The Bankruptcy and Insolvency Act imposes a minimum standard of conduct on all participants involved with a bankrupt estate including a listing of Bankruptcy Offences.
If the bankrupt is a corporation, every officer, director, or agent of the corporation who directed, authorized, etc. the commission of an offence is liable as if he had committed the offence personally.
The Bankruptcy and Insolvency Act outlines various bankruptcy offences for which criminal proceedings may be undertaken against a bankrupt, a trustee in bankruptcy, or other persons.
A bankrupt who commits any of the bankruptcy offences outlined in that Part may, according to S.173, have his discharge refused, suspended or granted conditionally.
A bankrupt who fails without reasonable cause to do any of the duties required of him under S.158, is guilty of a bankruptcy offence.
Who is Guilty of a Bankruptcy Offence?
Bankruptcy Offences are given in S.198 where a bankrupt is guilty of an offence where he or she:
Makes a fraudulent disposition of his property before or after the date of the initial bankruptcy event;
Refuses or neglects to answer fully and truthfully all proper questions put to him in an examination under the BIA;
Makes a false statement or knowingly makes a material omission in a statement or accounting;
After or within one year immediately preceding the date of the initial bankruptcy event, conceals, destroys, mutilates, falsifies, makes an omission in or disposes of or is privy to such acts, from books or documents affecting or relating to his property or affairs, unless he can prove he had no intent to conceal the state of his affairs;
After or within one year immediately preceding the date of the initial bankruptcy event, obtains credit or any property by false representations made by him or made by any other person to his knowledge;
After or within one year immediately preceding the date of the initial bankruptcy event, fraudulently conceals or removes any property of a value of $50 or more or any debt due to or from him;
After or within one year immediately preceding the date of the initial bankruptcy event, hypothecates, pawns, pledges, or disposes of any property that he has obtained on credit and has not paid for, unless in the case of a trader the hypothecation, pawning, pledging, or disposing is in the ordinary way of trade and unless in any case he proves that he had no intent to defraud.
Section 199 further provides that an un-discharged bankrupt who engages in a trade or business or obtains credit for more than $1,000 without disclosing that he is an undischarged bankrupt is also guilty of an offence.
Section 200 provides that a person has committed an offence where he has been bankrupt or has made a proposal in the past, and has not kept adequate records as defined in the BIA in the period of two years before the initial bankruptcy event.
Bankrupts are rarely aware of these provisions and it is the duty of a trustee to advise a bankrupt of these provisions.
These bankruptcy offences can be prosecuted in both the Bankruptcy Court and also Criminal Court as they are classified as criminal offences.
The prosecutions may also be brought after the bankrupt is discharged.