Poonian heads to the Supreme Court

By Heather Fisher, Gowling WLG

The Canadian Association of Insolvency and Restructuring Professionals (“CAIRP”) has been granted intervener status in the Supreme Court’s upcoming hearing of the appeal in Poonian v British Columbia Securities Commission.

The Canadian Press has recently reported on Poonian, a Supreme Court being heard on December 6. The Poonians were ordered to pay $13.5 million in administrative penalty and approximately $5.95 million in disgorgement orders following a decision of the BC Securities Commission that found the Poonians’ had engaged in market manipulation by artificially inflate share prices. The Poonians subsequently filed a joint assignment into bankruptcy.

The Supreme Court will consider whether the debt owed to the BC Securities Commission will survive bankruptcy under section 178(1) of the BIA (the “Exceptions”).

Debts that fall within the Exceptions survive bankruptcy in every circumstance where they arise and in their entirety. CAIRP argues that the objective of the “all or nothing” Exceptions is the protection of specific categories of creditors and that those categories should be narrowly construed. Within the discharge scheme of the BIA, s. 172(2) is the appropriate mechanism to address the misconduct of the bankrupt because it grants the Court the discretion to grant orders on discharge that are tailored to specific circumstances of the case.

CAIRP and the other parties’ materials can be found HERE.

• Gowling WLG for CAIRP

• Reedman Law for Thalbinder Singh Poonian et al

• Lawson Lundell for BC Securities Commission

• Stockwoods for Osgoode Investor Protection Clinic

• Hunter Litigation Chambers for Federation of Law Societies of Canada

Other interveners include:

• the Office of the Superintendent of Bankruptcy,

• the Attorney’s General of Ontario, British Columbia and Saskatchewan,

• the Ontario Securities Commission; and

• Dentons for the Alberta Securities Commission