A recent decision by the Court of Appeal for Ontario illustrates some of the complications that can arise for debtors, creditors and trustees when bankruptcy proceeds alongside skyrocketing real estate prices.
September 1, 2015- Greg Gehlen presented "When Estates Collide," a paper on the interaction between insolvency and wills and trusts, to the CBA's Okanagan Wills and Trusts section, reprising a similar address he gave to the Vancouver Wills and Trusts section earlier in the year.
When an unincorporated business files for bankruptcy, the situation plays out in essentially the same way as a personal bankruptcy. Unlike a corporation in which an owner's personal assets are typically out of reach from creditors, bankruptcy involving a sole proprietorship or partnership puts an owner's personal property at risk for seizure and liquidation in order to satisfy outstanding debts. However, exceptions do exist.
Although designed with honest but unfortunate debtors in mind, Canada's bankruptcy regime is sometimes misused by those with less-than-honourable intent. While misconduct in bankruptcy rarely results in criminal charges, the activity of the Integrated Bankruptcy Enforcement Unit could mean that we may see an increased number of bankruptcy fraud cases detected and prosecuted in the coming years.