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Debt Survival of Bankruptcy

Posted on August 12, 2021 | Posted in Bankruptcy, Collections, Five Liners

M.O.S. MortgageOne Solutions Ltd. v. Heidary 2021 Ont SCJ

Mortgagee sued not only for the debt owed; it also raised a claim of fraud and pleaded that any judgment should survive a future bankruptcy. The defendant served a notice of intent to defend but never defended the action. Ultimately, the parties entered into a consent judgment for a monetary payment, but made no reference to the allegations of fraud or bankruptcy. The defendant then went bankrupt. The issue was whether the debt survived bankruptcy pursuant to section 178(1)(d) of the Bankruptcy and Insolvency Act. The judge held that, although one could not raise issues that were not raised in the statement of claim, a consent judgment to an action based on fraud or fraudulent misrepresentation was sufficient to fall within the section. Accordingly, the debt survived the bankruptcy.

 

Jonathan Speigel

 

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

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