Superior Court of Justice – Ontario (Commercial List)

Court File No.: BK-16-02117602-0031
Date: 2025-04-25

Re: In the Matter of the Bankruptcy of Alan Saskin, of the City of Toronto, in the Province of Ontario

Before: W.D. Black

Counsel:

• Colby Linthwaite, Counsel for the Debtor Alan Saskin
• Kevin D. Sherkin, Counsel for the Creditor Dolvin Mechanical Contractors and Speedy Electrical Contractors Ltd.
• Emilio Bisceglia and R. Battista Frino, Counsel for the Creditor Alpa Stairs and Railings Inc.
• Neil Stuart Rabinovitch, Counsel for the Creditor Guy Gissin
• Robert Drake, Counsel for the Trustee, Fuller Landau Group Inc.
• Edward Park, Counsel for Canada Revenue Agency

Heard: April 8 and 9, 2025

Endorsement

Overview

[1] The bankrupt, Alan Saskin (the “Bankrupt”), appeals from the decision and order of Ilchenko AJ, sitting as Registrar in Bankruptcy, dated June 17, 2024 (the “Decision”).

[2] Associate Justice Ilchenko found evidence before him proving facts under subsections 173(1)(a) and 173(1)(o) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (the “BIA”), as a result of which he refused to order an absolute discharge of the Bankrupt from Bankruptcy, instead imposing conditions on that discharge.

[3] Specifically, Ilchenko AJ imposed a primary condition that the Bankrupt is required, as a condition of discharge, to pay $960,000.00 to the trustee in bankruptcy (as well as ordering other non-financial conditions, mostly mandating provision by the Bankrupt of additional information and documents to the trustee).

[4] The Bankrupt alleges that in the Decision, Ilchenko AJ denied the Bankrupt procedural fairness guaranteed “by statute and by equity,” arguing that certain factual assertions and legal arguments found by His Honour to be dispositive of key issues were “not contested during the very lengthy trial of the discharge application.”

[5] The Bankrupt also argues that Ilchenko AJ erred in law in various respects, including by allegedly insisting that an individual taking on unsecured debt (for the purposes of the analysis of s. 173(1)(a) of the BIA), must have “exigible assets” sufficient to satisfy the debt, and by finding that a bankrupt must report gifts as income on forms filed with the trustee.

[6] With respect to Ilchenko AJ’s other significant set of findings, of evidence proving, for purposes of s. 173(1)(o), that the “bankrupt has failed to perform the duties imposed on the bankrupt under [the BIA],” the Bankrupt argues that, because the Trustee’s report pursuant to s. 170 of the BIA stated that the Bankrupt had complied with his duties, and because the Trustee repeated that concession in closing submissions, the Opposing Creditors were obliged to prove the facts required for s.173(1)(o), and failed to do so.

“True Appeal” and Standard(s) of Review

[7] The parties agree, and I proceed on the basis, that this is a “true appeal” (as opposed to a hearing de novo) and that the applicable standard of review is that all findings of fact made by Ilchenko AJ deserve deference subject only to palpable and overriding error. With respect to questions of law and matters of principle the standard is correctness. Questions of mixed fact and law are reviewed against a spectrum, along which at one end the “palpable and overriding” standard applies to questions that primarily involved fact-finding or the making of factual inferences, and at the other end, where there is an alleged error in characterizing or considering the proper legal standard to be applied, the standard of review approaches correctness.

The Decision, Procedural Context, and Issues Raised by the Bankrupt

[8] As noted, the hearing from which the Decision comes was a lengthy one. While originally booked for three days, it ended up spanning three weeks of evidence and argument, spread out over the course of many months.

[9] It is also worth noting that before the trial giving rise to the Decision, Ilchenko AJ had case-managed this proceeding over the course of about two years.

[10] The Decision is lengthy and detailed. The main body of the endorsement comprises 631 paragraphs over 187 pages, and His Honour also attached a number of appendices dealing with various of the topics canvassed in the Decision. By any measure the Decision is thoroughgoing and comprehensive.

[11] Apart from reviewing the various case-management steps taken leading up to the trial, His Honour (as the Trustee fairly puts it in its factum), “meticulously recorded the…evidentiary issues, submissions of the various parties and factual findings necessary to come to his decision.” In addition, again as fairly set out in the Trustee’s factum, the Decision “features a carefully reasoned treatise on discharge hearings, citing seven different pieces of legislation, and 166 different cases.”

[12] Notwithstanding the length and breadth of the Decision, the Bankrupt argues that the trial by and large dealt with issues other than the issues on which the Decision turned. That is, the Bankrupt maintains that most of the evidence tendered before Ilchenko AJ related to the suspicion and insistence by the creditors Alpa Stairs and Railing Inc. (“Alpa”), Guy Gissin in his capacity as Israeli Court-appointed functionary office and foreign representative of Urbancorp Inc. (“Gissin”), Speedy Electrical Contractors Ltd. (“Speedy”), Dolvin Mechanical Contractors Ltd. (“Dolvin”), Franline Investments Limited (“Franline”), and Downing Street Financial Inc. (“Downing”), and to an extent His Majesty the King in Right of Canada as represented by the Minister of National Revenue (“CRA”) (collectively the “Opposed Creditors”), that the Bankrupt had not properly or persuasively accounted for assets that the Opposed Creditors would have expected the Bankrupt to possess. This expectation was tethered to the Bankrupt’s ostensible wealth and profile as the principal of the large real estate development enterprise comprising many entities operating under the Urbancorp banner (collectively “Urbancorp” or from time to time the “Urbancorp Group”).

[13] More particularly, and by way of illustrative example, the Bankrupt’s bank accounts over the five years pre-dating the proposal proceedings, from January 2011 to April 2016, showed incoming funds totaling $5,688,203.71. They also showed largely offsetting outgoing payments, such that in the result, the Bankrupt was, in relative terms, not wealthy in his personal capacity. The Opposing Creditors in particular alleged and emphasized that the Bankrupt had orchestrated an intentional strategy to create this appearance that he had few personal assets.

[14] In other words, the Opposing Creditors harboured a suspicion that the Bankrupt was hiding assets, and they spent considerable time at trial advancing, pursuing and exploring that theory.

[15] As a result of the focus of the trial on those issues, which the Bankrupt points out did not uncover any hidden assets and was thus not only time-consuming but unsuccessful, the Bankrupt argues that little or no attention was paid at trial to the evidence leading to the key findings by Ilchenko AJ, such that the Bankrupt has no opportunity to address that particular evidence, and was thus unfairly blindsided by His Honour’s findings.

[16] The Bankrupt argues that, with respect to Ilchenko AJ’s findings proving facts under section 173(1)(a) of the BIA, while it was clear and is conceded that the Bankrupt’s assets were not of a value equal to 50 cents on the dollar on the amount of his unsecured liabilities (the first requirement under s. 173(1)(a)), the real issue for the court was, for purposes of the remaining language of s. 173(1)(a), whether that fact arose out of “circumstances for which the bankrupt cannot justly be held responsible.”

[17] The Bankrupt argues that this standard is “ultimately, a moral one.” To that end it relies on the decision of DM Brown J. (as he then was) in Michael Katz (Re), 2013 ONSC 7426, para 44, where His Honour said:

“The jurisprudence under BIA s. 173(1)(a) generally holds that for a bankrupt to be held responsible for his assets being less than 50 cents on the dollar of his unsecured debt there must be some element of culpability or blameworthiness, some recklessness or blind disregard by the bankrupt for his own financial well-being. Financial imprudence or incompetence usually do not rise to that level.”

[18] The Trustee emphasized in argument that the overall context here is instructive and critical.

[19] Mr. Drake for the Trustee pointed out that Urbancorp filed for CCAA protection in April of 2016.

[20] Mr. Saskin provided a Notice of Intention under the BIA around that time, and then put forward a “holding proposal” (in respect of which no vote was taken).

[21] In July of 2019, in response to a motion from Gissin, Mr. Saskin assigned himself into bankruptcy. At that point the Trustee, which had been the proposal trustee, became the bankruptcy trustee.

[22] At a point not long thereafter, the Bankrupt requested an unconditional discharge.

[23] The Trustee opposed that request on the basis of s. 173(1)(a), and the case was assigned to Ilchenko AJ for case management. As noted above, the case management portion of the proceeding spanned over two years after commencing in 2019, culminating eventually in the discharge hearing (also referred to herein from time to time as the “trial”) from which this appeal is taken. The Opposing Creditors also objected to an absolute discharge during that timeframe, as did the CRA, and these parties too were involved in the case management exercise.

[24] In parallel with these proceedings, the CCAA proceedings in relation to certain of the Urbancorp entities were ongoing. In 2021, Morawetz CJC made a bankruptcy order relative to Urbancorp Management Inc, (Urbancorp, 2021 ONSC 3593), and subsequently at least one other Urbancorp entity, Urbancorp Toronto Management Inc., was also assigned into bankruptcy.

[25] Also of note is that Registrar Jean AJ granted an order in this Bankruptcy estate dated December 14, 2020, allowing Alpa to commence proceedings under s. 38 of the BIA with a view to reversing certain alleged transactions entered into by the Bankrupt, including relating to a condominium and a wine collection involving the Bankrupt’s spouse Doreen and other family members. Others among the Opposing Creditors later joined in that s.38 proceeding.

[26] All by way of illustrating that the various proceedings in relation to Urbancorp, including the matter at hand, were complex and multifarious, and involved considerable attention to the activities and assets of the Bankrupt (and of Urbancorp). I do not propose to review the parallel proceedings or the other related proceedings in particular detail; the point is that issues with respect to the role of the Bankrupt in spawning the bankruptcy, and his level of cooperation in terms of disclosure of assets and details of the family trust constructs within which it appears many of the assets were placed, were the subject of significant scrutiny and ongoing procedural gambits. Associate Justice Ilchenko discusses these various proceedings in some of the early paragraphs of the Decision.

[27] By way of further important context, in the lead-up to the discharge hearing, in December of 2022, in keeping with a direction from Ilchenko AJ in the case management phase, the Trustee submitted three reports to comprise the Trustee’s evidence‑in‑chief, expressing opposition to an absolute discharge.

[28] The Associate Justice’s additional direction in that regard, issued in advance of three days that had (very optimistically as it turned out) been set aside for the discharge hearing, said:

“In order that the Bankrupt knows what case he is to meet, and provide responding evidence on his discharge:

(1) All Affidavits of all Opposing Creditors detailing their grounds of opposition, and the evidence in support of those grounds to be served and filed by January 6, 2023;

(2) Bankrupt to serve and file the Bankrupt’s affidavit by January 13, 2023;

To be clear, these materials shall form the evidence in chief for the Bankrupt’s Discharge for the Creditor witnesses and the Bankrupt. The witnesses will be subject to Cross-Examination at the hearing and redirect, but there will be no more in-Chief evidence, in order that the hearing can be completed in three days.”

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Final Conclusion

[131] In conclusion, I find no factual or legal error in the Decision, and I dismiss this appeal.

W.D. Black

Date: April 25, 2025