2017, the court refused the bankrupt’s discharge and ordered that the bankrupt will not be entitled to reapply for her discharge for a period of one year.


Background

The bankrupt filed an assignment in bankruptcy on December 28, 2016. The bankrupts total unsecured debts total 65,624.54 and the reasons for financial difficulties are “My father’s death and legal action”. Approximately 4 months before filing for bankruptcy, the bankrupt was given 30,600.00 by her ex-boyfriend to build a property in Guyana as an investment. However, the project failed and when the ex-boyfriend requested that the funds be returned to him, the bankrupt no longer had the money. She explained that the funds were used to purchase goods and general expense livings (i.e. watch, handbags, spa treatments, etc.). Additionally, the bankrupt confirmed to have received 33,000.00 concerning a property transaction from someone while acting as a Power of Attorney for her father. Upon her father’s death, she disposed of the funds according to her father’s instructions and could not return any of the funds when requested. The bankrupt disposed of the funds by distributing 10,000.00 to her siblings in Guyana, used 5,000.00 to build a fence at her father’s property in Guyana, and paid import duties on a car and appliances.

Facts/Reason to oppose discharge:

  • Bankrupt contributed to his bankruptcy by unjustifiable extravagance in living.

Court Decision:

The court ordered the bankrupt to pay the sum of 15,000.00 by monthly instalments of $100.00 commencing on September 2018 before obtaining an absolute discharge.


Background

This was a first bankruptcy. The total amount of liabilities was $112,510, comprising solely unsecured debts, including 9 credit cards. During the year preceding the bankruptcy, the bankrupt made more than $76,000 in purchases with her credit cards. The debtor claimed that she incurred a large part of her debts when her only daughter got married because according to the customs in her country of origin, the bride’s parents bear all the wedding-related costs (clothing, furniture, among other things). According to the evidence, from May 2013 up to one month before the bankruptcy, the debtor used her credit cards to buy approximately $50,000 in airplane tickets for her and her daughter as well as products and services during these trips (Egypt, Spain, London, Turkey, Massachusetts, and Rhode Island).

Facts/Reason to oppose discharge:

  • The bankrupt’s assets are not of a value equal to fifty cents on the dollar on the amount of her unsecured liabilities.
  • The debtor has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet her liabilities.
  • The debtor has brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living.
  • The debtor has failed to comply to this act by not truthfully answering all the questions during her examination with the official receiver.

Court Decision (including decision link if available):

The court has orders that the debtor’s release be conditional on her payment of an amount of $16,500, to be paid to the trustee, for the general benefit of the creditors, by monthly instalments of $275. Furthermore, the bankrupt’s release has been suspended for a period of 5 years. The amount of $16,000 added to the realization of assets by the trustee represented 25% of the proven claims.


Background

The debtor has been a cashier in a fast food restaurant for approximately 16 years, making minimum wage. Her total proven debt is $110,379, comprising solely unsecured debts (8 credit cards, 2 lines of credit). During the examination before the official receiver, she declared that she had travelled to Lebanon since her bankruptcy. She stated having withdrawn $45,000 on her credit cards, in Canada, before declaring bankruptcy, to pay for her three trips. She deposited the money in a safe at her mother’s house in Lebanon so that she could use it for her travel expenses when there. She declared that there is no longer any money in that safe and notes that everything is recorded on her passport. The debtor had not informed her trustee that she had so much cash in Lebanon at the time of her bankruptcy.

Facts/Reason to oppose discharge:

  • The bankrupt’s assets are not of a value equal to fifty cents on the dollar on the amount of her unsecured liabilities.
  • The bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet her liabilities.
  • The bankrupt has brought on her bankruptcy by unjustifiable extravagance in living.
  • The bankrupt has committed offences under the BIA.

Court Decision:

The court rejected the release of the bankrupt.


2016

Background

The debtor filed for bankruptcy on October 3, 2013, and it was the bankrupt’s second bankruptcy. The Statement of Affairs listed $60,169.54 in assets and $684,122.19 in liabilities. The largest creditor was BC Ministry of Finance, with a debt of $334,965 for unpaid provincial sales tax. Canada Revenue Agency was owed $128,029 for personal tax arrears. The bankrupt cited loss of spouse as the cause of insolvency. The OSB examined the bankrupt in February 2015, where the bankrupt stated his spouse had taken care of books and records and completing taxes in the past, and had died in 2005. He had been financially falling behind since her death. During the examination the bankrupt said he lived in a residence he used to own and had since passed ownership of the residence to a former girlfriend although the mortgage remained in his name; he also said that he was making payments on credit cards under the name of his former girlfriend. His former girlfriend resides in the house with him when she is in the country. The bankrupt said she spends a lot of time away from Canada and added that he also travels with his former girlfriend for weeks at a time. The bankrupt confirmed he has a joint bank account with his former girlfriend and used his credit to purchase items for his former girlfriend. His former girlfriend is the beneficiary for the bankrupt’s life insurance. While the bankrupt appears to be in a current relationship with the person referred to as his former girlfriend, he cited himself as a widower who lives alone on his Statement of Affairs. The bankrupt confirmed he continued to take cash advances after he was aware he was insolvent. The bankrupt used credit to continue operating his business in addition to living off the credit.

Facts/Reason to oppose discharge:

  • the assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities
  • the bankrupt has continued to trade after becoming aware of being insolvent
  • the bankrupt has on any previous occasion been bankrupt
  • the bankrupt has failed to perform the duties imposed on the bankrupt

Court Decision (including decision link if available):

Conditional discharge granted December 14, 2016; bankrupt to pay $50,000.

This estate was also referred to the Special Investigation Unit in May 2016. Due to time limitations, the file was closed the file without an investigation.


Background

The bankrupt filed for bankruptcy on November 11, 2005. The Statement of Affairs listed one exempt asset totalling $300, and unsecured liability to eleven creditors totalling $63,418. Approximately $61,918 of the liabilities were over ten credit cards. The bankrupt cited on her SOA that the reasons for her financial difficulties were unemployment, spouse’s reduced income, and her spouse has not paid bills since 2011. She disclosed that on April, 2, 2015, she transferred her interest in real property to her spouse, with an estimated equity at $4,200.

The LIT contacted the OSB using the Debtor Compliance Referral Program after a creditor raised concerns with the LIT about the bankrupt’s use of credit one month prior to the bankruptcy, the bankrupt’s employment status, and the bankrupt’s disposition of her interest in real property to her spouse prior to bankruptcy.

The OSB received credit card statements which indicated the following notable transactions:

  • On October 6, 2015, the bankrupt made a cash advance for $8,500, and on October 16, 2015, she made another cash advance of $200;
  • On October 5, 2015, the bankrupt issued a cheque (denoted as a cash advance) for $3,000, and on October 19, 2015, she made two cash advances totalling $220;

The bankrupt was examined by the OSB on July 14, 2015. The bankrupt stated that she started gambling in December 2006 but ceased to gamble in 2015 without professional help. She did not disclose gambling as a cause for bankruptcy to the LIT. She stated she obtained three credit cards while she was unemployed. She stated she wired her brother, who resides in the UK, $8,500 in April 2014 and $7,530 in June 2014, and she asserted this money was a loan. She disclosed she met with the LIT in September 2015, October 2015 and again in November 2015 when she filed for bankruptcy. On March 2, 2015, she withdrew $27,000 from her mutual fund account and gave the money to her spouse. Her spouse gave her $26,027 between March and September 2015 which she deposited in her mutual fund account. She omitted to inform the LIT about the mutual fund account.

The OSB opposed the bankrupt’s discharge, as well referred the file to the Special Investigation Unit.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not equal to fifty cents on the dollar of his unsecured liabilities.
  • The bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities.
  • The bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs.

Court Decision:

A compelling order was issued for the bankrupt to attend counselling for gambling; to continue to submit monthly income and expense statements until discharged; and provide the LIT with the balance of non-exempt equity in the sum of $1,425.

The bankrupt’s discharge was adjourned until the investigation was completed.

The Crown made the decision not to pursue charges against the bankrupt.


Background

The bankrupt was part of a group of related individuals that had previously filed for bankruptcy and that had a history of accumulating liabilities while encumbering high-equity properties with sham trust agreements. Non-arms-length parties would also submit large claims using sham promissory notes. Hence, an individual would go bankrupt, keep their property, be discharged of their debts, and have a friend collect the dividends from the bankruptcy.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities, unless the bankrupt satisfies the court that the fact that the assets are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities has arisen from circumstances for which the bankrupt cannot justly be held responsible.
  • The bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities.
  • The bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs.
  • The bankrupt has failed to perform the duties imposed on the bankrupt under this Act or to comply with any order of the court.

Court Decision:

To summarize, the Bankrupt to pay 100% of proven claims plus LIT fees, tax compliance, a three-year credit ban, a three-year gambling ban and a 12-month suspension:

  • The bankrupt pay to the trustee, the total additional sum of $103,055, not already received by the trustee from prior realizations in this estate.
  • The bankrupt executes an authorization and direction, directing that Great-West Life deliver up to the trustee the sum of $40,620, being the settlement funds held net of legal fees of $9,259.22, being the amount equitably claimed by the bankrupt’s counsel on a claim for a charging order for the costs of creating this fund in this litigation, and any amount received by the trustee from Great-West Life shall be applied against the total amount owing under paragraph 1(a) of this order.
  • The bankrupt keep current on the post-bankruptcy CRA tax filings and payments, while undischarged.
  • The bankrupt provides a written undertaking not to use, possess, apply for, acquire or obtain any form of credit for a period of three years, and the trustee is authorized to make enquiries to ensure compliance.
  • The bankrupt provides a written undertaking not to gamble or enter any gambling establishment, and to enrol into the casino’s self-exclusion list, for three years and the trustee is authorized to make enquiries to ensure compliance.
  • 12-month concurrent suspension.

Background

The trustee objected to the debtor’s discharge following the examination conducted by the official receiver. The debtor gave half of the realization from the sale of her residence to her daughter without adequate valuable consideration. The reviewable transaction was for approximately $100,000 and the debtor was not providing the trustee with any assistance to recover this amount. During the examination conducted by the official receiver, the debtor stated that she had not disclosed this transaction to her trustee despite the fact that the sale took place one month before the bankruptcy, because it was her daughter who paid the $100,000 when the house was purchased in 2003. The bankrupt also stated to the official receiver that she withdrew $50,000 on her credit cards in October 2010 in El Salvador and gave the money to her husband (now her ex-husband) to help him start a business.

Facts/Reason to oppose discharge:

The bankrupt gave undue preference to her daughter to the detriment of the other creditors.

Court Decision (including decision link if available):

A judgment of conditional discharge has been rendered with the condition of paying the amount of $50,000 either in full or in monthly instalments of $300 over a maximum of seven years, failing which the discharge will be rejected. Furthermore, the discharge has been suspended for a period of two years starting on the date of the judgment. The conduct of the bankrupt both before and after the bankruptcy, as well as her answers during her interview, were not sufficient to convince the registrar of the debtor’s capacity to rehabilitate herself. Instead she used the bankruptcy to erase some of her debts.


Background

The debtor, unemployed, filed for bankruptcy in November 2014. The total liabilities totalled $330,044 including eight credit cards and 2 lines of credit. The bankrupt disclosed loss of employment as the reason for his financial difficulties. The bankrupt was examined by the Official Receiver and admitted to having made false declarations regarding his income in order to obtain credit cards. The bankrupt also declared being the owner of a property in Pakistan (which was not disclosed to the LIT). The proven claims totalled $535,809, thus not declaring all of his outstanding debts to the LIT. Furthermore, the bankrupt declared that on February 14, 2012, he leased a 2012 Audi Q7 valued at $79,000 with monthly payments of $1,300. To do so, he reported an annual income of approximately $88,000. The reason for this purchase was to impress his wife so that she will return home. Subsequently, the debtor simply “gave” the vehicle to an acquaintance that he met at the mosque. Also in 2012, the bankrupt declared giving his business to an individual and did not receive and funds from the transaction.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are of a value equal to fifty cents on the dollar on the amount of his unsecured liabilities.
  • The bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities.
  • The bankrupt has brought on, or contributed to, his bankruptcy by unjustifiable extravagance in living.
  • The bankrupt has committed an offence under this Act in connection with his property and his bankruptcy.
  • The bankrupt has failed to perform the duties imposed on his under this Act.

Court Decision:

Discharge refused. The debtor will be eligible to apply for his discharge again on April 1, 2022.


2015

Background

The debtor filed for bankruptcy on March 6, 2014 and it was the bankrupt’s third bankruptcy. The Statement of Affairs listed $3,085 in assets and $170,171 in liabilities. The bankrupt cited economic slowdown, using credit to pay business expenses and non-payment of taxes as the cause of insolvency. The OSB examined the bankrupt in October 2014. The bankrupt explained that most of his creditors were former employers who paid him advances while he was selling real estate. He disclosed during examination that he had accrued new tax liability since filing for bankruptcy, and that he was borrowing funds from his common-law spouse when his business experienced a slow month.

Facts/Reason to oppose discharge:

  • assets less than fifty cents on the dollar of the amount of unsecured liabilities
  • bankrupt brought on or contributed to bankruptcy by culpable neglect of business affairs
  • bankrupt was previously bankrupt

Court Decision (including decision link if available):

On August 6, 2016, a conditional discharge was granted; the order cites reasons as:

  • bankrupt was previously bankrupt
  • bankrupt has failed to comply with s.68

Conditional order calls for payment of $17,300 to the estate; payment in full of all post-assignment tax arrears, with proof of payment to the LIT; proof to the LIT of filing all income tax returns and GST tax returns; discharge suspended until July 7, 2017.

To this day, there is no indication that the conditions have been fulfilled.


Background

The debtor filed for bankruptcy on September 23, 2014. The Statement of Affairs listed two assets totalling $30,984 and a total of $205,408 in unsecured liabilities including $180,566 on fifteen credit cards. The bankrupt was examined by the OSB on May 28, 2015. Additionally, the OSB requested credit card statements of which the following were noted;

  • Between March 2012 and June 2013, three of the bankrupt’s credit cards were credited with amount totalling $214,900.40 from Lake Okanagan Resort and Northwynd Resort Properties. There was no indication these credits were to reverse payments made. During the exam the bankrupt disclosed that she was employed by Northwynd Resort Properties as a contract administrator from 2007 until March 2013.
  • Between May 2013 and February 2014, the bankrupt obtained cash advances totalling $28,013.78 and purchases totalling $39,924.69 over three credit cards. During that period $42,520 was remitted as payments and thirty-three cheques totalling $18,123.91 were returned as NSF.
  • The bankrupt obtained fifteen credit card accounts in the period of approximated five years (2007-2013).
  • The bankrupt admitted that in the one year prior to bankruptcy she applied for credit despite knowing she would be unable to repay it.
  • Around March 2013 she purchased an existing franchise called “The Lunch Lady” which she sold around May 2014. She admitted to using credit to support her business. She admitted to not keeping proper books and records for the business, making it impossible to verify her income during this time.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not equal to fifty cents on the dollar of his unsecured liabilities
  • The bankrupt has omitted to keep such book of account as are usual and proper in the business carried on by the bankrupt and as sufficiently disclose the business transactions and financial position of the bankrupt
  • The bankrupt continued to trade after becoming aware of being insolvent
  • The bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities
  • The bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs
  • The bankrupt has committed an offence under this Act or any other statute in connection with the bankrupt’s property, the bankruptcy or the proceedings thereunder
  • The bankrupt has failed to perform the duties imposed on the bankrupt under the Act: subsections 158(f) and (g)

Court Decision:

Discharge from bankruptcy adjourned sine die with leave granted for the LIT to proceed to their discharge.

Charges laid under the BIA for failing to comply with duties under s.158(c) per s.198(2). Second information sworn under Criminal Code for theft over $5,000 s.334(a). A warrant for the arrest of the bankrupt remains outstanding. It is believed the bankrupt is outside of the country.


Background

The bankrupt had been unemployed since 2005. She used credit to pay for numerous trips to Pakistan over the following five years claiming to be dealing with the separation from her husband. The bankrupt purchased a house and then defaulted on the mortgage. The bankrupt also purchased two luxury vehicles. On the financing application to purchase one of the cars, the bankrupt claimed to be executive earning a substantial income. When the vehicle was written off in an accident, the bankrupt did not use the insurance proceeds to pay off the car loan. The bankrupt claimed she purchased the other vehicle for a friend who was unable to obtain credit. She transferred ownership of the car to another friend when she could not make the financing payments. A post-bankruptcy criminal investigation resulted in a substantial restitution order being made against the bankrupt.

Facts/Reason to oppose discharge:

  • While knowing herself to be insolvent the bankrupt paid for numerous trips to Pakistan and one to Florida with credit.
  • The bankrupt also purchased two luxury vehicles on credit and gave one away to a friend. She also purchased real estate while insolvent.
  • Prior to her bankruptcy the bankrupt paid back debts to family and engaged in questionable business activities.

Court Decision (including decision link if available):

The court granted a conditional discharge after payment to the estate of $17,000. It also banned the bankrupt from obtaining or using unsecured credit for five years or until the restitution order is paid. The bankrupt’s discharge was also suspended for 24 months concurrent to the above conditions.


Background

This is a first-time bankruptcy. The total unsecured liabilities are $304,302, including at least 12 credit cards totalling $95,000. The debtor obtained 6 new credit cards in the 2 or 3 months preceding the date of his initial bankruptcy event and has obtained 2 more cards since the assignment of his property. The debtor declared that he made false statements about his income for the 6 cards obtained before the date of his initial bankruptcy event as well as for the 2 credit cards obtained after the initial bankruptcy event. In the weeks preceding his bankruptcy, he declared that he purchased furniture and appliances totalling approximately $18,000, which were then given as gifts to his brother and his wife. The debtor also resold property that he had purchased on credit, i.e. tools and construction material as well as 4 smart devices. In the months preceding the bankruptcy, the debtor made a preferential payment to a creditor for a total of approximately $35,000. The debtor also used his credit cards for trips to Las Vegas in the 2 months preceding his bankruptcy, and bought airplane tickets for family members in the months before the date of his initial bankruptcy event.

Facts/Reason to oppose discharge:

  • The debtor’s assets are not of a value equal to fifty cents on the dollar on the amount of his unsecured liabilities.
  • The debtor has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities.
  • The debtor has brought on the bankruptcy by unjustifiable extravagance in living and gambling.
  • The bankrupt has, when unable to pay debts as they became due, given an undue preference to any of the bankrupt’s creditors.
  • The debtor has committed an infraction under the terms of this Act.

Court Decision:

During the hearing about the discharge, the debtor signed a consent form rejecting his discharge, and consequently the court rejected the debtor’s discharge.

On April 26, 2021, the debtor and his wife pleaded guilty to a criminal charge. On August 31, 2021, the debtor was sentenced to jail for 12 months, followed by a probation of one year of probation.


Background

The bankrupt was the owner of Morton Dew Limited, an insurance broker firm. That company incurred significant debts which may have been incurred by fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity and debts resulting from obtaining property or services by false pretences or fraudulent misrepresentation. London Life has alleged, in its filed proof of claim, that it has incurred debts totalling at least $1,518,898.39 as a result of the bankrupt’s fraudulent activities and misappropriation in Morton Dew Limited. The bankrupt provided London Life with a personal guarantee of Morton Dew Limited’s debts to London Life. The LIT understands that London Life has completed an investigation into the conduct of the bankrupt as an officer and director of Morton Dew Limited and that they will be providing the results of the investigation to the Charlottetown police. It is further the understanding of the LIT that the Charlottetown police have been conducting their own investigation into the bankrupt’s conduct at Morton Dew Limited.

Facts/Reason to oppose discharge:

  • The bankrupt’s assets are not equal to 50 cents on the dollar of the amount of his unsecured liabilities.
  • The bankrupt continued to trade (incur debts) after he knew or should reasonably have known that he would not be able to repay those debts.
  • Funds from debt’s incurred by Morton Dew Limited which are guaranteed by the bankrupt and debts owing by the bankrupt to American Express appear to have been used for extensive personal travel of the bankrupt, the bankrupt’s spouse and business and personal associates which appear to have been unjustified from a personal or business perspective.

Court Decision:

Conditional Discharge:
https://www.ic.gc.ca/app/scr/osbeftr/app/EstateManagement/displayDocument?id=33563213


2014

Background

The debtor filed for bankruptcy on February 24, 2014. The Statement of Affairs (SOA) listed $12,939.38 in exempt assets and $206,889.75 in unsecured liabilities. The bankrupt indicated the reasons for his financial difficulties were marital breakdown, loss of income and overuse of credit. The OSB requested applications and statements from creditors. The analysis of these statements showed that within a period of sixty days, the bankrupt accumulated $91,159 over five credit cards. The transactions included cash advances, gift cards and jewellery. The OSB examined the bankrupt in September 2014. During the examination, the bankrupt stated he lost his job in November 2012. He also attributed gambling and alcohol use as an additional cause of his bankruptcy. He denied purchasing the jewellery and admitted to only some of the cash advance transactions. He admitted using some gift cards toward renovations to his property of which he later disposed around March 2013. The bankrupt omitted to mention the disposal of his property within five years prior to the bankruptcy on his SOA. He also admitted transferring his title, on a different property, to his spouse for nil consideration in June 2013. In addition to the OSB’s opposition to discharge, the file was referred to the special investigation unit.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not equal to fifty cents on the dollar of his unsecured liabilities
  • The bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities
  • The bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs
  • The bankrupt has committed an offence under this Act or any other statute in connection with the bankrupt’s property, the bankruptcy or the proceedings thereunder
  • The bankrupt has failed to perform the duties imposed on the bankrupt under the Act: subsections 158(f) and (g)

Court Decision:

Order Setting Conditions of Bankrupt’s Discharge granted on February 3, 2015. Conditions included:

  • • The bankrupt to contribute $50,00 toward conduct issues by making minimum monthly payments of $500
  • • attend gambling addiction program
  • • undertaking not to apply for credit for a period of five years
  • • creditors to be put on notice with respect to properties if they wish to pursue under section 38 of the BIA

In November 2018, the bankrupt pleaded guilty to one count contrary to paragraph 362(1)(b) (obtaining credit by false pretence or by fraud – indictable offence) of the Criminal Code of Canada. He received a two year custodial sentence concurrent to a two year sentence that he is currently serving for drug trafficking.


Background

The debtor filed for bankruptcy on June 18, 2012. It was the debtor’s second bankruptcy. The statement of Affairs (SOA) listed $0.00 in assets and $467,891.56 in liabilities, all unsecured. The bankrupt cited business failure as the cause of insolvency. The Licensed Insolvency Trustee (LIT) requested an examination under the Debtor Compliance Referral Program, citing the lack of disclosure of the prior insolvency and lack of cooperation in providing details on a sold asset. The OSB examined bankrupt in December 2012. The bankrupt stated he had not disclosed a loan from his girlfriend of $160,000, nor had he disclosed that he gifted his girlfriend $40,000 in 2009 for the purchase of a property. When the property was sold in 2012, his girlfriend retained all the proceeds. The bankrupt stated $85,000 was paid for equipment for his business which his business partner took and used to start a new business. The bankrupt stated he walked away from his business when an account receivable was not paid as he did not have the means to pursue collection. In addition to the OSB’s opposition to discharge, the file was referred for a Special Investigation.

Facts/Reason to oppose discharge:

  • assets less than fifty cents on the dollar of the amount of unsecured liabilities
  • bankrupt was previously bankrupt
  • failure to perform duties

Court Decision:

Discharge adjourned generally on December 10, 2014; the bankrupt has not attempted to obtain his discharge since.

In November 2014, the bankrupt was charged with four counts under 198(1)(c), making a false entry or knowingly making a material omission, and one count of 198(2), failure to comply with duties. In June 2015, the debtor pled guilty to one count of 198(1)(c); he received a suspended sentence with one year probation that included 40 hours of community service.


Background

The debtor filed for bankruptcy on January 10, 2014. The Statement of Affairs recorded $213,977.09 in unsecured claims. The bankrupt failed to attend his examination on April 16, 2014 because he was out of the country. The bankrupt subsequently attended on August 25, 2014. The Statement of Affairs recorded a shortfall on a property. The Bankrupt did not disclose on his Statement of Affairs that this shortfall (as well as several other liabilities) was the result of him operating an illicit cannabis cultivation operation. The bankrupt’s liabilities were listed for a combined $70,000 in business losses with an additional $70,000 in loans to no non-arms-length parties, more than $28,000 in jewellery purchases, more than $30,000 in cash withdrawals, and more then $6,000 on travel. A bill of lading also confirmed that the Bankrupt shipped undisclosed assets to Israel.

Facts/Reason to oppose discharge:

  • the assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities, unless the bankrupt satisfies the court that the fact that the assets are not of a value equal to fifty cents on the dollar on the amount of the bankrupt’s unsecured liabilities has arisen from circumstances for which the bankrupt cannot justly be held responsible;
  • the bankrupt has omitted to keep such books of account as are usual and proper in the business carried on by the bankrupt and as sufficiently disclose the business transactions and financial position of the bankrupt within the period beginning on the day that is three years before the date of the initial bankruptcy event and ending on the date of the bankruptcy, both dates included;
  • the bankrupt has continued to trade after becoming aware of being insolvent;
  • the bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet the bankrupt’s liabilities;
  • the bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt’s business affairs
  • the bankrupt has committed any offence under this Act or any other statute in connection with the bankrupt’s property, the bankruptcy or the proceedings thereunder;
  • the bankrupt has failed to perform the duties imposed on the bankrupt under this Act or to comply with any order of the court.

Court Decision:

Bankrupt to pay $28,043.43 as a condition and a nine months suspension.


Background

The bankrupt, unemployed, lied on his credit card applications regarding his employment status and monthly wage, and by doing so, was able to secure credit. He would also accept pre-approved credit cards from other companies, as well as all credit card limit increases offered to him. After his separation, he began to use his credit cards in an excessive manner. He disclosed an alcohol and gambling problem. The bankrupt stated that he never made payments to the credits cards and that he would transfer the balances between each card. The bankrupt disclosed three trips for which he used his credit cards to pay for, and while he was abroad, he purchased gifts for his children all on credit. He also disclosed sending $5000.00 abroad to a family member for cancer treatment. The sworn Statement of Affairs dated November 14, 2013 indicates the total unsecured liabilities are $111,300.00 and the total net realizable assets are $0.00.

Facts/Reason to oppose discharge:

  • The bankrupt continued to use and accept credit cards knowing he did not have the means to cover all the expenditures.
  • The bankrupt struggled to provide even approximate amounts of his debts. He was also unable to provide proper documentation substantiating his spending.
  • The bankrupt brough on his bankruptcy through unjustifiable extravagance in living and gambling.

Court Decision:

The court granted the bankrupt a conditional discharge. If the bankrupt obtains employment, he is required to provide his income and expense information, as well as his income tax return and assessment to the LIT. He must also advise his LIT of any property acquired. If applicable, he must make any surplus income payments until his discharge. The bankrupt is required to attend gamblers anonymous, or similar counselling, for a one-year period and provide details to the LIT. He must pay $12,000 to the estate within 36 months where any GST credits and surplus income payments would be applied to this amount. The bankrupt discharge was also suspended for 36 months.


Background

The bankrupt has been on social assistance since 2007 and has managed to incur liabilities totaling $ 140,000 on approximately 16 credit cards and lines of credit. The reason of the debtor’s financial difficulties, provided on the Statement of Affairs, was gambling problems. During the bankrupt’s examination before the Official Receiver, she declared that she would gamble at the casino at least four times a week (roughly $ 2,000 $ to $ 8,000 per visit) and that the majority of her gambling funds came from her credit cards. The bankrupt also stated that she had always declared her true income and occupation when applying for credit. A review of the bankrupt’s credit card applications revealed that the bankrupt made false declarations about her income in order to obtain credit. Furthermore, the bankrupt had incurred almost all of her debts in the year preceding the bankruptcy (travel, jewellery, cash advances, electronics and alcohol). The statements also revealed that the bankrupt issued 27 cheques with non sufficient fund for a total of approximately $ 107,000 in dishonoured payments which enabled the bankrupt to gain access to funds well in excess of the credit limits of her credit cards.

Facts/Reason to oppose discharge:

  • The assets of the bankrupt are not of a value equal to fifty cents on the dollar on the amount of her unsecured liabilities;
  • The bankrupt failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet her liabilities;
  • The bankrupt has brought on, or contributed to, her bankruptcy by unjustifiable extravagance in living and by gambling;
  • The bankrupt has committed an offence under this Act in connection with her bankruptcy.

Court Decision:

Debtor’s discharge refused


Background

The bankrupts, a mother and her son, filed two distinct bankruptcies. They submitted the same reason for their bankruptcies: loss of employment and insufficient income to pay debt load. The bankrupts managed to accumulate $230 055 in liabilities consisting of 36 credit cards (each had a total of 18 credit cards) while their only sources of income, since their arrival to Canada in 2004, had been social assistance. When being examined by an Official Receiver, under oath, both bankrupts admitted to false declarations on credit card applications regarding their income as well as their employment status. During the year preceding their bankruptcies, the bankrupts withdrew over $ 60,000 from their credit cards.

Facts/Reason to oppose discharge:

  • • The assets of the bankrupts are not of a value equal to fifty cents on the dollar on the amount of their unsecured liabilities;
  • • The bankrupts have failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet their liabilities;
  • • The bankrupts have brought on, or contributed to, their bankruptcy by unjustifiable extravagance in living;
  • • The bankrupts have committed an offence under this Act in connection with their bankruptcy.

Court Decision:

Both discharges were refused by the court.


2013

Opposition to bankrupt's discharge by two creditors
Court No. : 400-11-004311-113
OSB No.: 43-1389770

Background

A self-employed contractor declared debts of $430,000, almost entirely for unpaid taxes and related penalties. About two years before filing for bankruptcy, he sold his share of the family home to his wife, from whom he was separated. He received $106,000 from the sale, which he used to take trips abroad with his wife, as well as to pay for health care for himself. During this period, he continued to receive tax assessments and challenge them, without paying any instalments. After he filed for bankruptcy, he did not appear to cut back on his spending, including leasing a car for close to $600 a month. His discharge was opposed by the provincial and federal tax agencies, which together were owed $425,000.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt has $200,000 or more of personal income tax debt, which represents 75 percent or more of the bankrupt's total unsecured proven claims.
  • Bankrupt contributed to his bankruptcy by unjustifiable extravagance in living.

Court decision

In noting that the marital separation appeared to be a sham to help the bankrupt avoid paying taxes or his trustee, the Court granted a conditional discharge after payment to the estate of $106,000 in minimum annual instalments of $10,600. The bankrupt can receive an absolute discharge as soon as he pays off the entire amount.

Read the Court decision for 400-11-004311-113/43-1389770 (available in French only).

2012-2007

2012

Background

An individual undertook renovations of an apartment building owned by someone else. Although he did not have a contract with the building owner to do the work, there was an agreement in principle with an option to buy the property and he had made some payments toward its purchase. When the individual filed for bankruptcy, he said he owed about $470,000. Proven claims from creditors actually amounted to close to $740,000, most of it relating to the renovations. In addition to underestimating his debts, he did not include all of his assets in his statement of affairs—the police found $25,000 in cash at his residence as well as other items that should have been part of his bankruptcy estate. The trustee and four creditors opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt contributed to his bankruptcy by unjustifiable extravagance in living.
  • Bankrupt failed to perform his duties as a bankrupt imposed under the Act.

Court decision

The Court ordered the bankrupt to pay $150,000 at an annual rate of $15,000 over 10 years. The bankrupt can be discharged only after 10 years, even if he completes payment before that time.

Read the Court decision for 350-11-000040-101/43-146320 (available in French only).


Opposition to bankrupt's discharge by a creditor
Court/ OSB No. : 10-3756/11-1397474

Background

A retired woman filed for bankruptcy with debts totalling more than $790,000 in taxes owed to the Canada Revenue Agency (CRA). The tax debt arose seven years earlier after an audit of her tax returns concluded that $502,500 that the woman had transferred from a registered retirement savings plan (RRSP) to a self-directed RRSP had disappeared. She claimed that she was the victim of an RRSP scam, but the CRA said she had used a scheme to avoid paying taxes on the withdrawal. She said that she sold her husband her share of the matrimonial home for $362,500 to generate funds to deal with appeals related to the CRA claim. She also sold 60 gold coins prior to the bankruptcy for approximately $60,000, claiming she used the money for living expenses. However, she did not spend any money on appeals nor did she make any payments toward her tax bill. The CRA opposed her discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt has $200,000 or more of personal income tax debt, which represents 75 percent or more of the bankrupt's total unsecured proven claims.

Court decision

The Court ordered a conditional discharge upon payment of $150,000 to the trustee. The bankrupt must file all income tax returns and pay all taxes as required by law.

Read the Court decision for 10-3756/11-1397474.


Opposition to bankrupt's discharge by the trustee and the OSB
Court/OSB No. : 11-1412432

Background

A woman accumulated debts of $162,000, most of it on 14 credit cards. She indicated that she used funds for shopping and gambling. When questioned under oath by the OSB , this first-time bankrupt admitted that she continued to gamble, but did not want to undergo gambling counselling. She reported having withdrawn about $2,000 from registered retirement savings plans (RRSPs) in the year before her bankruptcy, but the bank confirmed that she actually withdrew $14,500 from her RRSPs . Furthermore, she was not able to explain a payment of $18,000 to one creditor only three months before her bankruptcy. Although she claimed she became aware she was insolvent just before she filed for bankruptcy, she had been using credit from one credit card to pay off another in the months leading up to her bankruptcy. The trustee and the OSB opposed her discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt is responsible for having less than half the value of her debts covered by the value of her assets.
  • Bankrupt contributed to her bankruptcy by unjustifiable extravagance in living and by gambling.

Court decision

The Court ordered the bankrupt to pay $23,481 to the trustee for her bankruptcy estate, in minimum monthly payments of $1,000, before she can receive an absolute discharge. She must also file a notice with credit agencies that she cannot apply for credit for 60 months and she must attend at least five gambling counselling sessions.

Opposition to bankrupt's discharge by the OSB
Court No. : 500-11-038361-107
OSB No.: 41-1201538

Background

A first-time bankrupt declared debts of $176,000; however, his creditors claimed that he owed $219,000. He was examined under oath by the OSB , and his statements were contradicted by the evidence collected by his trustee. For example, he said he used cash advances to pay for only two trips abroad to visit and help pay medical expenses for his ailing parents. However, his credit card statements revealed additional charges of $30,000 to a travel agency and some airlines. At the examination, he revealed under oath that he had withdrawn more than $100,000 in cash advances and bought items on credit that he resold for cash so that he could have money to gamble. He had not identified gambling as one of the causes of his bankruptcy when he was required to list them, even though his trustee had inquired about it. The OSB opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt is responsible for having less than half the value of his debts covered by the value of his assets.
  • Bankrupt failed to account for any loss of assets; he cannot explain why there are not enough assets to meet his liabilities.
  • Bankrupt contributed to his bankruptcy by unjustifiable extravagance in living and by gambling.
  • Bankrupt failed to perform his duties as a bankrupt imposed under the Act.

Court decision

The Court refused to discharge the bankrupt from his debts, noting that he claimed to be employed at present and would, therefore, be in a position to prepare a proposal for repaying his creditors.


Opposition to bankrupt's discharge by the trustee
Court/OSB No. : 25-1359676

Background

Within the 12-month period before filing for bankruptcy, a real estate agent used credit cards to purchase goods she knew she couldn't afford. She also took trips to Las Vegas and Disneyland, accumulating debts totalling $200,000. She would then use one credit card to make payments on another. She attributed her financial difficulties to low real estate sales and a lawsuit related to a house she had sold. After she had filed for bankruptcy, she received a $4,000 tax refund and sold some exercise equipment for $900, but did not report receiving these funds to her trustee. When questioned under oath by the OSB , she admitted she spent a lot of money on gambling in the 12 months leading up to the bankruptcy. She also admitted selling goods she had obtained on credit even though she had not paid for them. She used that money to repay family and friends who were supporting her when she had no work. The trustee and the OSB opposed her discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt is responsible for having less than half the value of her debts covered by the value of her assets.
  • Bankrupt failed to account for any loss of assets; she cannot explain why there are not enough assets to meet her liabilities.
  • Bankrupt contributed to her bankruptcy by unjustifiable extravagance in living and by gambling.
  • Bankrupt failed to perform her duties as a bankrupt imposed under the Act.

Court decision

The Court ordered the bankrupt to pay $35,000 at a rate of $100 per month. In addition, the Court ordered the Canada Revenue Agency to forward all of the bankrupt's income tax refunds directly to her trustee to go toward her payments. The bankrupt must also file a notice with credit agencies that she cannot apply for credit while she is an undischarged bankrupt.


Opposition to bankrupt's discharge by the trustee
Court/OSB No. : 32-1238873

Background

At the time of filing his second bankruptcy, a bankrupt reported $126,000 in debts. He blamed his financial difficulties on costly divorce proceedings, business failure, fluctuating income from commission sales, lump sum demands by creditors and credit mismanagement. His trustee discovered that under his divorce settlement, the bankrupt received $155,000 in equalization payments in the six months before his bankruptcy. When examined under oath by the OSB , the bankrupt could not explain what happened to these funds. In fact, during the same period he was receiving the equalization payments, the bankrupt used his credit cards to pay for a trip for four to Mexico. He also admitted that he bought gifts on credit when he knew he couldn't afford to pay for them. As well, the bankrupt did not complete his second insolvency counselling session as required under the Bankruptcy and Insolvency Act. His trustee opposed his discharge, seeking to obtain funds equivalent to the equalization payments for the bankruptcy estate.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt is responsible for having less than half the value of his debts covered by the value of his assets.
  • Bankrupt continued to borrow after knowing he was insolvent.
  • Bankrupt failed to account for any loss of assets; he cannot explain why there are not enough assets to meet his liabilities.
  • Bankrupt contributed to his bankruptcy by unjustifiable extravagance in living.
  • Bankrupt has on a previous occasion been bankrupt.
  • Bankrupt failed to pay the required surplus income to his trustee.
  • Bankrupt failed to perform his duties as a bankrupt imposed under the Act.
  • Bankrupt refused or neglected to receive counselling.

Court decision

The Court ordered a conditional discharge upon payment, within five years, of $31,500 to the trustee for his bankruptcy estate in minimum monthly payments of $250. Until the bankrupt pays the full amount ordered, he must not apply for, obtain or use credit of any kind. The bankrupt must also attend his second counselling session. After the full amount is paid, the bankrupt's discharge is to be suspended for an additional 12 months.

Opposition to bankrupt's discharge by the trustee, the OSB and a creditor
Court No. : BK-09-1302418
OSB No. : 33-1302418

Background

A chiropractor owned two clinics, where he also employed his wife. According to the bankrupt, his financial difficulties arose because he had hired a tax advisor who was later found guilty of fraud relating to tax returns prepared for 115 clients. After that conviction, the Canada Revenue Agency (CRA) reassessed his taxes, concluding that he owed about $890,000, including penalties and interest. He was also ordered to pay $31,000 in court costs for his unsuccessful appeal of the assessment.

In the years between the CRA's reassessment and filing for bankruptcy, the bankrupt cashed in $910,000 in Registered Retirement Savings Plans (RRSPs). Also during that period, the bankrupt and his wife drew up a separation agreement in which he transferred to his wife his entire share in family properties. This included the couple's matrimonial home, the two chiropractic clinics, a cottage and eight motor vehicles. However, the bankrupt and his wife remained together in the house, continued working together and quickly reconciled. When he filed for bankruptcy, the bankrupt reported assets of $15,500 against debts totalling $1,365,000, all of which were tax debt. During his examination under oath with the OSB , it became clear that the properties transferred to his wife were considerably undervalued. It was also revealed that he had under-reported his income, falsely reported paying some expenses and failed to disclose to his trustee the transfer of the cottage or cashing in the RRSPs . The discharge was opposed by the trustee, the Office of the Superintendent of Bankruptcy (OSB) and the CRA .

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by culpable neglect of business affairs.
  • Bankrupt has failed to perform the duties imposed under the Act.

Court decision

Although the Court stated that the bankrupt could be presumed to have been honest when he retained the tax advisor initially, he could not be considered to be an honest debtor after his tax reassessment. At the very least, he misled the trustee and his creditors about the cottage, the RRSPs and his monthly expenses. The Court also considered the separation to be a sham to hide his assets. The bankrupt was given a conditional discharge upon payment of $75,000, with a minimum instalment of $1,000 per month. In addition, the bankrupt must provide the trustee with a written accounting for the proceeds of his RRSPs and written evidence of the value of the cottage and his chiropractic clinics. If this accounting reveals that more should be paid into the estate, the trustee is required to take the steps necessary to do so.

Read the Court decision for BK-09-1302418/33-1302418.


Opposition to bankrupt's discharge by the OSB
Court No. : 500-11-041565-116
OSB No. : 41-1455795

Background

A man had not been working for four years and was on welfare. Despite his financial situation, he used credit to pay about $50,000 for his brother's wedding overseas. Although he already had at least 10 credit cards, he continued applying for new credit cards, stating on the applications that he was working at his former place of employment. He used the credit cards to obtain cash advances to gamble. In the two months before filing for bankruptcy, he used his credit cards to obtain about $70,000 in cash advances and to buy $12,500 in electronics, appliances and home furnishings. He used some of the cash to repay a loan of $40,000 from a friend. When he filed for bankruptcy, he reported assets of $800 against debts totalling $99,500. The OSB opposed the discharge of this first-time bankrupt.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet liabilities.
  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living.
  • Bankrupt has given an undue preference to any creditors.
  • Bankrupt has been guilty of any fraud or fraudulent breach of trust.
  • Bankrupt has allegedly committed an offence.
  • Bankrupt has failed to perform the duties imposed under the Act.

Court decision

The bankrupt's discharge was refused.

Opposition to bankrupt's discharge by the trustee
Court/OSB No. : 31-1107000

Background

A man who earned $1,900 per month used credit to pay $30,000 for his wedding overseas. Even though he couldn't afford to pay off the debt, he continued buying items on credit and applying for new credit. He spent $50,000 on household goods. He also borrowed $100,000 against his credit cards to send to family overseas. When he filed for bankruptcy, he had debts totalling $267,000. During his examination under oath with the Office of the Superintendent of Bankruptcy, the bankrupt kept changing his explanation of what happened to items he had bought. The trustee opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt is held responsible for having less than half the value of debts covered by the value of assets.
  • Bankrupt continued to borrow after becoming aware of being insolvent.
  • Bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet liabilities.
  • Bankrupt has allegedly committed an offence.
  • Bankrupt has failed to perform the duties imposed under the Act.

Court decision

The Court refused to discharge the bankrupt and ordered him to pay $100,000 to the estate before he can reapply for discharge.


Opposition to bankrupt's discharge by the trustee
Court/OSB No. : 31-1377605

Background

The bankrupt who was an accountant suffered heavy losses in the stock market and began to use credit to pay for further investments. After he was deeply in debt and within a year of declaring bankruptcy, he used credit cards to pay $4,000 for a family vacation. When the bankrupt lost his job, he used a line of credit to pay rent. He had been unemployed for about three months when he filed for bankruptcy, listing debts totalling $220,000. His wife, also unemployed, filed for bankruptcy on the same day. In reviewing bank statements, the trustee found some sizable withdrawals that the man could not remember nor explain, other than to say that he tried to pay down some of his debts. The bankrupt said that he sent $24,000 to his wife overseas, but did not pay any money to the bankruptcy estate. The trustee opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt continued to borrow after becoming aware of being insolvent.
  • Bankrupt brought on, or contributed to, the bankruptcy by rash and hazardous speculations or by gambling.
  • Bankrupt has failed to perform the duties imposed under the Act.

Court decision

The Court ordered a conditional discharge upon payment of $43,631 and providing proof to the trustee that all appropriate government agencies have been notified of the bankrupt's current whereabouts. The discharge was further suspended for three months concurrently.


Opposition to bankrupt's discharge by the trustee and the OSB
Court/OSB No. : 51-1511748

Background

A man first realized he was insolvent about three years before filing for bankruptcy, when he began using credit to pay for everything. This included obtaining cash advances to pay off other credit cards. With monthly income of about $2,000, he kept paying the minimum balance on his credit cards. He also maintained his lifestyle and did not miss his monthly payments of $1,400 for his vehicle. He moved across the country 16 months before filing for bankruptcy, and received $100,000 clear from selling his home. He used $57,600 of that money to pay for his vehicle, living expenses and the purchase of another vehicle. After the move, he accumulated $178,000 in credit-card debt. In his new location, he managed to meet monthly mortgage payments of $1,600 using money from his girlfriend and parents. During the investigation, the Office of the Superintendent of Bankruptcy (OSB) found evidence in the bankrupt's banking documents that he had repaid a $10,000 loan to his mother within the year before filing his assignment. Both the OSB and the trustee opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living.
  • Bankrupt has given an undue preference to any creditors.

Court decision

The Court ordered a conditional discharge upon payment of $20,000 to the estate, including any income tax refunds. This amount is intended to cover the $10,000 preferential payment to his mother and $10,000 in restitution for the bankrupt's abuse of credit cards. The Court established an eight-year payment plan, but the bankrupt has the right to prepay at any time.

Opposition to bankrupt's discharge by the trustee and the OSB
Court/OSB No. : 11-1514900

Background

A woman had 21 credit cards, and every month she paid off any money owing. With a zero balance on her credit cards, she took a trip to Las Vegas. In her two weeks there, she used the credit cards to make purchases and more than 130 cash withdrawals that amounted to $193,000. Two months later, she filed for bankruptcy. During her examination under oath with the Office of the Superintendent of Bankruptcy (OSB), she said that the cash was not for gambling but for an investment that was supposed to pay back a 30-percent return. She could not identify the investment company nor the hotel that held the investment seminar. When she filed for bankruptcy, she had no assets. The trustee and the OSB opposed her discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by rash and hazardous speculations or by unjustifiable extravagance in living.

Court decision

The Court ordered that the bankrupt must pay $30,000 before she can be discharged and must provide her trustee with monthly income and expense statements for three years. She must also file a notice with national credit-reporting agencies that she cannot apply for credit for five years.

Opposition to bankrupt's discharge by the trustee and a creditor
Court/OSB No. : 35-1393934

Background

An individual failed to keep records or submit tax returns for his business for a period of over seven years on the basis that he could not afford the audits required. When he filed for bankruptcy, this first-time bankrupt had unsecured debts of $615,000, including more than $200,000 in back taxes. His trustee and the Canada Revenue Agency opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt did not keep proper books and records for the business.

Court decision

The Court suspended his discharge for six months and ordered him to pay $100,000 to the bankruptcy estate. Upon the latter of the payment of $30,000 towards the conditional amount or the period of suspension, the bankrupt will be eligible to receive an absolute discharge on the condition of consenting to a judgment in favour of the trustee for the balance owing under the conditional order.


Opposition to bankrupt's discharge by the OSB
Court/OSB No.: 41-1308169

Background

A man who had been bankrupt before was living solely on welfare and family allowance payments. However, when he applied for credit cards, he said he was working and that he earned more than double his actual income. The man obtained more than 25 credit cards, gradually building up a debt of $74,000. In the year before his bankruptcy, he charged an additional $94,000 on credit, including more than $60,000 in cash advances. Some items that he bought on credit were sold or given away, including some that he sold after he had filed for bankruptcy. During his examination under oath with the Office of the Superintendent of Bankruptcy (OSB), he explained that he had had a drinking problem that made him gamble and spend wildly, and that he did not remember what he had bought or what he had done with the cash. The OSB opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living or by gambling.
  • Bankrupt has been guilty of any fraud or fraudulent breach of trust.
  • Bankrupt has allegedly committed an offence.

Court decision

The Court refused to discharge the bankrupt.

Opposition to bankrupt's discharge by the trustee
Court/OSB No.: 33-1497267

Background

After losing her job, a woman sold a property to pay back a $50,000 loan from her sister and gambled with the remaining $20,000 she received from the sale. Although she was unemployed, she continued to gamble heavily. She indicated that to pay for her gambling, she obtained money from lines of credit, cash advances from credit cards or the sale of items she bought on credit, as well as from borrowing money from people she knew. Over four years, she accumulated debts of more than $215,000, continuing to gamble even after she knew she was insolvent. When she filed for bankruptcy, she reported $500 in assets. She continued to borrow money to gamble after her assignment into bankruptcy. Her trustee opposed the discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living or by gambling.
  • Bankrupt has failed to perform the duties imposed under the Act.

Court decision

The Court ordered the bankrupt to pay $21,000 to the estate and banned her for life from casinos anywhere in the world. She was also ordered to attend gambling-addiction counselling, and must show the Court that she completed the required sessions. After all of these conditions are met, the bankrupt will receive an absolute discharge.


Opposition to bankrupt's discharge by the trustee and a creditor
Court/ OSB No. : 42-1002551

Background

An individual who had been previously bankrupt was operating a business with a partner. After resigning as president of the company, the individual stayed on to look after customer relations. He assumed that the other partner was looking after accounting. Tax liabilities accumulated such that when the individual declared bankruptcy, he owed $48,000 to Revenu Québec. While he was bankrupt and not yet discharged, the individual operated another business for which he was collecting, but not remitting, taxes owed. His trustee, as well as Revenu Québec, opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by culpable neglect of business affairs.
  • Bankrupt has on a previous occasion been bankrupt.

Court decision

The Court ruled that the bankrupt demonstrated negligence and carelessness in managing his business affairs, and attributed his insolvency to violation of tax laws and not to any cause beyond his control. The Court reiterated that the Bankruptcy and Insolvency Act should not be used as a quick and easy way for a person to be discharged from his/her debts and absolved of any responsibility. Accordingly, the Court discharged the bankrupt conditional upon payment of $54,500.

Read the Court decision for 42-1002551 (available in French only).

Opposition to bankrupt's discharge by the trustee
Court/ OSB No. : 41-0899110

Background

A man whose only sources of income were welfare and child tax benefits incurred debts of more than $100,000 on 17 credit cards, mainly within the five-month period leading up to his bankruptcy. To obtain access to credit, this first-time bankrupt, who had been unemployed since 1999, would declare yearly income of $48,000 on credit-card applications. The trustee opposed his discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living.

Court decision

The Court ordered the bankrupt to pay $20,000 to the estate.


2011

Background

A school teacher used her credit cards to invest in a restaurant managed by her spouse, accumulating $190,000 in debts. Although the business generated little or no profit for three years, she bought a new house requiring a monthly payment of $3,000. The couple was eventually locked out of the restaurant by the landlord for rent arrears. During her examination under oath by the OSB, she explained that she could not provide her trustee with the restaurant's records or its computer system because she and her husband had been locked out. The trustee opposed her discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt is responsible for having less than half the value of her debts covered by the value of her assets.
  • Bankrupt continued to borrow after knowing she was insolvent.
  • Bankrupt failed to account for any loss of assets; she cannot explain why there are not enough assets to meet her liabilities.
  • Bankrupt contributed to her bankruptcy by rash or hazardous speculations.

Court decision

The Court granted a conditional discharge upon payment of $19,712.48 of outstanding surplus income to the trustee, in minimum monthly payments of $500, and an additional $20,000 representing her share of the equity in the family home.


Opposition to bankrupts' discharge by the trustee
Court No. : 31-1263620
OSB No.: 31-1269022

Background

A husband and wife, while supporting their teenaged daughter, were earning about $1,800 a month. The husband was self-employed and had been bankrupt once. After remortgaging their house to consolidate their loans, they went on a two-year spending spree. They used credit cards for cash advances and purchases totalling $147,000 for the husband and $70,000 for the wife. About six months before filing for bankruptcy, the husband had a heart attack and was diagnosed with a chronic illness. The couple averaged over $8,500 a month in expenses; $800 of the monthly bill was for gas even though the husband had no work. When they filed for bankruptcy, they blamed the economy and their health problems for their financial difficulties, reduced household income and unmanageable debt load. The trustee opposed their discharge.

The decision to oppose the bankrupts' discharge was based on a number of facts,Footnote 1 including:

  • Bankrupts continued to borrow after becoming aware of being insolvent.
  • Bankrupts have failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet liabilities.

Court decision

The Court found the bankrupts' behaviour a very serious abuse of credit. The husband's discharge was suspended for a year and he was ordered to pay $20,000 to the estate. As a first-time bankrupt, the wife's discharge was suspended for six months, during which time she must begin paying $5,000 to the estate. After their discharge, they are both banned from applying for, acquiring or using credit for five years.

Opposition to bankrupt's discharge by the trustee
Court/ No. : 31-1414288

Background

Some two years before filing for bankruptcy, a woman realized she could not pay her debts but kept using credit cards to pay for living and other personal expenses. This included $15,000 to divorce her first husband. Using credit, she sent about $50,000 overseas to help pay for her second husband's medical expenses and to help him immigrate to Canada. She said she was defrauded of $72,000 in a scheme to borrow more money to relieve her debt. She also gambled regularly although she was unsure how much this contributed to her debt. Following her second husband's arrival in Canada, they separated after a few months—she had assumed that once he was in Canada he would help her to repay her debts. When she declared bankruptcy, she owed about $220,000 but had only $3,000 in assets. The trustee opposed her discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt continued to borrow after becoming aware of being insolvent.
  • Bankrupt brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living or by gambling.

Court decision

The Court suspended the bankrupt's discharge for six months. During that time, she must begin paying $20,000 to the estate, with a minimum monthly instalment of $200. For 10 years after her discharge, she must stay away from casinos and not apply for, acquire or use any credit card.


Opposition to bankrupt's discharge by the OSB
Court/OSB No.: 41-1363231

Background

A first-time bankrupt whose main family income was a welfare cheque of $1,100 per month incurred $96,000 in credit-card debt, half of it within six months prior to her bankruptcy. She reported obtaining $40,000 using credit cards, which she loaned to her son to pay down his debt. She admitted to declaring work income varying from $25,000 to $47,000 on credit-card applications, while her sole income was the welfare cheque. During her examination under oath with the Office of the Superintendent of Bankruptcy (OSB), she said she wasn't aware of anyone within her family who had ever gone bankrupt. However, OSB records indicate that her husband, daughter, son-in-law and brother have all filed for bankruptcy in the past. The OSB opposed her discharge.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living.

Court decision

The bankrupt's discharge was refused.


Opposition to bankrupt's discharge by a creditor
Court No .: 700-11-002892-096
OSB No. : 41-1231678

Background

A woman took out a $50,000 line of credit to finance her university education. Shortly after she graduated and started working, she and her partner purchased a condominium. They had a baby and decided to sell the condominium and to buy a new house, taking on a $314,000 mortgage even though the woman was on maternity leave and was receiving only 55 percent of her salary. Within a year, she filed for bankruptcy with debts of close to $95,000. She stated that she chose bankruptcy instead of a consumer proposal because it meant making nine payments of $650 instead of 60 payments of $650. The bank opposed the discharge, arguing that she could have made a viable proposal as her education—paid for through the line of credit—could provide her with a good salary.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt could have made a viable proposal.

Court decision

The Court found that the principal reason for the bankruptcy was the couple's decision to buy a new house instead of repaying their creditors first. Taking into account all of the facts, the Court ordered the woman to pay $18,000, in monthly instalments of at least $355, before she can be discharged.

Read the Court decision for 41-1231678 (available in French only).

Opposition to bankrupt's discharge by a creditor
Court No .: 700-11-011000-090
OSB No .: 41-1083184

Background

An individual took out a student loan while attending a professional private school. After graduating, he worked for three years but never made a payment against the loan. He then decided to change careers, quitting his job to return to school. He applied for a new student loan and paid the interest that had accumulated on his first student loan. After graduating, he looked for a job for several months and finally started a business without paying back his student loans. After two years, he changed jobs and began earning a salary of $68,000 a year. He lost his job months later and filed for bankruptcy. This first-time bankrupt had debts of $146,000, including $120,000 in student loans.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt is held responsible for having less than half the value of debts covered by the value of assets.

Court decision

The Court found that the bankrupt never intended to pay back his student loans. The Court ordered him to pay $50,000 to the bankruptcy estate before he can be discharged.

Read the Court decision for 700-11-011000-090/41-1083184 (available in French only).


Opposition to bankrupt's discharge by the trustee
Court/ No. : 31-1182271

Background

An individual, separated from his wife, was paying legal expenses, child support and expenses for two households. He paid $240,000 for a new business, arranging a loan through a broker whom he said he could not name. Within three months, the business premises had been locked up by the landlord and the inventory was gone. The individual did not report the theft to the police because he claimed he could not prove that he owned the business. The bankrupt admitted to spending $10,000 gambling, but could not account for $120,000 of used credit. At the time of his bankruptcy, the individual had debts of $562,000, including $300,000 accumulated in the year prior to the bankruptcy.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt did not keep proper books and records for the business.

Court decision

The Court ordered the bankrupt to pay 25 percent of all proven claims and not to apply for, acquire or obtain any form of credit for five years. The Court ordered a suspended discharge for 24 months after the conditions are met.

Opposition to bankrupt's discharge by a creditor and the OSB
Court/ No. : 33-1409737

Background

A Canadian property manager owned rental properties in Florida. He did not pay the taxes owing on the rental income he earned. During his examination under oath with the Office of the Superintendent of Bankruptcy, he admitted that he transferred the properties to a numbered company and later to a business associate to avoid having the Canada Revenue Agency (CRA) foreclose on them. After he had not paid the taxes for more than 10 years, the CRA seized his disability benefits to cover his tax debt. The CRA recovered back taxes in this way for two years until he filed for bankruptcy. He said the reasons for his bankruptcy were his disability and loss of his pension. The bankrupt said he was retired and not earning income. In fact, he was still managing real estate in Florida and living there rent-free much of the year. When he filed for bankruptcy, he still owed $750,000 in taxes.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by culpable neglect of business affairs.

Court decision

The Court ordered the bankrupt to pay $375,000 to the bankruptcy estate before he can be discharged.


Opposition to bankrupt's discharge by the trustee and a creditor
Court/ OSB No.: 11-1321002

Background

In the 10 years leading up to his bankruptcy, the self-employed bankrupt failed to file his income tax return or pay the taxes owed for his business, including $20,000 in GST remittances. At one point, he owed $150,000, with $111,000 owed to the Canada Revenue Agency, and he had assets of $4,000. When he filed for bankruptcy, this first-time bankrupt advised that marital separation and overwhelming tax debt led to his bankruptcy. At the time of his application for discharge, his estimated monthly income was $3,000, with the possibility to earn close to $5,000 monthly in a stronger economy.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by culpable neglect of business affairs.

Court decision

The Court found that the bankrupt wilfully ignored his tax commitments, taking advantage of the fact that his taxes were not deducted at source. An aggravating factor was that the bankrupt failed to account for the GST he had collected over 10 years. Because of the bankrupt's age and to encourage his rehabilitation, as a condition of his discharged he is required to pay only 50 percent of his tax debt over seven and a half years, for a total of $55,000. He also must file his income tax, GST and HST returns on time, and make timely payments.

Read the Court decision for 11-1321002.


Request by a creditor for the annulment of a bankruptcy by the Court
Court No.: 500-11-039140-104
OSB No.: 41-1346608

Background

An individual, married with two young children, had a medical doctorate and was in his fourth year of residency in neurosurgery. He was earning about $50,000 a year and had accumulated debts of about $248,000, including $190,000 owed on a line of credit. He asserted that he was suffering from psychological distress because of his debts and had fears of not being able to pay rent or to buy food and clothes for his family. He decided to file for bankruptcy even though his creditors had not asked for repayment. One of the creditors (the bank) asked the Court to annul the bankruptcy. The Court agreed that bankruptcy was inappropriate in the circumstances.

The decision to annul the bankruptcy was based on a number of facts, including:

  • The BIA provides honest but unfortunate debtors with a way to make payments against obligations that are due or past due.
  • This was a pre-emptive bankruptcy, because no creditors had demanded immediate payment or expressed concern about repayment—the stress was due to the future prospect of paying back the debts, not due to harassment by creditors.
  • The individual made no effort to work with his creditors to find a solution.
  • The individual was in a position to earn a considerable income once he completed his residency.

Court decision

The bankruptcy was annulled. The individual appealed the decision, but the appeal was refused.

Read the decision on the request to appeal the decision for 500-11-039140-104/41-1346608 (available in French only).

Opposition to bankrupt's discharge by the OSB
Court/ OSB No.: 41-1321643

Background

An individual had been earning $2,000 a month working at a restaurant. He was laid off when the restaurant was sold, and he then started using credit cards to support himself. He began using credit to gamble and buy goods he could not afford. He exaggerated his income on credit applications in order to receive additional credit cards. He used his credit cards to fund a $23,000 spending spree while he was out of the country, and to buy more than $10,000 of jewellery before leaving on his trip. Eventually, he owed 15 creditors almost $315,000, including a tax debt of about $76,000. He then filed for bankruptcy.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living or by gambling.

Court decision

The Court found that the bankrupt's behaviour was neither honest nor unfortunate. Therefore, his discharge was refused.


Opposition to bankrupt's discharge by the trustee and the OSB
Court/ OSB No.: 11-1343807

Background

An individual continued to use credit for extravagant purchases even after he knew he was insolvent. He sold $7,700 worth of items bought on credit but did not use the money received to pay down his debts. This first-time bankrupt owed almost $420,000 to 23 creditors. He claimed his bankruptcy arose from insufficient self-employment earnings. He also omitted to mention two of his credit cards to the trustee.

The decision to oppose the bankrupt's discharge was based on a number of facts,Footnote 1 including:

  • Bankrupt continued to borrow after becoming aware of being insolvent.

Court decision

The Court suspended the bankrupt's discharge for 24 months, ordered the bankrupt to pay the bankruptcy estate for the full amount of items purchased on credit and sold to a third party, and barred the bankrupt from applying for credit for 60 months.


2010

Background

Two bankrupts filed jointly for their second bankruptcy. The husband had been injured and unable to work for several months; the wife had been laid off. Even after they realized that they were insolvent, they continued to use their credit cards for trips and extravagant items. They followed a pattern of exaggerating their income on their credit applications, spending to the limit of their credit cards and paying the minimum balance. In nine months, they accumulated an additional $100,000 in credit card debt, for a total debt amounting to $145,000. At the time of applying for discharge, the husband was working again and the wife had just finished working for eight months, as well as having completed training to increase her employment prospects.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupts brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living.

Court decision

The registrar found that the conduct of the bankrupts was reprehensible as they exhibited extravagance, eccentricity and recklessness. The Court suspended the bankrupts' discharges concurrently for a period of five years or until payment of $21,000 is made to the trustee, whichever occurs first. The Court indicated that the terms of this discharge take into account the public interest, financial morality, the integrity of the insolvency system and rehabilitation of the bankrupts.

Read the Court decision for 48-11-000026-089/42-1114106 (available in French only).


Opposition to bankrupt's discharge by the OSB
Court No.: 500-11-038771-107
OSB No. 41-1237330

Background

The bankrupt, with a reported income of $23,000, had acquired 20 credit cards and incurred upwards of $207,000 dollars of debt. He deliberately wrote cheques with insufficient funds to make payments on the credit cards. The bankrupt later established a shell company that he used to justify travel to different countries, where he supposedly bought telephone equipment destined to be resold in Canada. He used his credit cards as working capital to pay for the trips and goods. He sold the goods and equipment at a fraction of what he paid for them. He also made extravagant purchases, such as a diamond for $9,150. He bought a condominium for $133,000 using one of his credit cards for the down payment and, again using his credit cards, he made mortgage payments for 11 months.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living or by culpable neglect of business affairs.

Court decision

The Court found that the bankrupt did, indeed, frustrate his creditors through deceitful financial practices and that such conduct was an aberration. To protect the public from such abusive conduct and to dissuade others who, like the bankrupt, might be tempted to take advantage of the insolvency system, his discharge was refused.

Opposition to bankrupt's discharge by the trustee, a creditor and the OSB
Court No.: 500-11-037769-094
OSB No.: 41-1228039

Background

The bankrupt had 24 credit cards. When he applied for credit cards in May and June of 2005, his declared income varied from $40,000 to $80,000 a year. However, the bankrupt later testified that he earned $30,000 annually from 2004 to 2006. The bankrupt also took expensive trips abroad when he was under financial hardship, using his credit cards to make purchases or to obtain cash advances. He would buy goods on credit and resell them. He would pay off his credit cards by cheque and then use the cards to buy goods or to obtain cash advances before the cheques bounced. When he filed for bankruptcy, he had accumulated over $329,000 of debt owed to 20 creditors.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupt has been guilty of any fraud or fraudulent breach of trust.

Court decision

The bankrupt's discharge was refused as the Court determined that he caused his bankruptcy through unpardonable and reprehensible behaviour.


Opposition to bankrupt's discharge by the trustee and the OSB
Court/ OSB No.: 31-1210759

Background

The bankrupt admitted to knowing that he was in financial trouble at least two years before declaring bankruptcy. However, in the year or so before declaring bankruptcy, the bankrupt applied for and obtained two more credit cards on which he accrued an additional $52,900 of debt. The bankrupt acknowledged that he provided false financial information to obtain credit. Also, the bankrupt stopped paying his creditors 11 months prior to declaring bankruptcy. One month later, he used his new credit card to travel abroad, spending $3,000 for the flight and $20,000 to purchase gifts. Within three months of returning from his trip, he declared bankruptcy, with $292,000 of debt. In addition, the bankrupt cashed in $23,000 of his Registered Retirement Savings Plans (RRSPs), which he did not disclose in his sworn statement to the trustee.

The debtor claimed that he sent $75,000 to his family abroad during the two-year period before bankruptcy to pay medical expenses, make financial support payments and pay ransom for a kidnapped brother. None of these claims could be supported by evidence of any kind. Also, according to the bankrupt, approximately half of his total debt could be attributed to gambling and accrued interest.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living or by gambling.

Court decision

The Court ordered the bankrupt to pay $35,000 to the estate through minimum monthly payments of $150. He was further banned from gambling and from obtaining credit for five years, and was required to send notices to this effect to two credit-reporting agencies and to the Ontario Lottery and Gaming Corporation. In addition, the bankrupt was required to undergo at least six sessions of gambling counselling, which must meet the trustee's satisfaction. His discharge was suspended for a year, concurrent to the above conditions being met.

Opposition to bankrupt's discharge by the trustee and the OSB
Court/ OSB No.: 31-1203267

Background

While he was aware that he was in financial trouble, the debtor continued to use credit. He refinanced his house to buy out his wife's share of $25,000 when they separated; he applied for and obtained new credit cards; he relied on additional credit to make minimum monthly payments on credit cards; he used more than $40,000 of credit to pay for rent, gambling and other expenses of another individual; he obtained credit for more than $90,000 to fund his own gambling; he used credit to pay for the support and education of his daughter abroad; he used credit amounting to about $30,000 to pay for his daughter's wedding abroad and $8,000 to buy a car for his son. At the time of his bankruptcy, the debtor, now a bankrupt, had debts of $194,600 and assets of $5,750.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupt brought on, or contributed to, the bankruptcy by unjustifiable extravagance in living or by gambling.

Court decision

The Court ordered the bankrupt to pay the trustee $30,000 in instalments over a 69-month period. The Court further banned the bankrupt from obtaining any form of credit for two years and from gambling for five years. Concurrently, the Court suspended his discharge for six months. The Court required that a copy of the Court Order be provided to credit-reporting agencies (Trans Union and Equifax) and to the Ontario Lottery and Gaming Corporation.


2009

Background

Information provided by the bankrupt at the time of filing for bankruptcy with regard to a $200,000 second mortgage, registered against his property less than a year before filing for bankruptcy, was not accurate. Also, the bankrupt did not disclose that he had not received any funds in consideration of granting this mortgage. In addition, the trustee indicated that the bankrupt had been uncooperative regarding dealing with his property. The creditor opposing the discharge provided information to the Court showing that the bankrupt put the creditor to unnecessary expense as the creditor was taking steps to obtain payment. The bankrupt did not appear at the discharge hearing.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupt has put any creditors to unnecessary expense by a frivolous or vexatious defence.

Court decision

The Court found that the bankrupt was not only evasive and uncooperative but also disruptive and caused additional expense for creditors. The Court found that he had not rehabilitated himself and as a result of his conduct the Court refused his discharge.

Read the Court decision for 11-250339.


Opposition to bankrupt's discharge by the trustee and a creditor
Court/ OSB No.: 32-839458

Background

A second-time bankrupt closed his autobody shop business and became a tow-truck driver for his brother's company. His brother had taken over the bankrupt's autobody shop leases for equipment and the premises. The bankrupt did not disclose to the trustee his half ownership in the family home, nor did he identify as creditors the holders of three mortgages against it. He also did not report the entirety of his income. The bankrupt had served jail time and, with money borrowed from his brother, had paid $50,000 in restitution for fraudulently selling leased equipment worth $400,000. At the time of his application for discharge, the bankrupt had surplus income of $1,000 a month.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupt did not keep proper books and records for the business.
  • Bankrupt has been guilty of any fraud or fraudulent breach of trust.

Court decision

While the bankrupt argued that he had already been punished for his crimes, the Court responded that his bankruptcy was a separate issue. The Court refused to grant a discharge to the bankrupt. In addition, before he could reapply for discharge from bankruptcy, the bankrupt was required to either give his defrauded creditors information for recovering their equipment or pay 100 cents on the dollar for their proven claims. The Court further reminded the bankrupt of his ongoing surplus income obligation (payment of part of the surplus to be made to his bankruptcy file) while he remains undischarged.

Read the Court decision for 32-839458.

Opposition to bankrupt's discharge by the trustee and the OSB
Court/ OSB No.: 31-1142522

Background

The bankrupt increased his personal debt by $176,000 within 12 months of filing for bankruptcy, even though he knew he was in financial trouble. The bankrupt claimed that the credit was used to fund a business venture, which he could not prove. During the same period, the bankrupt obtained $32,000 of additional credit. The bankrupt was unable to provide any written documentation to support his claims for how these funds were spent. When he filed for bankruptcy, his business partner had disappeared and his total debt had reached more than $236,000. The bankrupt declared his total assets were less than $9,000, but failed to declare an interest in a property overseas and the disposition of a motor vehicle.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupt did not keep proper books and records for the business.
  • Bankrupt continued to borrow after becoming aware of being insolvent.
  • Bankrupt brought on, or contributed to, the bankruptcy by rash and hazardous speculations.

Court decision

The Court found the entire business scheme to be evidence of rash or hazardous speculation. The Court described the venture as "dubious" and "so beyond the reasonable as to verge on unbelievable." There was no documentary evidence to support claims relating to the business scheme. The bankrupt squandered huge sums of money in goods and cash. The Court determined that the bankrupt was completely irresponsible in his use of credit. The Court issued an order refusing the bankrupt's discharge and requiring the bankrupt to provide full details of his interest in his properties abroad.


2007

Background

The bankrupt, who testified he was addicted to gambling, bought a substantial amount of goods on credit, purportedly for the purpose of reselling the goods to raise cash to fund his gambling. He received payment for some of these goods in the form of cheques. Participating in a kiting scheme, the bankrupt used cheques to pay his credit-card account, withdrawing additional funds in the form of cash advances before the worthless cheques bounced. He contributed to his insolvency by gambling, which accounted for all of the $181,000 of debt he incurred.

The decision to oppose the bankrupt's discharge was based on a number of factsFootnote 1 including:

  • Bankrupt continued to borrow after becoming aware of being insolvent.
  • Bankrupt brought on, or contributed to, the bankruptcy by gambling.

Court decision

The Court found that the bankrupt was not unfortunate, having brought all of his financial troubles upon himself, with no real excuse. The Court ruled that gambling was the cause of his insolvency. The bankrupt was required to repay the trustee $41,600 within 20 months. He was banned from gambling and from applying for or using credit for five years. His discharge was suspended for three years, concurrent to the above-noted conditions.