Personal Bankruptcy Hell and Debtor Compliance Program in Canada
by: Honorable Stanley J. Kershman
Ontario Superior Court of Justice; Ottawa, Ontario, Canada
Personal Bankruptcy Hell:[1]
Your Client’s Worst Nightmare
Debtor Compliance Program in Canada
Bad News for Your Client — Good News for You [2]
The Bad News, and the Good in Canada
Building the Story—Canada Caselaw Developments
Canada Caselaw that deals with OSB oppositions to discharge over the past two years is focused largely on debtors that have shown noncompliance with the BIA—for example in not filing appropriate documents to prove income and expenses, debtors that are repeat filers or those who have otherwise come under §173 of the BIA by way of gambling, credit card abuse, speculative or risky investments, or extravagant living.
Investigating Fraud and Overcoming Roadblocks: Some Observations from the Trenches
by Steven R. Neuner
Bankruptcy Trustee and Certified Business Bankruptcy Specialist; Marlton, N.J.
Too often in my role as a trustee or as the trustee’s attorney, I run into a debtor, defendant or witness who will claim the information I need is missing, or make a dubious claim not to remember key facts. This article distills some of my thoughts and observations on how to deal with these situations.
Expand the “Web of Lies”
Fraudulent behavior or concealment is rarely done in a vacuum. There are always friends, family, coworkers or others who are involved with, or can vouch for or debunk the dubious claims. When faced with a dubious story, I have often found it very useful to pursue the linkages that exist in all human relationships. Thus, I want to know who else was involved or knew what was going on. Who else was present at each of the central events? Who kept records? A debtor, for example, may lie to you about why money was transferred or paid. However, if you then take the investigation further, and bring in family members, friends, present or former employees or business associates, you are requiring each of these individuals to lie for or vouch for the implausible story. When you do this, in my experience, one of two things will happen. Either the story will begin to fall apart with the mounting inconsistencies or the original prevaricator will come forward with an offer of settlement or a more plausible and verifiable story.
The One-Sock Theory of Forensic Accounting
by Marcus A. Wide
PricewaterhouseCoopers; Halifax, N.S.
I don’t know if this happens to you a lot or whether it is peculiar to my household but … I have two feet. I know this as I see them everyday. They have conveyed me faithfully over many miles. Each morning I put on two shoes and two socks, and at the end of the day I take off two shoes and two socks. The latter speed their way into the laundry basket whence the Lovely Lady of the House (LLoH)—while refusing to deal with anything that needs the touch of an iron—whisks them away on an irregular but consistent basis. On my return, post whisking away, from a hard day of forensicking—or whatever it is we do—there, laid out in orderly rows, are neatly rolled pairs of socks—and one loner.
Circuit Court Split Regarding Degree of Culpability Required under §523(a)(4)
by Howard A. Cohen
Drinker Biddle & Reath LLP; Wilmington, Del.
Evelyn J. Meltzer
Pepper Hamilton LLP; Wilmington, Del.
Section 523(a)(4) of the Bankruptcy Code excepts from discharge any debt “for fraud or defalcation, while acting in a fiduciary capacity, embezzlement, or larceny.” While at first glance interpreting this section of the Code might appear straightforward, the current state of the law appears to contradict this notion. Some of this confusion may stem from the fact that the Bankruptcy Code does not define the terms fraud, defalcation or fiduciary capacity. Rather, these terms have been subject to judicial interpretation. This article highlights the circuit court level split of opinion regarding the degree of culpability required to meet the defalcation standard imposed by §523(a)(4) of the Bankruptcy Code as recently addressed by the Second Circuit Court of Appeals in In re Hyman, 2007 WL 2492789 (2d Cir. 2007).
Prosecution of Crimes under the Mexican Commercial Insolvency Act Part II
by Eduardo Alfonso Eric Martínez Rodríguez
and Carlos Guerrero González
Eduardo Martínez Abogados, S.C.; Mexico D.F., Mexico
During a Mexican insolvency proceeding, prosecution of several criminal conducts may occur. Such conducts may be attributed to the members of the board of directors, managers, employees and receivers of the insolvent company. The basic criminal conducts are: (i) The intended aggravation of the generalized breach of payment obligations; (ii) The failure to file the accounting information within the term established by the district court; (iii) The request of the acknowledgement of an inexistent or simulated credit.
Unlike a traditional criminal procedure, crimes arising under an insolvency proceeding are prosecuted on a fast-track basis, therefore not being subject to certain rules and timing as regulated by Mexican Criminal Procedural Codes to other criminal investigations and proceedings.
Record Year for the Commercial Fraud Task Force!
It’s been a great year for the Commercial Fraud Task Force Committee. In 2007, we published nine newsletters, including 33 articles! The full archive can be found anytime at the ABI website in the committees section under the "About ABI" tab.