|
Insolvency (BIA) - Consumer Proposal. Piekut v. Canada (National Revenue)
In Piekut v. Canada (National Revenue) (SCC, 2025) the Supreme Court of Canada dismissed an insolvency appeal, here involving "when a bankrupt is released from their government student loan debts under the Bankruptcy and Insolvency Act".
Here the court considers 'consumer proposals' under the BIA:[31] The appellant in this case made a consumer proposal rather than an assignment in bankruptcy. A consumer proposal is a procedure under the BIA allowing insolvent individuals who meet certain conditions to propose an arrangement to pay their creditors a percentage of what they owe, or to pay their debts over an extended period, or both, subject to the supervision of an administrator. Consumer proposals are generally quicker, more efficient, and less costly than bankruptcy. Many consumer debtors prefer a consumer proposal to an assignment in bankruptcy to avoid the stigma of bankruptcy and because a consumer proposal often allows a debtor to keep their house or apartment, vehicle, or other property (BIA, ss. 66.11 to 66.4; Wood, at pp. 15 and 564-74; L. W. Houlden, G. B. Morawetz and J. Sarra, Bankruptcy and Insolvency Law of Canada (4th ed. rev. (loose-leaf)), at § 4:152; J. D. Honsberger and V. W. DaRe, Honsberger’s Bankruptcy in Canada (5th ed. 2017), at p. 230; D. Brochu, Précis de la faillite et de l’insolvabilité (6th ed. 2022), at ¶¶21-1 to 21-26).
[32] Under s. 66.28(2) of the BIA, a consumer proposal accepted by creditors and approved by the court binds creditors regarding all unsecured claims and certain secured claims. Under s. 66.38, a successfully performed consumer proposal entitles the debtor to a certificate issued by the administrator with the same effect as an order of discharge in bankruptcy (Houlden, Morawetz and Sarra, at § 4:169). At the same time, s. 66.28(2.1) provides that a consumer proposal “does not release the consumer debtor from any particular debt or liability referred to in subsection 178(1) unless the consumer proposal explicitly provides for the compromise of that debt or liability and the creditor in relation to that debt or liability voted for the acceptance of the consumer proposal”.
[33] Under s. 66.4(1), all provisions of the BIA (except Division I of Part III, which deals with proposals not specific to consumers) apply to consumer proposals “in so far as they are applicable” and “with such modifications as the circumstances require”.
|
