Legal Blog

Bankruptcy Discharge Exceptions

Alberta Securities Commission v. Hennig 2021 Alta (CA)

A bankruptcy discharge normally discharges all debts, but there are exceptions under section 178(1) of the BIA. The Alberta Securities Commission concluded that the bankrupt had contravened Alberta securities laws, but never indicated that the bankrupt was fraudulent. It required payment of an administrative penalty and costs of the hearing. The court held that this order was not a penalty (for punishment) imposed by a court in respect of an offence; it was merely an administrative penalty to protect the public. Therefore ss. 1(a) did not apply. The court held that the bankrupt was not held to have obtained property or services by false pretences or fraudulent misrepresentation pursuant to ss.1(e) for 3 reasons: he was never held to have been fraudulent, there was no link between the debt and the alleged improper actions, and only the victim of fraudulent behaviour can claim the benefit of the subsection.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.