Decision of the Week – Bankruptcy and Fraud

This week’s decision comes from Alberta – Alberta Securities Commission v. Hennig, 2020 ABQB 48.

[1]               This is an application by the Alberta Securities Commission for a declaration that an administrative penalty levied against Theodor Hennig survives his discharge as a bankrupt pursuant to subsections 178(1)(a), (d) and (e) of the Bankruptcy and Insolvency Act, R.S. 1985, c B-3. The administrative penalty arose from the findings of a panel of the Securities Commission that Mr. Hennig was responsible for misrepresentations in the financial statements of a public company of which he was a director and officer, that he obtained financial benefits as a result of non-disclosure of material facts, that he participated in market manipulation which resulted in artificial prices for another company, and that he made ongoing misrepresentations to Commission staff, all contrary to the public interest.

2020 ABQB 48

This decision analyses the meaning of the term “offence” as used in s. 178(1)(a) of the BIA and whether it includes administrative penalties ordered by the securities commission. Justice Romaine found that:

81]           The Applicant is entitled to the following relief:

a)         a declaration that the judgment arising from the administrative penalty survives Mr. Hennig’s bankruptcy pursuant to subsection 178(1)(e) of the BIA;

b)         a direction requiring Mr. Hennig to show cause why a new judgment should not be granted as against him; and

c)         an order renewing the judgment for a period of ten years, and granting the Alberta Securities Commission a new judgment against Mr. Hennig pursuant to Rule 9.21 of the Alberta Rules of Court for the amounts remaining due and unpaid on the judgment.

Further commentary is available from this article from The Lawyers Daily.

Manitoba eLaws – New Edition – Business Law No. 83

The October 2018 edition of the Business Law Update has been published. Selected contents include:

  • Application of Common Interest Privilege in Commercial Transactions Restored: FCA
  • Private Disputes Not Enforceable Via the Oppression Remedy: MBCA
  • Exclusion Clause a Bar to Negligent Misrepresentation Claim: MBCA
  • Legislative Updates, including several regarding the upcoming legalization of marijuana
  • and more.