Suleiman loaned a total of $500,000 USD and $250,000 CAD to Redragon Oil & Gas Systems International Inc., with promissory notes guaranteeing repayment.
The Respondents, Venkataraman and Hodgson, were executives at Redragon and personally guaranteed these loans.
After defaulting on repayments, the parties reached a settlement, but the Respondents eventually declared bankruptcy in 2017.
Suleiman sought to have the debt survive bankruptcy under sections 178(1)(d) and (e) of the Bankruptcy and Insolvency Act (BIA), arguing the debt was tied to fraud.
Legal Analysis:
Section 178(1)(d) BIA: Requires evidence of fraud or misappropriation while acting in a fiduciary capacity. The court found no evidence that the Respondents acted in such a capacity or committed fraud by stopping payment on the cheques.
Section 178(1)(e) BIA: Relates to debts obtained by false pretenses or fraudulent misrepresentation. The court found no evidence of fraud in the original pleadings or judgment, only a breach of contract.
Conclusion:
The court dismissed the application, concluding that the debt did not survive bankruptcy as no evidence of fraud or fiduciary misconduct was presented. No mponetary award specified.
Costs:
Submissions on costs were to be made by the parties, with deadlines set for August and September 2024.
