THE British Columbia Supreme Court has denied an attempt by Thalbinder Singh Poonian and Shailu Poonian to be discharged from their bankruptcy, citing the millions of dollars they owe to the British Columbia Securities Commission (BCSC) for past misconduct.
The Poonians asked the court to exit the bankruptcy process, arguing that they were “honest but unfortunate debtors” who have no ability to pay their debts. The BCSC, along with Canada’s Minister of National Revenue, opposed the Poonians’ application because a discharge would have extinguished the financial sanctions they owe to the BCSC and the tax arrears, interest and penalties they owe to the Canada Revenue Agency.
A BCSC panel found in 2015 that the Poonians manipulated the share price of OSE Corp., an Ontario company whose shares traded on the TSX Venture Exchange. The panel concluded that the Poonians inflated the share price through back-and-forth trading among themselves, along with relatives, friends and acquaintances, and then illegally obtained approximately $7 million by selling OSE shares to unsuspecting buyers.
The panel ordered the Poonians to pay a combined $13.5 million in administrative penalties and a combined $5.5 million disgorgement of their ill-gotten gains. The Poonians have not paid any portion of those sanctions.
The BCSC and Minister of National Revenue argued that discharging the Poonians from bankruptcy would be contrary to the public interest and a misuse of Canada’s bankruptcy law. Any funds paid to satisfy the $5.5 million disgorgement order would be given to investors who lost money in the Poonians’ scheme.
B.C. Supreme Court Master Bruce Elwood, in denying the Poonian’s discharge from bankruptcy, said Canada’s bankruptcy laws are not meant “to cleanse those who contravene the Securities Act of the fiscal consequences of their actions.”
He added that there is “considerable doubt in this case whether the Poonians have been rehabilitated,” and have demonstrated through their own evidence that they “refuse to take responsibility for their actions or the consequences of those actions for others.”