Headline: Half of British Columbians will need a pay raise to help pay off debt.
Via: The Vancouver Sun
BOC progress report
June 6, 2018 by
IMF flags housing at economy risk in Canada
June 6, 2018 by
Media Covers Lawsuit Aimed at Son of Ponzi Schemer
May 28, 2018 by
The popular online publication Vancouver Is Awesome, and the North Shore News have published a new article on the latest development in the on-going story regarding Virginia Tan.
Last year, Tan admitted to fraudulently raising at least $30 million from investors as part of a Ponzi scheme. The admission was part of a settlement with the BC Securities Commission.
This latest story covers details of a lawsuit aimed at Tan’s son. The story, by reporter Jane Seyde, explains:
Bankruptcy trustee Boale, Wood and Co. filed a notice of claim against Marcus Soon-Keen Tan of North Vancouver, alleging six properties he acquired in connection with a real estate development in Surrey since 2011 were bought with funds his mother defrauded from investors.
The bankruptcy trustee is asking the court to transfer ownership of the properties to the trustee for the creditors’ benefit or for Marcus Tan to pay back investors whose funds were allegedly used to buy or make payments on the properties.
The trustee has also asked the court for records tracing money received by Marcus Tan from either of his parents and for assets bought by him with funds from either of them.
No statement of defence has been filed and none of the claims have been proven in court.
You can read the story in Vancouver is Awesome, or on the North Shore News online.
Breaking Down BC’s Reliance on Real Estate
May 16, 2018 by
Headline: Breaking down the B.C. economy’s risky reliance on real estate: Experts say a market crash could have serious consequences and something needs to change.
Via: CBC News
How Money Affects Health
May 16, 2018 by
Home Sales Fall
May 16, 2018 by
Headline: Canada home resales fall in April, lowest in over 5 yrs-CREA
Via: Reuters
Will Bankruptcy Affect My Employment?
May 16, 2018 by
If I declare bankruptcy, will it affect my employment? This is a fairly common question that a Licensed Insolvency Trustee (“LIT”) gets asked at the initial interview stage.
You may be wondering if your current or future employer will discover a bankruptcy filing and whether that impacts your ability to obtain work or keep your job.
In a typical bankruptcy, the LIT doesn’t need to notify your employer. However, there may be situations when filing bankruptcy may affect your application to take on a new job. Below we answered some of the most common questions around bankruptcy and employment issues.
Will My Current Employer Find out I’ve Filed for Bankruptcy?
As part of the usual bankruptcy process, your employer is not told that you’ve filed a bankruptcy.
The only time an LIT will notify your employer that you have filed a bankruptcy or consumer proposal is in cases where there may be a garnishee in place or where the LIT needs payroll information to determine surplus income or prepare tax returns. In most cases where the LIT requires information from the employer, we request the debtor to obtain it for us so we don’t have to contact the employer directly for it.
Can I Lose My Job if I File for Bankruptcy?
It is illegal in Canada for an employer to fire someone because they filed for bankruptcy.
Certain professional associations have professional conduct standards that require an individual to disclose if they are bankrupt. Often these are professions that involve the handling of money and/or trust accounts. Examples are insurance/investment broker, real estate agent, lawyer or accountant.
Professionals often file a consumer proposal as an alternative to bankruptcy. Since someone who has entered into a repayment arrangement through a consumer proposal is not a bankrupt, they are generally excluded from these professional guidelines. However, any professional should first check any regulations with their professional association or society before filing.
In general, if the debts you owe are personal in nature and not the result of fraudulent or poor business practices, an insolvency filing shouldn’t impact you professionally. However, if you are considering an insolvency filing, it’s still important to satisfy yourself of the disclosure requirements to your professional association.
If I File for Bankruptcy, Will I be Able to Get a Job?
You are not required to disclose that you have filed for bankruptcy or a consumer proposal when applying for a job. Potential employers may ask if you are currently bankrupt as part of the application process. They may also choose to conduct an insolvency search or credit check as part of hiring process. This is more common if you are applying for a position that involves significant financial trust. If you think that an employer is going to ask or perform a background check, it is always better to be up front about it.
Some positions require employees to be bonded by the firm’s insurance company to protect against employee theft and dishonesty. Bonding provides the firm with compensation in the case of a loss. It’s a protective measure for the employer. In reality, a bankruptcy on your credit report is not necessarily a bad thing. It shows that you have dealt with your debt. If you are undischarged, then you only have one obligation and that is to your LIT. Unfortunately, if you are unable to be bonded, an employer may choose not to hire you for these types of positions.
As an undischarged bankrupt, you can also be precluded from holding certain roles such as a director of a company, a society or other similar type position until such time as you are discharged from bankruptcy.
Consider filing a Proposal
Many concerns regarding the impact of a bankruptcy on employment do not apply in the case of a proposal. A proposal is a repayment arrangement made with your creditors, to repay a portion of what you owe. While a proposal is still a legal process administered under Insolvency legislation that can only be filed through an LIT, you’re not a bankrupt when you’re in a proposal. As such, a proposal can often solve some of the situations that arise in terms of your employment and looking for debt relief solutions.
A Licensed Insolvency Trustee will carefully review your financial situation and provide you with the best course of action without unduly affecting your employment.
Boale, Wood & Company Ltd. has helped thousands of individuals and families overcome debt for more than 14 years.
Call us. It’s not too late. (604) 605-3335
Office of the Superintendent of Bankruptcy Issues Directive on Counselling
May 16, 2018 by
In previous newsletters, we addressed the issue of possible changes being proposed to the counselling directive by the Office of the Superintendent of Bankruptcy (“OSB”). The OSB issued its draft directive in October 2017 and commenced public consultations, inviting comments from stakeholders.
On January 29, 2018, the OSB issued its final Directive relating to the qualifications of Insolvency Counsellors, referral arrangements and debt advisors, along with the transition phases and its plan to revamp the entire counselling curriculum. The Directive can be found here.
The OSB has stated that the first phase of amendments will contribute to a level playing field for all LITs and reduce risks to the integrity of the consumer insolvency process related to:
- LIT involvement in prohibited referral arrangements; and,
- reliance on intermediaries whose activities are incompatible with an LIT’s legal and professional responsibilities.
It will also provide LITs with flexibility to accommodate debtor circumstances in the delivery of insolvency counselling, and by ensuring insolvent Canadians continue to benefit from:
- Access to insolvency proceedings at regulated rates;
- Open choice of an LIT; and,
- Protection from unnecessary costs and predatory activities.
The second phase of the counselling amendments, including on line modules, will de developed in 2018 and beyond. No timetable for the implementation has been set.
Improved protections
The aim of the Directive is to ensure that:
- consumers are not charged more for the insolvency process than is allowed under the BIA. This will be accomplished by having the counsellor registered against the LITs license and not be involved in any unregulated and unnecessary services or predatory activities.
- consumer debtors and bankrupts are free to choose whatever LIT they want and make an open choice of an LIT, rather than being directed to a specific LIT chosen for them under an arrangement negotiated by the person who will then provide their BIA insolvency counselling.
- consumer debtors and bankrupts receive clear and accurate information, regarding responsibility for insolvency counselling, related fees, and the roles and responsibilities of debtors, LITs and registered BIA Insolvency Counsellors.
- consumer debtor’s or bankrupt’s informed consent to the LIT is now required prior to the sharing of that debtor’s insolvency information with ahird-party BIA Insolvency Counsellor.
Additional delivery flexibility
- Directive No. 1R4 provides flexibility to accommodate an insolvent person’s circumstances related to participation in insolvency counselling by video conference in order to avoid significant inconvenience; or at the third-party location of a registered BIA Insolvency.
- Upcoming renewal of the BIA insolvency counselling curriculum will provide further delivery enhancements, such as the addition of on-line learning modules at no cost to the debtor.
LITs relying on third-party BIA Insolvency Counsellors
There is no restriction from LITs relying on third-party BIA Insolvency Counsellors. However, these counsellors must meet registration requirements under the Directive and adhere to the same professional standards as LITs themselves are required to follow including adherence to all relevant provisions of the BIA, its Rules — including the LIT Code of Ethics – and Directives from the OSB.
The Directive applies only to LITs. It does not restrict a third party to provide unregulated products and services to Canadians outside the scope and parameters of federal insolvency legislation.
Conclusion
It is our view that the changes to the Directive will enhance the counselling process for consumers and provide delivery flexibility for LITs where the debtor is in a remote location or where there are other circumstances where a face to face meeting would be inconvenient. The Directive comes into force on October 1, 2018. Until that time, the previous Directive applies. Details regarding this Directive can be found here.
Boale, Wood & Company Ltd. has helped thousands of individuals and families overcome debt for more than 14 years.
Call us. It’s not too late. (604) 605-3335
Case Law Update Re: Gwidz
May 16, 2018 by
Recently, the BC Supreme Court provided some much needed clarification relating to the non-exempt equity in a bankrupt’s home at the date of bankruptcy and where the bankrupt and the Licensed Insolvency Trustee (“LIT”) have reached an agreement on the amount.
In this case the bankrupt was granted a discharge on the condition that he pays into his estate approximately $27,000, enforcing an agreement entered into between the bankrupt and the LIT almost two and a half years earlier at the outset of bankruptcy.
The issues in this case are whether the increase in property value can be categorized as after-acquired property, subject to realization by the Trustee, and whether the Bankrupt can invoke the principle of promissory estoppel.
The Court concluded that payment amount represented a fair assessment of the bankrupt’s non-exempt interest in his home at the date of bankruptcy. However, in the intervening years, the bankrupt’s share of the equity had substantially increased, attributable solely to the rising markets in the Lower Mainland of British Columbia.
Previously, the leading case on this issue was the 2016 Ontario Court of Appeal decision in Lepage (Re), (2016 ONCA 403). The ONCA ruled that even where an LIT disclaims its interest in a bankrupt’s property, or reaches an agreement at the date of bankruptcy for the non-exempt equity, any increase in equity amounted to “after acquired property” which then became part of the bankrupt’s estate.
The BC Court declined to follow this analysis, noting the comments of the ONCA in Lepage were not supported by the case law, calling it “one-off where the court determined the bankrupt needed to provide a healthy payment to CRA whom the debtor had defrauded”.
Ultimately, the BC Court found that the agreement between the bankrupt and the LIT ought to be enforced, and that in exercising its discretion and considering the rehabilitation of the bankrupt, the interests of creditors, and the integrity of the bankruptcy process, a payment in accordance with the agreement was the appropriate condition of discharge.
In Lepage, the Court found that the increase in the property values were after acquired property and that the valuation was done at the discharge hearing. In Gwizd, the date of bankruptcy is used for valuation purposes.
What is lost in this issue is what happens when the property value drops to a point where there is no longer any equity and the bankrupt decides that he shouldn’t have to pay. To our knowledge, this scenario has not played out in any reported decisions.
These cases put LITs and debtors alike in a potentially untenable position. LITs have usually used the date of bankruptcy as the “date for which asset values are determined”. Or the date in which the LIT determines that it has an interest or no interest in an asset. But there is case law that supports that LITs should be diligent in their efforts to deal with assets and that they should not be speculators. A debtor also relies on the LIT for advice and makes decisions based on that advice.
Time will tell if anything further comes of these decisions in future discharge applications either in BC or other jurisdictions. It should also be noted that the LePage decision is the Ontario Court of Appeal which is distinct from the Gwizd decision that was decided by a Master.
The full text of the Gwizd case can be found here.
Boale, Wood & Company Ltd. has helped thousands of individuals and families overcome debt for more than 14 years.
Call us. It’s not too late. (604) 605-3335