Executive Summary: Key Legal and Evidentiary Issues

• Debtor failed to meet payment obligations under a court-approved consumer proposal.

• A creditor moved to annul the proposal under section 63(1) of the Bankruptcy and Insolvency Act (BIA).

• The proposal trustee issued a notice of default and confirmed ongoing payment arrears.

• The court was not satisfied that the debtor could cure the default or maintain future compliance.

• Discretion to annul was exercised based on sustained non-compliance and absence of supporting financial evidence.

• The proposal was annulled, and the debtor was deemed bankrupt under section 63(4) of the BIA.

Background and parties involved

Ketankumar Sukhlal Gore filed a consumer proposal under section 62 of the Bankruptcy and Insolvency Act (BIA) on July 29, 2022, with Rumanek & Company Ltd. acting as the proposal trustee. The proposal, which involved monthly payments of $930 over 90 months totaling $83,700, was accepted by creditors and approved by the court. Anirban Sarkar, an unsecured creditor with a $29,000 claim, later became aware of the proposal after court approval and subsequently filed a proof of claim.

History of default and motion to annul

Mr. Gore began to fall behind on payments as of July 31, 2023. By December 6, 2023, the trustee issued a formal notice of default to all creditors and the Office of the Superintendent of Bankruptcy. No inspectors had been appointed, and the default was not waived. Despite a few payments in early 2025, Mr. Gore remained in substantial arrears and was five months behind at the time of the motion hearing. A cheque covering the outstanding amounts was delivered the day before the hearing, but had not cleared.

Mr. Sarkar brought a motion to annul the proposal pursuant to section 63(1) of the BIA. The annulment would automatically trigger Mr. Gore’s bankruptcy under section 63(4). Mr. Gore argued for the continuation of the proposal and maintained that his recent payment would clear, but provided no financial evidence or plan to maintain future compliance. The trustee did not support continuation, citing the pattern of persistent default.

Legal framework and court’s analysis

Under section 63(1) of the BIA, a court may annul a proposal when the debtor is in default or where continuing the proposal would result in injustice or delay. The court emphasized that annulment is a discretionary remedy and need not result in a better position for creditors to be valid. The judge also reaffirmed that the BIA must be interpreted in a way that respects commercial integrity and creditor confidence in the insolvency system.

The court found the debtor’s default well-established and noted that Mr. Gore had failed to provide any evidence to demonstrate his ability to meet future obligations under the proposal. The recent payments did not offset the broader history of sustained non-compliance. The court declined to make inferences based on the silence of other creditors and relied instead on the objective record.

Conclusion and outcome

The court granted the motion and annulled Mr. Gore’s proposal. As a result, Mr. Gore was deemed to have made an assignment in bankruptcy. The decision emphasized the importance of maintaining the integrity of the bankruptcy process and holding debtors accountable to the terms they voluntarily agree to. The parties were encouraged to resolve the issue of costs amicably, failing which they were invited to make written submissions.