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Creditor Claims and Remedies Archives

Trustee's disallowance of claim a reminder to creditors to take proofs of claims seriously

A recent decision of the Supreme Court of BC took issue with a bankruptcy trustee's investigation of a proof of claim, but also serves as a reminder that creditors need to take the proof of claim process seriously, particularly where there is any complexity to their claim, or else they risk unneeded cost and inconvenience.

Prepayment penalties in loan agreements

Loan agreements will often have fixed repayment terms. In some cases, it is in the lender's interest to delay the repayment of the loan, usually in order to take advantage of a high interest rate. In order to guarantee the payment of interest at the high rate for the whole of the projected term, the loan agreement may contain a prepayment provision. Under such provision, even though early payment may be allowed, the lender will be entitled to recover the amount of interest that would have otherwise been payable over the term of the loan.

Passive Participation in a Fraud can Still Result in Criminal Sanctions

One doesn't have to be the master mind of a fraud in order to face criminal charges and sanctions for it later. In the case of R. v Roberts, 2019 BCSC 338, Mr. Roberts was charged with fraud over $5,000 for participating in a fraud on Scotiabank, wherein Scotiabank lost approximately $6M. Mr. Roberts was the office manager of Aggressive Road Builders ("ARB") and he knowingly provided documents to Scotiabank that contained false information so that Scotiabank would approve a $7M operating line of credit for ARB that would pay out ARB's then operating line of credit with the Royal Bank.

Federal funds for laid-off workers increased

The federal Wage Earner Protection Program Act (WEPPA) provides funds for employees who go unpaid as a result of their employer's bankruptcy. or receivership This program is administered with the help of the trustee in bankruptcy or receiver (as the case may be).

Recovering the excess from net winners in a Ponzi scheme

Ponzi schemes are fraudulent investment schemes whereby individuals are enticed by a conman or fraudster to make investments in an operation promising an unreasonably high rate of return. Once the first few investments are made, subsequent investors are enticed to invest partly through reported gains and partly through the high payouts of earlier investors. Ultimately, the conman either spends or disappears with the remaining money, or the scheme collapses on itself as funds are exhausted by payouts to earlier investors. 

Resetting the limitations clock in actions to recover debts

The Supreme Court of British Columbia is the most recent court latest to find that a debtor's email can, in the appropriate circumstances, be sufficient to restart the two-year limitation period in which a creditor can initiate a court action to recover payment of a debt.

Deemed trust amounts

In the course of business a person, in compliance with various statutory obligations, may collect tax or withhold monies that are payable to federal or provincial governments. Examples of such collection or withholding are for provincial sales tax, goods and services tax and employee source deductions for income tax, employment insurance and Canada Pension Plan amounts.

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