SUPERIOR COURT OF JUSTICE - ONTARIO
RE: In the Matter of the Bankruptcy of Frances Josephine Buchalter
BEFORE: Associate Justice Rappos
COUNSEL: Frances Josephine Buchalter, self-represented bankrupt
Steve Welker, representative of the trustee in bankruptcy
Shirley Sollano, representative of the Office of the Superintendent of Bankruptcy
Jayne Clayton, self-represented creditor
HEARD: January 20, 2026 (via videoconference)
REASONS FOR DECISION
Introduction
[1] Frances Josephine Buchalter filed a voluntary assignment in bankruptcy. Steve Welker and Company Inc. is the Trustee in bankruptcy.
[2] As a result of a prior bankruptcy filing, the earliest Ms. Buchalter could have obtained her discharge would have been 24 months after her filing date.
[3] The Trustee filed a notice of objection, indicating that it opposed Ms. Buchalter obtaining her discharge for numerous reasons, including for her failure to report on assets she acquired and spent prior to her bankruptcy.
[4] The Office of the Superintendent in Bankruptcy (the “OSB”) filed a report with the Court, which sets out facts that the OSB asks the Court to consider at the discharge hearing.
[5] Ms. Buchalter asks that she receive her discharge from bankruptcy. The Trustee recommends that the Court refuse an absolute order of discharge. In the alternative, the Trustee recommends that the Court grant a conditional and suspended order of discharge, which requires Ms. Buchalter to pay at least $5,000 to the Trustee, and for her discharge to be suspended for two years.
[6] The OSB also suggests that a refusal for discharge is warranted in the circumstances.
Legal Principles
Objectives of the BIA
[7] The two main purposes of the Bankruptcy and Insolvency Act (the “BIA”) are the equitable distribution of a bankrupt’s assets among her creditors and the bankrupt’s financial rehabilitation.[1] A bankrupt’s financial rehabilitation involves allowing an “honest but unfortunate debtor” to obtain a discharge of her debts and have a “fresh start”, free of debt.[2]
[8] Through discharge, the “honest but unfortunate debtor” is provided “with relief from the weight of oppressive indebtedness”, and a discharged bankrupt is allowed to “reintegrate into economic life so he or she can become a productive member of society”.[3]
[9] Other objectives of the bankruptcy system include preserving and maximizing the value of a debtor’s assets and protecting the public interest.[4]
[10] Bankruptcy is not a process to be used by a debtor to avoid her responsibilities to the maximum extent that she is able to do so. Bankruptcy can become an abuse if a debtor can go into bankruptcy as a convenient means of evading payment of just obligations that she has incurred and obtain a discharge without difficulty.[5]
Options Available to the Court
[11] Section 172 of the BIA addresses the discharge of a bankrupt. Subsection 172(1) provides that at the hearing of a discharge application, the court may:
(a) grant or refuse an absolute discharge;
(b) suspend the operation of an absolute discharge for a specified time; or
(c) grant an order of discharge subject to any terms or conditions with respect to any earnings or income that may afterwards become due to the bankrupt or with respect to the bankrupt’s after-acquired property.
[12] However, subsection 172(2) provides that the Court shall, on proof of any of the facts referred to in section 173 of the BIA:
(a) refuse the discharge of a bankrupt;
(b) suspend the discharge of such period as the court thinks proper; or
(c) require the bankrupt, as a condition of his discharge, to perform such acts, pay such moneys, consent to such judgments or comply with such other terms as the court may direct.
[13] As recently noted by the Supreme Court of Canada in Poonian v. British Columbia (Securities Commission), the BIA provides no guidance for the exercise of the Court’s broad discretion, aside from the impact of subsection 172(2).[6]
[14] In exercising the discretion, the Court is to consider three factors: the interests of the creditors in obtaining payment of their claims, the interests of the bankrupt in obtaining relief from her obligations, and the integrity of the bankruptcy process.[7]
[15] Section 173(1) of the BIA sets out 15 facts for which discharge may be refused, suspended or granted conditionally. Proof of the facts may be given orally under oath, by affidavit or otherwise.[8]
[16] Many of the facts under subsection 173(1) bear directly on the bankrupt’s conduct and culpability, while others reflect standards of commercial morality.[9]
[17] Once a fact under section 173 has been proven, the Court no longer has the discretion to grant an absolute order of discharge.[10]
[18] A discharge from bankruptcy is not a matter of right, and discharge is highly discretionary.[11] In exercising its discretion, the court must carefully look at the causes of the bankruptcy.
Analysis – Section 173 Facts
Subsection 173(1)(a)
[19] Subsection 173(1)(a) provides that a fact for section 172 exists when 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.
[20] In the Statement of Affairs dated June 7, 2023 and sworn to be true by Ms. Buchalter, she listed assets totaling $33,663.83, all of which are claimed to be exempt from the bankruptcy proceeding. Ms. Buchalter identified unsecured claims totaling $117,486.42, with the largest amounts owed to TD Canada Trust ($45,000), National Bank ($26,500), RBC ($17,500) and CRA ($15,006.04). Ms. Buchalter listed the reason for her financial difficulties as “financial mismanagement”.
[21] The Trustee has reported in its claims register that as of June 25, 2025, there were proven unsecured claims totaling $136,994.26. The Trustee has also reported in its estate general ledger report that as of June 25, 2025, it had recovered $30,254.03.
[22] There has been no argument made to the Court that Ms. Buchalter cannot justly be held responsible for this situation. To the contrary, in the report of the Official Receiver with respect to the examination of Ms. Buchalter held on February 7, 2024, Ms. Buchalter was asked about the amounts owed to National Bank, TD Canada Trust, and RBC, and her response was that they were credit accounts used for living expenses and to purchase gifts.
[23] Based on the foregoing, I find that there is a proven fact under subsection 173(1)(a).
Subsection 173(1)(e)
[24] Subsection 173(1)(e) provides that a fact for section 172 exists when 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.
[25] The Trustee says that Ms. Buchalter contributed to her bankruptcy by unjustifiable extravagance in living. The Trustee notes that on November 28, 2022, just over six months prior to Ms. Buchalter filing for bankruptcy, she spent a total of $15,358.96 at the Apple Store. During her examination by the Official Receiver from the OSB, Ms. Buchalter confirmed that she purchased four cell phones and four iPads as Christmas presents for her grandchildren who live in Europe. Ms. Buchalter stated during her examination that she was very generous to her grandchildren.
[26] Ms. Buchalter confirmed during her examination that she had retired in April 2022, and that she was receiving OAS and CPP prior to her bankruptcy filing. Ms. Buchalter also confirmed that she separated from her husband in July 2022, which was a primary motivator to file for bankruptcy.
[27] The Trustee also reported in its Supplementary Report dated August 19, 2025 that, in addition to the Apple products purchased on her RBC Visa card: (a) between December 17, 2022 and February 12, 2023, she made additional Apple Store purchases on different credit cards totaling $5,751; (b) between October 21 and November 1, 2022, she did cash withdrawals from her National Bank credit card totaling $7,025; and (c) between June 21 and August 10, 2022, she made payments from credit cards to PayPal totaling $5,945.
[28] I am satisfied that Ms. Buchalter contributed, at least in part, to her bankruptcy by unjustifiable extravagance in living through purchasing expensive gifts at a time when she was not working and in the midst of a separation from her spouse.
[29] Based on the foregoing, I find that there is a proven fact under subsection 173(1)(e).
Subsection 173(1)(j)
[30] Subsection 173(1)(j) provides that a fact for section 172 occurs if the bankrupt has on any previous occasion been bankrupt or made a proposal to creditors.
[31] Ms. Buchalter previously filed for bankruptcy on February 13, 1992 and received her discharge on November 25, 1992.
[32] Based on the foregoing, I find that there is a proven fact under subsection 173(1)(j).
Subsections 173(1)(l) and (o)
[33] Subsection 173(1)(l) provides that a fact for section 172 exists when the bankrupt has committed any offence under the BIA or any other statute in connection with the bankrupt’s property, the bankruptcy or the proceedings thereunder.
[34] Subsection 173(1)(o) provides that a fact for section 172 exists when the bankrupt has failed to perform the duties imposed on her under the BIA or to comply with any order of the court.
[35] The Trustee is of the view that Ms. Buchalter failed to perform her duties as a bankrupt. Section 158(e) requires a bankrupt to make or give all the assistance within her power to the trustee in making an inventory of her assets. Section 158(f) of the BIA requires the bankrupt to disclose to the trustee all property disposed of within one year before the date of the initial bankruptcy event and end on the date of the bankruptcy, and how and to whom and for what consideration any part thereof was disposed of.
[36] On her Statement of Affairs, Ms. Buchalter disclosed that she only had $500 worth of furniture, $500 worth of clothing, and a life income fund of $32,663.83. When specifically asked whether she had sold or disposed of any of her property within 12 months or five years prior to the date of the initial bankruptcy event, Ms. Buchalter answered “No”.
[37] However, during her examination, Ms. Buchalter confirmed that following her separation with her spouse in July 2022, they sold their martial property located in Burlington. The OSB verified that the property was sold in September 15, 2022, which is less than 12 months prior to the filing of the assignment in bankruptcy.
[38] The Trustee has reported to the Court in its Supplementary Report that Ms. Buchalter had received $334,564 in proceeds from the sale of the property in September 2022. Ms. Buchalter has produced bank statements that confirmed these funds being deposited into her account on September 15, 2022. The bank statement also showed that Ms. Buchalter received $9,278.25 on September 21, 2022 as a “refund from real estate”.
[39] In terms of the use of the funds, Ms. Buchalter claims that she was the subject of a romance scam by an individual named “James H”. The bank records show that she made numerous cash withdrawals totaling approximately $301,000, which she says she transferred to this individual.
[40] In an e-mail sent by Ms. Buchalter to the Trustee dated August 15, 2025, she says that when filing for bankruptcy, she was not asked about the type of residence she had prior to bankruptcy, nor did she understand that she had to disclose it.
[41] In a written submission from Ms. Buchalter dated December 15, 2025, she explained that she met “James Herbert” on Instagram, that she understood he was a doctor building a hospital and fourplex in Spain, and she was convinced to invest by sending funds to a company called Alcadecor Construction. Ms. Buchalter said the transfers were made using bitcoin, and she has no records of the bitcoin purchases.
[42] In addition to the issue of Ms. Buchalter’s failure to inform the Trustee of the sale of the property, it was discovered that Ms. Buchalter also failed to inform the Trustee when she filed for bankruptcy that she was expecting an equalization payment from her former spouse. She only disclosed this to the Trustee on December 7, 2023.
[43] The Trustee reports that Ms. Buchalter failed to provide the name of her lawyer when asked by the Trustee, and that it was through the Trustee’s efforts that it was able to contact Ms. Buchalter’s former spouse, get the name of Ms. Buchalter’s lawyer, and eventually receive payment of $25,000 in equalization from Ms. Buchalter’s former spouse.
[44] Ms. Buchalter’s position is that she advised the Trustee about the equalization payment when she learned that she had to disclose it to the Trustee.
[45] Ms. Buchalter also failed to disclose to the Trustee when she filed her assignment that she withdrew $160,834 from her pension/superannuation account in 2021, and that she apparently transferred a total of $107,381.81 to fraudsters between September 7 and December 9, 2021. This is a different fraud than the one noted above that took place in September 2022.
[46] Ms. Buchalter has indicated in her written submissions that she thought she sent $44,521.24 to a friend of her daughter’s. These funds were never received by her daughter. Ms. Buchalter also transferred $62,860.57 to various beneficiaries as a result of a scam executed by an “Andrew Destafano”.
[47] This withdrawal, although it was outside of the 12-month period provided for in section 158(f) of the BIA, was still to be included in her Statement of Affairs, as the prescribed Form 79 required Ms. Buchalter to disclose any prior sold, disposed or transferred property within five years of filing for bankruptcy. By not disclosing it in her Statement of Affairs, Ms. Buchalter failed to properly complete and verify by affidavit her statement as required by subsection 158(d) of the BIA.
[48] With respect to this fraud, Ms. Buchalter wrote a letter to TD Bank dated April 1, 2022 stating that she authorized wire transfers to a person using a false identity (Andrew Destanfo), and that she reported the incident to the police. The Trustee and the OSB have been unable to obtain a copy of any police report. Ms. Buchalter does not have a copy of any such report.
[49] The Trustee also says that Ms. Buchalter’s conduct in not making full and truthful disclosure on her Statement of Affairs and during her examination with the Official Receiver is a bankruptcy offence under subsection 198(b) (refuses or neglects to answer fully and truthfully all proper questions put to the bankrupt at any examination held pursuant to the BIA), subsection 198(1)(c) (any bankrupt who makes a false entry or knowingly makes a material omission in a statement or accounting) and subsection 198(2) (a bankrupt who, without reasonable cause, fails to do any of the things required of the bankrupt under section 158).
[50] Based on the foregoing, I find that there are proven facts under subsection 173(1)(1) and (o) of the BIA as a result of Ms. Buchalter’s disclosure failures.
Analysis - Discharge
[51] As a result of the findings of the existence of facts under subsection 173(1), section 172(2) of the BIA provides that Ms. Buchalter is no longer entitled to an absolute discharge. The Court may now only refuse to grant Ms. Buchalter her discharge, suspend her discharge for such a period as the Court thinks is proper, or require Ms. Buchalter, as a condition of her discharge, to perform such acts, pay such moneys, or comply with such other terms as the Court may direct.
[52] In its Supplementary Report, the Trustee recommended that the Court suspend Ms. Buchalter’s discharge for 24 months and make obtaining her discharge conditional on her paying $5,000 to the Trustee and providing evidence that she is compliant with her post-bankruptcy tax obligations.
[53] In the Trustee’s Second Supplementary Report dated January 6, 2026, the Trustee recommended a refusal of discharge. The OSB suggested to the Court that a refusal of discharge is appropriate in this case.
[54] With respect to discharge refusals, in Industrial Acceptance Corp. v. Lalonde, the Supreme Court of Canada held that “the penalty involved in the absolute refusal of discharge ought to be imposed only in cases where the conduct of the debtor has been particularly reprehensible, or in what have been described as extreme cases.”[12]
[55] As noted by the learned authors of Bankruptcy and Insolvency Law of Canada, 4th edition, the “refusal of a discharge is such a severe penalty that it should be reserved for extreme cases where the court believes that the bankrupt is incapable of rehabilitation”.[13]
[56] I have carefully reviewed the Trustee’s reports, the OSB’s report and questionnaire from the Official Receiver examination, and Ms. Buchalter’s written statements regarding her conduct, and heard the parties’ oral submissions.
[57] While I do find that Ms. Buchalter failed to complete her bankruptcy duties and provided inconsistent answers to the Trustee and the OSB, I do not believe that such actions were intentionally committed by Ms. Buchalter to obfuscate and evade responsibility.
[58] It appears that Ms. Buchalter was unfortunately the victim of multiple online scams in a 12-month period that resulted in her losing over $400,000 of assets from her pension and house. There is little to no documentation that Ms. Buchalter can produce to support her version of the fraud outside of the bank records that show the cash transfers or withdrawals that she made to be transferred to the fraudsters.
[59] Ms. Buchalter should have disclosed these situations to the Trustee when she filed for bankruptcy. I do believe that she was careless in failing to disclose the matters to the Trustee. However, I accept Ms. Buchalter’s evidence that she did so because she did not appreciate she had to disclose them, and that she was embarrassed at being the victim of multiple frauds that almost entirely wiped out her life savings.
[60] I have taken into account that Ms. Buchalter was 74 years old at the time she filed for bankruptcy. She is now 77 years old. She is retired and has not worked since 2021. Ms. Buchalter receives monthly pension income of $2,162, of which she pays $1,000 in rent. Her total income in 2024 was $25,976 according to her notice of assessment.
[61] While Ms. Buchalter has a prior bankruptcy, it was filed more than 30 years prior to the current bankruptcy. I do not believe that Ms. Buchalter has in any way abused the bankruptcy system by taking recourse to it twice over a 30-year period.
[62] In reviewing Ms. Buchalter’s finances, I do not believe she has the means to make any payments to the bankruptcy estate as a condition of discharge. Even a modest amount of $2,500 would likely take her multiple years to repay.
[63] I have also taken into account that, while Ms. Buchalter must accept some responsibility for the fact that she paid over $400,000 to fraudsters when those funds could have been used to repay her creditors in full, she is still a victim and has lost her entire savings and assets. There is nothing in the evidence to suggest that Ms. Buchalter has been untruthful to the Court as to what happened with her money, or that Ms. Buchalter has perpetrated a situation where she has put her assets out of the reach of her creditors. While it would have been preferable for there to have been more documents that detail what transpired, I do not believe that the lack of such documents is detrimental.
[64] I also take judicial notice of the fact that, as reported by the Government of Canada, “Fraud is the number one crime against older Canadians. Though people of all ages can be victims of fraud, older people get targeted more than others.”[14] The City of Toronto has made a similar statement: “Fraud is the number one crime against older Canadians… People who think they may have been a target of fraud or a scam should not feel embarrassed or ashamed. Instead, they should report it and get help.”[15]
[65] In considering the interests of her creditors, I note that Ms. Buchalter currently lives with Jayne Clayton, who is her second largest creditor. She has lived with Ms. Clayton since December 2023. Ms. Clayton has a proven unsecured claim of $37,107.94, which makes up approximately 27.1% of all proven claims. Ms. Clayton has provided support to Ms. Buchalter both before and after her bankruptcy filing.
[66] TD Canada Trust is owed $46,274.80 for a line of credit and Visa, National Bank is owed $26,455.21 for a MasterCard, and RBC is owed $17,738.69 for a Visa. None of these creditors have opposed Ms. Buchalter’s discharge.
[67] In considering all of the circumstances, I am of the view that a refusal of discharge is not an appropriate resolution. I am satisfied that any issue with Ms. Buchalter’s disclosure to the Trustee resulted from carelessness, lack of knowledge, and shame regarding the situation she has created by falling prey to multiple fraudsters. I do not see her behaviour to be intentional lack of cooperation and disregard for her responsibilities as a bankrupt that would constitute the type of extreme behaviour that necessitates a refusal of discharge.
[68] With respect to a proposed suspension, I believe a 22-month suspension is warranted in the circumstances. Ms. Buchalter is a repeat bankrupt and, while it happened through carelessness, she did fail to fully report her assets to the Trustee and provide information to the Trustee regarding her separation process. Protecting the integrity of the bankruptcy process is an important consideration on discharge, as bankrupts must know that they are to carefully complete all their bankruptcy duties.
[69] With a 22-month suspension to June 25, 2028, Ms. Buchalter will receive her discharge approximately five years after filing for bankruptcy. Given the existence of the facts under section 173 established above, I believe that this is an appropriate amount of time for an individual in the circumstances faced by Ms. Buchalter and detailed above to be an undischarged bankrupt.
Disposition
[70] For the reasons set out above, Ms. Buchalter shall be discharged from bankruptcy on June 25, 2028 upon completion of her 22-month suspension.
___________________________
Associate Justice Rappos
DATE: August 25, 2026
1Piekut v. Canada (National Revenue), 2025 SCC 13, para. 26.
2Ibid.
3Poonian v. British Columbia (Securities Commission), 2024 SCC 28, para. 21, citing Alberta (Attorney General) v. Moloney, 2015 SCC 51, paras. 36 and 77.
4Aquino v. Bondfield Construction Co., 2024 SCC 31, para. 36.
5Bankruptcy and Insolvency Law of Canada, 4th Edition, The Honourable Mr. Justice Lloyd W. Houlden, Mr. Justice Geoffrey B. Morawetz, Dr. Janis P. Sarra (Thomson Reuters: Westlaw Edge Canada), §7:69. Discharge Generally—General Principles.
6Supra note 3, para. 23.
7Ibid., para. 24.
8Subsection 172(2) of the BIA.
9Supra note 3, para. 23.
10Alan Saskin, 2025 ONSC 2501, para. 51.
11Nagy v. Canada (National Revenue), 2010 SKQB 124, para. 40.
12Industrial Acceptance Corp. v. Lalonde, 1952 CanLII 2 (SCC), [1952] 2 S.C.R. 109, para. 34.
13Supra note 5, §7:109 Discharge Refused – Generally.
14Government of Canada Website: https://www.canada.ca/en/employment-social-development/corporate/seniors-forum-federal-provincial-territorial/fraud-scams.html
15City of Toronto Website: https://www.toronto.ca/community-people/children-parenting/seniors-services/legal-support-elder-abuse/