Case Overview

Peggy Henderson (Appellant) appealed a chambers decision dismissing her application to lift bankruptcy stays protecting Sadru Peerani, Din Peerani, and Simone Skaff (Respondents) from her fraudulent misrepresentation claims. She argued her claims survived under s. 178(1)(e) of the Bankruptcy and Insolvency Act (BIA). The Alberta Court of Appeal (ABCA) allowed the appeal and lifted the stays.

Background

Henderson loaned money to Umeta Holdings Ltd, Mavingo Holdings Inc, and Forman’s Men’s Shop Inc, in which the Respondents had roles. She alleged they made fraudulent misrepresentations to induce property sales and diverted sale proceeds for no value, rendering the companies insolvent and prejudicing her recovery. The Respondents denied wrongdoing.

Key Issues & Rulings

1. Did the chambers judge misinterpret s. 178(1)(e) BIA? Yes. The judge wrongly required the debt to arise from a direct transfer of property from Henderson to the Respondents. The ABCA, applying Poonian v British Columbia (Securities Commission), 2024 SCC 28, held that s. 178(1)(e) does not require direct transfer.
2. Did the chambers judge misclassify the claim? Yes. The court found Henderson's claim involved fraudulent misrepresentation, not just fraudulent preferences or transfers at undervalue.
3. Should the stays be lifted? Yes. Henderson demonstrated an arguable case of fraudulent misrepresentation, satisfying s. 69.4 BIA.

Decision

The ABCA lifted the bankruptcy stays but ordered Henderson to amend her Statement of Claim within 60 days to properly plead fraudulent misrepresentation, or the stays would automatically resume?. No monetary award granted at this stage.