Do Securities Commission Debts Survive a Bankruptcy Discharge? An Analysis of Poonian v. British Columbia (Securities Commission) (BCCA)

The Bankruptcy and Insolvency Act1 (“BIA”) allows certain debts to be discharged at the end of the bankruptcy process.2 This discharge achieves one of the BIA’s objectives by offering individual debtors a “fresh start” to rehabilitate and become productive members of society.3 However, the fresh start is not an absolute right. Parliament has enacted a series of exceptions to the discharge in section 178(1) of the BIA. As a counterweight to the fresh start principle, these exceptions ensure that debtors who engage in certain wrongful conduct do not benefit from the protections afforded by the bankruptcy regime. Interpreting these exceptions can be challenging, however, as a proper interpretation must necessarily balance the fresh start principle with creditors’ rights in order to maintain confidence in the credit system.4 This case comment considers an important relationship between the BIA objectives and provincial securities law.5 In Poonian v. British Columbia (Securities Commission),6 (“Poonian”) the British Columbia Securities Commission had obtained multimillion dollar disgorgement orders and ordered administrative penalties against the bankrupts, the Poonians, for their market manipulation. The British Columbia Court of Appeal determined that these debts survived a bankruptcy discharge under the section 178(1)(e) exception, which provides that an order of a discharge does not release the bankrupt from “any debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation….”.7 A similar issue arose in Alberta Securities Commission v. Hennig,8 (“Hennig”) but the Alberta Court of Appeal reached the opposite result; it discharged the debt to the Commission after emphasizing the rehabilitation function of bankruptcy.9 Leave to appeal the Poonian decision has been granted.10 Given the divergent decisions at the provincial courts of appeal on the section 178(1)(e) exception to the bankruptcy discharge,11 this is an area that could use some clarity from the Supreme Court of Canada12 though the authors of this paper argue that this matter is best resolved by Parliament in the form of a statutory amendment. This comment provides an overview of the Poonian case and discusses how the court expanded section 178(1)(e) in a way that it is inconsistent with prior case law

The Winding-Up and Restructuring Act: Realigning Insolvency Law’s Orphan to the Modern Insolvency Law Process

The Winding-Up and Restructuring Act (WURA) is an important pan of Canada\u27s insolvency law structure. Insolvent banks and insurance companies may only be liquidated under WURA and are excluded from the Bankruptcy and Insolvency Act (BIA) and the Companies\u27 Creditors Arrangement Act (CCAA). However, WURA has been neglected and many of its provisions reflect its nineteenth century origins. The most recent round of insolvency reforms in S.C. 2005, c. 47 and S.C. 2007, c. 36 do not make any substantive changes to WURA. BIA and CCAA have been modernized over time; WURA is the orphan of insolvency law reform. The article examines whether WURA should remain a distinct statute and if so, whether it should be limited to financial institutions. The article considers specific areas of reform in relation to pre-bankruptcy transactions, the role of inspectors, preferred claims and Crown priority

International Perspectives on Consumers\u27 Access to Justice (Cambridge: Cambridge University Press) 2003

Consumer protection law in the age of globalization poses new challenges for policy makers. This book provides an international perspective on consumer law and the difficulties encountered by consumers in search of practical remedies and solutions for defective products and services. Leading scholars outline the key problems faced by legislators in different countries seeking to adapt consumer laws to the global marketplace. Topics include standard form contracts; the legal challenges posed by mass infection (such as mad-cow disease and CJD); consumers and services; consumer bankruptcy law; and cross-border transactions. A consideration of consumers\u27 access to justice in an increasingly global marketplace Contributions by leading scholars in consumer law Includes three key essays offering insights on the broader theme of access to justice from socio-legal and economic perspectiv