{"id":10212,"date":"2021-01-18T17:41:21","date_gmt":"2021-01-18T22:41:21","guid":{"rendered":"http:\/\/www.irasmithinc.com\/blog\/?p=10212"},"modified":"2021-10-08T11:34:49","modified_gmt":"2021-10-08T15:34:49","slug":"bankruptcy-fraud-examinations","status":"publish","type":"post","link":"https:\/\/irasmithinc.com\/blog\/bankruptcy-fraud-examinations\/","title":{"rendered":"BANKRUPTCY FRAUD: QUICK GUIDE TO BANKRUPTCY FRAUD AND BANKRUPTCY EXAMINATIONS"},"content":{"rendered":"

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.<\/span><\/p>\n

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.<\/span><\/p>\n

If you would prefer to listen to the audio version of this <\/span>bankruptcy fraud<\/i><\/b> Brandon Blog, please scroll to the very bottom and click play on the podcast.<\/span><\/p>\n

\"bankruptcy<\/a>
bankruptcy fraud<\/em><\/figcaption><\/figure>\n

Bankruptcy fraud<\/i><\/b> introduction<\/b><\/h2>\n

Bankruptcy fraud<\/i><\/b> is not something that the vast majority of individual Canadians engage in.\u00a0 Personal insolvency case filers can be for either a <\/span>consumer proposal<\/span><\/i><\/a>, <\/span>Division I proposal<\/span><\/i> or <\/span>consumer bankruptcy filings <\/span><\/i>under the <\/span>Bankruptcy and Insolvency Act<\/span><\/i> (Canada) (BIA) so that individuals can get the debt relief they need.\u00a0 Entrepreneurs can file a <\/span>Division I proposal<\/span><\/i>, or for <\/span>corporate bankruptcy<\/span><\/i> for when their company needs to either restructure or liquidate under the BIA.\u00a0 They can also file a <\/span>Plan of Arrangement<\/span><\/i> under the <\/span>Companies’ Creditors Arrangement Act <\/span><\/i>if their company qualifies <\/span>under Canada’s <\/span>insolvency laws<\/span><\/i>.\u00a0<\/span><\/p>\n

Most of these individuals are honest and would never even think about bankruptcy fraud<\/em>. They or their company have actually experienced such substantial <\/span>financial difficulties<\/span><\/i> leading to their insolvent <\/span>financial condition<\/span><\/i>, that the only thing they can do to solve the <\/span>financial problems<\/span><\/i> is to get relief within the Canadian <\/span>insolvency system<\/span><\/i>. Their problems may result from a job loss, a change in their household situation like divorce, a major disease resulting in loss of income and\/or medical bills they cannot pay, bad financial advice, or most recently, the bottom falling out of their lives because of the COVID-19 pandemic.<\/span><\/p>\n

There are instances, however, where an individual is not a victim and perhaps they are trying to pull off a <\/span>bankrupt fraud crime<\/span><\/i>.\u00a0 They will use misconduct to create abuse of the system and continue to trade and get credit understanding that they will never be able to pay back the money they are borrowing. There are people who try to use the <\/span>insolvency<\/span><\/i> system in Canada to get out of problems that they have created themselves through bad faith or fraud.\u00a0 They may even unknowingly cross the line into a white-collar financial crime and bankruptcy fraud<\/em>.<\/span><\/p>\n

In this Brandon Blog, I first discuss what <\/span>bankruptcy fraud<\/span><\/i><\/a> is and then comment on a very recent decision of the <\/span>Supreme Court of British Columbia in Bankruptcy and Insolvency<\/span><\/i> on what level of suspicion is necessary in order for the court to order an <\/span>examination of the bankrupt<\/span><\/i> or by extension, the <\/span>designated officer<\/span><\/i> of the <\/span>bankrupt company<\/span><\/i>.<\/span><\/p>\n

What is <\/b>bankruptcy fraud<\/i><\/b>?<\/b><\/h2>\n

When I talk about <\/span>bankruptcy fraud<\/span><\/i>, it could include <\/span>criminal fraud<\/span><\/i><\/a> under the <\/span>Criminal Code of Canada<\/span><\/i><\/a>, but not necessarily.\u00a0 <\/span>Bankruptcy fraud<\/span><\/i> is a white-collar criminal activity that can be in several different forms.<\/span><\/p>\n

The more common <\/span>fraudulent activity<\/span><\/i> that either is or are indicators of <\/span>bankruptcy fraud<\/span><\/i> committed under Canadian bankruptcy law (which may be just a bankruptcy offence or can also be a criminal code crime, depending on the circumstances) are:<\/span><\/p>\n