Bondfield president appeals bankruptcy order as of right

Aquino (Re), 2026 ONCA 132
Is a bankruptcy order appealable as of right?

Summary: The Ontario Court of Appeal has confirmed that a bankruptcy order is appealable as of right under s. 193(c) of the Bankruptcy and Insolvency Act, where the order is substantive, engages the value of the debtor’s property, and results in a loss, as it does by vesting the debtor’s property in a trustee. The monitor of Bondfield Construction Company had successfully applied to adjudge the appellant, the former president and a directing mind of Bondfield, bankrupt, and the debtor sought to appeal. The Court rejected the monitor’s argument that leave was required and upheld prior authority recognizing such appeals as of right, emphasizing that bankruptcy orders fundamentally alter property rights and exceed the $10,000 threshold. On the merits, the Court found no error in the bankruptcy judge’s determination that the debtor owed over $27.4 million, had committed an act of bankruptcy by ceasing to meet liabilities, and lacked the ability to pay his debts. As a result, the appeal was dismissed.

On the application of the respondent, Ernst & Young Inc., in its capacity as court appointed monitor (the “Monitor”) of Bondfield Construction Company Limited (“Bondfield”), the Court issued an order adjudging the appellant, being the former president and a directing mind of Bondfield, bankrupt and appointing B. Riley Farber Inc. as trustee of his bankrupt estate (the “Bankruptcy Order”). The Monitor was a judgment creditor of the appellant.

The grounds for making a bankruptcy order against the appellant were found to have been established. The bankruptcy judge accepted the Monitor’s evidence that it was owed more than $27.4 million by the appellant, and that the appellant had committed an act of bankruptcy within six months preceding the application by ceasing to meet his liabilities as they become due within the meaning of s. 42(1)(j) of the Bankruptcy and Insolvency Act. She refused to exercise the discretion granted by s. 43(7) of the BIA, which permits a judge to dismiss a bankruptcy application when the debtor shows they are able to pay their debts, finding that the appellant had no present ability to do so.

The appellant appealed the Bankruptcy Order on the premise that he could do so as of right under s. 193(c) of the BIA. That section provides for an appeal as of right “if the property involved in the appeal exceeds in value ten thousand dollars”. The appellant relied on Royal Bank v. Bodanis, 2020 ONCA 185, which held that a bankruptcy order was appealable as of right under s. 193(c) of the BIA. The Monitor submitted that a bankruptcy order was not appealable without leave and Bodanis was incorrectly decided.

Appeals as of right attract an automatic stay of proceedings, and there is a need to address bankruptcy proceedings expeditiously wherever possible. Accordingly, an appellant must meet three criteria to fit under s. 193(c). The appeal must be more than procedural in nature, involve the value of the debtor’s property, and result in a loss to the appellant.

The BIA specifies the effect of the Bankruptcy Order. Section 71 of the BIA states: “On a bankruptcy order being made … a bankrupt ceases to have any capacity to dispose of or otherwise deal with their property, which shall, subject to this Act and to the rights of secured creditors, immediately pass to and vest in the trustee named in the bankruptcy order…”. Bearing in mind that effect, the appeal of the Bankruptcy Order, which seeks to reverse its effect, fits within the plain wording of the text of s. 193(c) of the BIA read in in light of its context and the factors made relevant by a consideration of purpose.

The Bankruptcy Order stripped the appellant of any capacity to dispose of or deal with any or all of his property, and it vested that property in B. Riley Farber Inc. as trustee of his bankrupt estate. It was clearly more than a procedural order. It directly brought into play the value of the appellant’s property, and it caused a loss to the appellant by vesting the property in someone else. No one disputed that the property involved, which the Bankruptcy Order vested out of the appellant’s ownership in favour of the bankruptcy trustee, exceeds $10,000 in value.

Another element of the context supported this interpretation. Section 193(d) provides that any decision granting or refusing to grant a discharge from bankruptcy is appealable as of right if the unpaid claims of creditors exceed $500. It would be strange if an order placing someone in bankruptcy required leave to appeal, while orders about exiting bankruptcy are appealable as of right.

The Court concluded that the Bankruptcy Order was appealable as of right under s. 193(c) of the BIA. The Court further found that the bankruptcy judge did not err in rejecting the appellant’s preliminary objections: 1) that the Monitor lacked authority to bring an application for a bankruptcy order, 2) that a bankruptcy order would improperly transfer obligations of the Monitor to a bankruptcy trustee, and 3) that a bankruptcy would be redundant. According to the Court, each objection misconceived the separate roles of the Monitor, a court officer with functions directed to the assets of and stakeholders in Bondfield, and the bankruptcy trustee, a court officer charged with administering assets formerly owned by the appellant for the benefit of his creditors, one of whom was the Monitor. The bankruptcy judge’s factual determinations were entitled to deference, and the appellant failed to show a basis to interfere with them.

The Court dismissed the appeal.

Judges: Gillese, Zarnett and Coroza JJ.A.

Professionals involved:

• David Ullmann and Stephen Gaudreau of Blaney McMurtry, and George Corsianos of Corsianos Lee and Terry Corsianos, for the appellant, John Aquino

• Alan Merskey and Laura Cloutier of Cassels, and Evan Cobb of Norton Rose Fulbright for the respondent Ernst & Young Inc. in its capacity as Court-Appointed Monitor of Bondfield Construction Company Limited

• Alex Bogach of Torys for the respondent, KSV Restructuring Inc. in its capacity as trustee in bankruptcy of 1033803 Ontario Inc.