Provided by @Sophia:
Hello everyone,
As you may already be aware, an interim receiver was recently appointed over Dylan Suitor’s assets pending the hearing of a bankruptcy application against him. We are hoping for a timely realization of his assets for the benefit of his creditors, including lenders who received personal guarantees from him.
A group of lenders is coming together with the aim of taking similar legal action against the remaining principals of the Balboa companies (Robby Clark, Aruba Butt, Ryan Molony, Sam Drage, Bronwyn Bullen) with the goal of maximizing recoveries for the benefit of their creditors.
We are currently in the process of gauging interest and gathering support to move this initiative forward. To make this effort a reality, we need financial contributions to cover the necessary legal expenses and associated costs (not yet determined on a per person basis as we do not yet know how many people are interested in participating). The involvement of as many lenders as possible, both in terms of interest and financial support, would assist in pursuing this effort successfully and cost-effectively, although any creditor is also free to pursue legal action independently.
If you are interested in participating or learning more about this initiative, please take a moment to complete this form – Click here. You will be invited to join an informational call that we will be hosting in the coming weeks.
Please feel free to share this message with other lenders that may be interested in participating in this initiative.
Thank you for your time,
Group of lenders looking for justice
FAQ
1. What does it mean to petition someone into bankruptcy?
Petitioning someone into bankruptcy is a legal process where a creditor (an individual or business owed money) asks the court to declare a debtor (the person or business that owes money) bankrupt. This is done when the debtor is unable to pay their debts and has not voluntarily filed for bankruptcy. The court will assess the situation, and if it agrees with the creditor, it will appoint a Licensed Insolvency Trustee (LIT) to manage the debtor's assets and distribute them to creditors.
2. How is petitioning someone into bankruptcy different from suing someone?
• Petitioning for Bankruptcy: The goal is to have the debtor declared bankrupt so that their assets can be liquidated and distributed among creditors. This process applies when the debtor is insolvent and unable to pay their debts.
• Suing Someone: When suing, the creditor files a lawsuit against the debtor to obtain a court judgment for the amount owed. If the court rules in the creditor’s favor, the creditor can then pursue legal actions like garnishing wages or seizing assets, but the debtor is not declared bankrupt.
Key Difference: Petitioning for bankruptcy focuses on debt recovery through bankruptcy proceedings, while suing is a legal action for monetary compensation, which may or may not lead to asset recovery.
3. Who can petition someone into bankruptcy in Canada?
In Canada, any creditor can file a petition to bankrupt a debtor, provided that:
• The debtor owes at least **$1,000**.
• The debtor has committed an "act of bankruptcy" in the last six months (e.g., not paying their debts, closing their business without paying creditors, or leaving the country to avoid payment).
4. What is an "act of bankruptcy"?
An act of bankruptcy is a situation or behavior that demonstrates a debtor's inability to pay their debts. Common examples include:
• Failing to pay a debt when it is due.
• Assigning assets to a third party to avoid debt repayment.
• Leaving the country to avoid creditors.
• Ceasing to meet financial obligations to evade payment.
If any of these acts occur within six months before the bankruptcy petition is filed, it strengthens the creditor’s case.
5. What is the process to petition someone into bankruptcy?
The process typically involves the following steps:
I. File a Bankruptcy Application: The creditor files a formal bankruptcy petition in court.
II. Serve the Petition: The petition must be delivered (served) to the debtor.
III. Court Hearing: The court schedules a hearing to determine whether the debtor should be declared bankrupt. The debtor can oppose the petition.
IV. Bankruptcy Order: If the court decides in favor of the creditor, a bankruptcy order is issued, and the debtor’s assets are placed under the control of a Licensed Insolvency Trustee (LIT).
V. Asset Liquidation: The LIT sells the debtor’s assets and distributes the proceeds to creditors.
6. What happens if a debtor is declared bankrupt?
If the court declares a debtor bankrupt:
• Their assets are sold off by the Licensed Insolvency Trustee (LIT).
• The proceeds are distributed to creditors according to a priority system set by law.
• The debtor may be subject to certain restrictions (e.g., not being able to take out new credit).
• Some debts may be discharged (wiped out), allowing the debtor to get a fresh financial start after completing the bankruptcy process.
7. Can a debtor oppose a bankruptcy petition?
Yes, a debtor has the right to oppose a bankruptcy petition. Common reasons for opposing include:
• Disputing the debt or the amount claimed.
• Showing evidence that they are able and willing to pay the debt.
• Arguing that the bankruptcy petition is being used as a tactic to harass or pressure the debtor rather than for legitimate debt recovery.
If the debtor successfully opposes the petition, the court may dismiss it.
8. What are the advantages of petitioning someone into bankruptcy compared to suing them?
• Speed of Recovery: Bankruptcy may be a quicker way for creditors to recover a portion of the debt, as the debtor’s assets are liquidated by a Licensed Insolvency Trustee.
• Equitable Distribution: In bankruptcy, all creditors are treated fairly, with a specific order of priority for how funds are distributed.
• Avoiding Lengthy Legal Battles: Bankruptcy proceedings can resolve debt issues more efficiently than a lengthy court case that might result from suing.
However, the creditor may only recover a portion of what is owed, depending on the debtor’s assets.
9. What are the risks of petitioning someone into bankruptcy?
• Costs: There are legal and court costs associated with filing a bankruptcy petition. If the debtor has few or no assets, these costs may outweigh the benefits.
• Asset Shortfall: If the debtor has limited assets, there may be little left to distribute after secured creditors are paid, leaving the petitioning creditor with less than what was owed.
10. What happens to secured creditors when someone is petitioned into bankruptcy?
Secured creditors, such as mortgage lenders, have the right to seize the asset that serves as collateral for the debt (e.g., the house or car). They are paid before unsecured creditors in the bankruptcy process.
11. How long does the bankruptcy process last?
For first-time bankruptcies, the process typically lasts 9 months if the debtor is cooperating and meets certain conditions. For repeat bankruptcies or if there are complicating factors (e.g., surplus income), the process can take longer—up to 21 months or more. These are estimates and each case varies.
12. How much does it cost to petition someone into bankruptcy?
This amount varies depending on the companies hired, however the cost for this entails paying:
I. Lawyer: to File a Bankruptcy Application, Serve the Petition, Court Hearing Bankruptcy Order
II. Licensed Insolvency Trustee (LIT): Asset liquidation
13. What funds can we expect to recoup?
This is unknown. Petitioning an individual into bankruptcy serves as a final effort to ensure that all stones are left unturned. Trustees are granted power over their banking and can trace money transactions – finding any that may still be available to pay out creditors and/or equity. However, it does not guarantee that any monies will be found and/or paid out to creditors.