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creditors' role in detecting bankruptcy abuse and fraud
Creditors have a role in detecting bankruptcy abuse and fraud. Depending on the situation:
- A creditor can oppose a bankrupt's discharge from bankruptcy. The grounds for opposition are set out in section 173 of the Bankruptcy and Insolvency Act (BIA). The creditor must notify the Licensed Insolvency Trustee (LIT) and the bankrupt of his/her opposition and the reasons for it, and must present evidence to the Court to support his/her arguments. In such cases, after hearing the parties, the Court will decide on the type of discharge for the bankrupt. Learn more about bankruptcy discharge and its consequences for the bankrupt
About Licensed Insolvency Trustees
- A creditor may also inform the LIT of any inappropriate transactions or preferential treatment on the part of the bankrupt that harmed his/her interests and those of other creditors. For example, a creditor may have knowledge of assets or transactions that the bankrupt failed to declare.
- If a creditor suspects misconduct on the part of the bankrupt or fraudulent activities in connection with a bankruptcy file, he/she should contact the OSB.
To know what constitutes bankruptcy abuse and fraud, consult the section entitled "Bankruptcy Abuse and Fraud." The information focuses on the duties of the bankrupt, provides information on what constitutes non-compliant behaviour, and includes real-life examples of criminal convictions and Court decisions on bankrupt discharges.
The section also provides information on the discharge process, the roles of bankrupts and LITs, and investigations conducted by the OSB's Special Investigation Units and the Royal Canadian Mounted Police.
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