A creditor applied for bankruptcy orders against an individual debtor and his corporation arising from an unpaid arbitration award exceeding $465,000.
The respondents objected and argued that the creditor was attempting to seize control of a separate civil action they had commenced against a lawyer.
The court considered the requirements under ss. 42(1)(j) and 43(1) of the Bankruptcy and Insolvency Act and the principles governing acts of bankruptcy where a debtor fails to meet liabilities as they become due.
Despite the existence of only one known creditor, the court found special circumstances, including the large unpaid judgment outstanding for several years and the creditor’s unsuccessful collection efforts.
The court concluded that the debtors had ceased to meet their liabilities generally as they became due and granted the requested bankruptcy orders.
