Associate Judge Alexander Ilchenko

A creditor applied to annul the consumer proposals of two undischarged bankrupts.

The debtors had filed the consumer proposals to escape opposed discharges, but failed to disclose significant real estate transactions and income to the administrator and creditors.

The court found that the debtors breached their duties of good faith and full disclosure under the Bankruptcy and Insolvency Act.

The court exercised its discretion to annul the consumer proposals.

In proposal proceedings under the Bankruptcy and Insolvency Act, the debtor brought concurrent expungement motions against proofs of claim filed by two former law firms.

The court held that the debtor failed to establish, on a balance of probabilities, that the trustee erred in admitting the unpaid appeal-fee claim of one firm or that the claim was not legitimate, and further held that s. 135(5) did not permit reopening paid accounts or ordering repayment beyond the amount of the proof of claim.

Applying insolvency expungement jurisprudence, solicitor’s account assessment principles, and the single proceeding model, the court found that the negligence allegations against the second firm raised complex unliquidated set-off issues more appropriately determined in the pending civil negligence action.

The expungement motion as to the first law firm was dismissed, while the motion as to the second was adjourned pending the civil action, with the trustee directed to retain the disputed amount.

The creditor successfully brought a motion under s. 69.4 of the Bankruptcy and Insolvency Act to lift the automatic stay to pursue fraud claims against the bankrupt.

The bankrupt opposed the motion for four years using delay tactics before consenting on the eve of the hearing.

The court awarded the creditor costs on a substantial indemnity scale, finding the bankrupt's conduct improper and unnecessarily lengthened the proceeding.

The bankrupt was ordered to pay $25,665.52 in costs, which the court noted would survive any discharge.

A creditor moved under s. 69.4 of the Bankruptcy and Insolvency Act to lift the automatic stay and continue a pre-bankruptcy civil action alleging fraud, misrepresentation, conversion, and breach of trust arising from a residential property renovation and resale venture.

The court held that a contingent creditor has standing to seek leave, that the pleaded facts met the low threshold for showing sound reasons to lift the stay, and that the action raised credibility-driven and complex issues unsuitable for summary determination within the bankruptcy process.

The court found material prejudice because the creditor would otherwise be deprived of discovery, viva voce evidence, and a forum to determine whether the alleged debt falls within s. 178(1)(d) and (e).

The stay was lifted to permit the action to continue against the bankrupt.

The court also held that the bankrupt's motion materials were improper and misleading, and determined that costs should be awarded on a substantial indemnity basis, with quantum to be fixed later.

The bankrupt brought a repeatedly shifting motion seeking directions, stays, disclosure, and litigation “guardrails” concerning estate litigation being prosecuted or assigned by the trustee in bankruptcy.

The court held that the bankrupt lacked standing under s. 37 of the Bankruptcy and Insolvency Act because he was not an aggrieved person, and also failed to qualify under s. 119(2) because he was not an interested person and had adduced no evidence of fraud or bad faith by inspectors.

The court further rejected the factual premise of the alleged conflict, finding no evidence of BIA “relatedness” and no basis to interfere with the trustee’s conduct of the Whitehorse Action or with case management orders made by a Superior Court judge.

The motion was dismissed with prejudice.

Because the bankrupt filed improper, late, AI-generated materials containing hallucinated or unreliable citations and made unfounded allegations against the trustee and inspectors, the trustee was awarded substantial indemnity costs of $12,366.72.

Appeal and cross-appeal arising from a bankruptcy trustee's proof of claim, the chair's rulings at the first meeting of creditors, and subsequent voting at a reconvened second meeting.

The court held that the chair erred in law by entirely preventing a creditor with an objected and allegedly non-arm's length claim from voting, because ss. 108(3) and 109(6) of the Bankruptcy and Insolvency Act require the vote to be taken subject to later invalidation or redetermination.

The court further held that filing the appeal did not automatically stay the effect of the vote or prohibit a second meeting under s. 115.1, but found that the second meeting nevertheless should not have been convened while the first appeal was pending.

The appeal was not moot, the second meeting resolutions were not nullities, and the court confirmed the uncontested resolutions nunc pro tunc while redetermining the contested vote to appoint the appellant trustee's representative as an inspector.

On a bankrupt’s opposed discharge arising almost entirely from family-law costs awards owed to the opposing parent, the court held that the bankruptcy had been used to avoid those judgment debts and that the bankrupt had failed to comply with core disclosure and co-operation duties under the Bankruptcy and Insolvency Act.

The court found facts proven under ss. 173(1)(a) and (o), relying on extensive prior family-law findings, contradictions in the bankrupt’s later affidavit evidence, nondisclosure of crowdfunding, gifts, and post-bankruptcy debts, and breaches of the statutory duty of good faith under s. 4.2.

Although the record could have supported outright refusal of discharge, the court concluded that a conditional discharge better balanced rehabilitation, creditor fairness, and the integrity of the insolvency system.

The bankrupt was ordered to pay 50% of proven claims through staged monthly payments and to satisfy additional tax, credit-card, reporting, and record-correction conditions before discharge.

The bankrupt sought to vary a prior order refusing discharge under section 187(5) of the Bankruptcy and Insolvency Act.

The bankrupt was deemed bankrupt on June 21, 2011, following rejection of a Division I proposal.

The cause of bankruptcy was the failure of True Blend Tobacco Company Inc., a company co-owned by the bankrupt.

The bankrupt had previously been bankrupt in 1994 from a failed restaurant franchise.

The discharge was refused in 2017 on multiple grounds including failure to cooperate with the trustee, failure to provide sufficient information regarding surplus income obligations, transfer of shares to his mother after bankruptcy without informing the trustee, and failure to maintain proper books and records.

The court dismissed the motion to vary, finding the bankrupt had not met the onus to establish fundamental changes in circumstances or new evidence of a substantial nature that would justify varying the refusal order.

The court found the bankrupt continued to demonstrate credibility issues, had incorporated a new corporation despite swearing he would not, and had failed to follow the roadmap set out for rehabilitation.

A discharge hearing in an ordinary administration bankruptcy where the bankrupt made an assignment on April 16, 2020.

The bankrupt had entered into an agreement of purchase and sale for a property for $1.4 million but failed to close the transaction, resulting in a claim by the vendor (Arista Homes) for damages of approximately $281,421.39.

The trustee and opposing creditor opposed the discharge on multiple grounds under section 173 of the Bankruptcy and Insolvency Act.

The court found facts proven under sections 173(1)(a), 173(1)(e), and 173(1)(o), relating to assets being less than 50 cents on the dollar, rash and hazardous speculation, and failure to perform duties under the BIA.

The court granted a conditional discharge requiring payment of 10% of proven claims and compliance with additional conditions.

Discharge hearing for a bankrupt real estate agent who filed for bankruptcy in October 2020 with significant debts including a substantial costs award from family law proceedings.

The Trustee opposed discharge on multiple grounds including failure to comply with surplus income obligations under section 68 of the Bankruptcy and Insolvency Act, failure to perform duties under the Act, and unjustifiable extravagance in living.

The bankrupt earned over $590,000 in gross income during the bankruptcy period but dissipated funds without remitting tax or HST installments.

The court found multiple section 173 facts proven and imposed a conditional discharge requiring payment of $40,000 plus 20% of proven claims, along with tax compliance conditions.

The creditors brought a motion to lift the automatic stay of proceedings under the Bankruptcy and Insolvency Act to continue a civil lawsuit against the debtor.

The underlying lawsuit involves claims of misrepresentation and breach of trust arising from home renovations.

The creditors also requested to add the proposal trustee as a defendant in the lawsuit.

The Court granted the motion to lift the stay, finding that the creditors would suffer material prejudice otherwise, but denied the request to add the trustee as a defendant.

The decision addresses a motion by landlords Juan Liu and Bobin Rui to lift the stay of proceedings under section 69.3(1) of the Bankruptcy and Insolvency Act (BIA) in respect of their tenant, Leanna Mae Snaith, who had filed for bankruptcy after eviction orders were made against her.

The court reviews the procedural history, including the Landlord and Tenant Board (LTB) orders, review and appeal proceedings, and the bankruptcy filing.

The court finds that the eviction order is not a "claim provable in bankruptcy" and thus not subject to the stay, or, in the alternative, that the stay should be lifted under section 69.4 of the BIA due to material prejudice to the landlords.

The court also provides guidance on the interaction between residential tenancy law and bankruptcy, and addresses costs.

This decision concerns an appeal by Zeifman Partners Inc., as Trustee in Bankruptcy of Oragin Foods Inc., from the disallowance by KPMG Inc., as Trustee in Bankruptcy of Organic Garage (Canada) Ltd., of a proof of claim for $6,760,280.89.

The claim was based on alleged intercompany loans and a note payable.

The court allowed the appeal in part, admitting the "Current Liability Component" ($2,917,423.11) as a proven unsecured claim, but dismissed the appeal regarding the "Long Term Liability Component" and "Note Payable Component" finding insufficient evidence that these were debts rather than equity contributions.

The decision provides a detailed analysis of the distinction between debt and equity in the context of related-party transactions in insolvency, and the applicable standards of review.

The moving creditors, Antoine Dwyane Small and Whayne Small, brought a motion under section 69.4 of the Bankruptcy and Insolvency Act to lift the automatic stay of proceedings.

They sought to continue their civil fraud action against the bankrupt, Richard Nicholson, in which they claimed damages of approximately $500,000 for fraud, misrepresentation, and breach of fiduciary duty.

The bankrupt opposed the motion, while the trustee did not oppose it.

The court granted the motion, lifting the stay to allow the fraud action to proceed, finding that the creditors would be materially prejudiced by a continued stay and that it was equitable to do so.

A motion by a first-time bankrupt to determine preliminary legal issues regarding his discharge under the Bankruptcy and Insolvency Act.

The bankrupt argued that section 168.1 provides for automatic discharge after nine months, and that section 169(1) does not operate as an application for discharge for first-time bankrupts.

He contended that when his discharge was opposed, the procedure should follow a different pathway than the standard discharge application procedure in sections 169-176, with the onus on the trustee and creditors to prove their opposition rather than on him to prove entitlement to discharge.

The court rejected these arguments and held that the standard discharge procedure applies to opposed automatic discharges.

The moving party creditor brought a motion to annul the consumer debtor's consumer proposal.

The creditor had failed to file a proof of claim within the statutory time periods, resulting in the proposal being deemed accepted and approved.

The creditor also commenced actions against the debtor and the administrator without obtaining leave of the court, breaching the stay of proceedings under the Bankruptcy and Insolvency Act.

However, the debtor was ineligible to file a consumer proposal because her aggregate debts, including the creditor's judgment, exceeded the $250,000 statutory limit.

Balancing the factors, including the debtor's ineligibility and the massive disparity between the proven claims and the creditor's claim, the court exercised its discretion to annul the consumer proposal, despite the creditor's misconduct.

The bankrupt applied for a discharge after being in bankruptcy for 17 years.

The discharge was opposed by the Trustee and several creditors, including the Canada Revenue Agency, on the basis of multiple facts under section 173 of the Bankruptcy and Insolvency Act.

The court found that the bankrupt had misappropriated over $9 million, spent the funds on an extravagant lifestyle, failed to account for the loss of assets, and breached his duties to report income and expenses.

The court also found the bankrupt breached the duty of good faith under section 4.2 of the BIA.

Concluding that the bankrupt was not an honest and unfortunate debtor, the court refused an absolute discharge and instead granted a conditional discharge requiring the bankrupt to pay $100,000 to the estate and fulfill all outstanding tax and reporting obligations.

The bankrupt applied for an absolute discharge from bankruptcy.

The discharge was opposed by the trustee and an opposing creditor (the bankrupt's brother) on the grounds that the bankrupt failed to disclose significant real property assets, acted as a straw borrower for her common-law spouse, obtained post-bankruptcy credit, and failed to fulfill her duties under the Bankruptcy and Insolvency Act.

The court found that the bankrupt was uncooperative, evasive, and untruthful, having engaged in a pattern of deceit regarding her income, assets, and liabilities.

Applying the principles from Giannotti, the court refused the discharge and imposed strict conditions before the bankrupt could re-apply in 24 months.

The bankrupt, a former real estate developer, sought an absolute discharge from bankruptcy.

The discharge was opposed by the Trustee, the Canada Revenue Agency, and several creditors, who argued that the bankrupt's assets were less than 50 cents on the dollar for reasons he could be held responsible for, and that he failed to perform his duties under the Bankruptcy and Insolvency Act.

The court found that the bankrupt had engaged in an asset protection strategy, incurred significant personal liabilities without the means to pay them, and failed to disclose his true post-bankruptcy lifestyle and use of a corporate credit card.

The court declined to refuse the discharge entirely but imposed a substantial conditional order requiring the bankrupt to pay $960,000 and fulfill various outstanding duties.

The moving party, a creditor, brought a motion to admit fresh evidence on its appeal from the trustee's disallowance of its proof of claim in a bankruptcy proceeding.

The trustee opposed the motion, arguing that the parties had previously agreed to limit the appeal record and that admitting the evidence would undermine the efficiency of the bankruptcy process.

The court found that no binding agreement precluded the evidence and that refusing to admit the newly discovered documents would result in an injustice to the creditor.

The court exercised its discretion to admit the fresh evidence, allowing the trustee to file responding documentation.