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December 2018

Bankrupt faces resurrected mortgage debts following discharge

The bankruptcy process is generally considered a means for a person facing an overwhelming debt burden to obtain a "fresh start" through the release of their debts upon discharge from bankruptcy. The Bankruptcy and Insolvency Act prescribes a number of exceptions to that principle, and a recent decision out of Alberta serves as a stark reminder that a bankrupt's conduct can also cause a debt to survive bankruptcy, or even be revived.

CRA deemed trusts for GST/HST and bankruptcy

The Supreme Court of Canada in Callidus Capital Corp. v Canada, 2018 SCC 47, recently held that the dissent ruling of Pelletier J.A. of the Federal Court of Appeal in Canada v Callidus Capital Corporation, 2017 CAF 162, was the correct interpretation of s. 222(3) of the Excise Tax Act, R.S.C. 1985, c. C-36 confirming that CRA loses its right to priority payment over all creditors, even secured creditors, for unremitted GST and HST when the debtor becomes bankrupt.

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