Executive Summary: Key Legal and Evidentiary Issues

• Applicability of section 193(c) of the Bankruptcy and Insolvency Act (Lfi) regarding the right to appeal based on the value of property exceeding $10,000.

• Whether the bankruptcy orders against Hugo Bernard and Nick Bernard were properly granted and their assets correctly devolved to a trustee.

• Validity of the Superior Court’s decision to allow the appellants’ counsel to withdraw and to deny a further adjournment.

• Argument that creditors must exhaust alternative remedies against other guarantors and real security before seeking bankruptcy.

• Discretionary power of the court to refuse bankruptcy orders under section 43(7) Lfi in light of guarantees and alleged procedural abuse.

• Award of legal costs to the respondents, with no specific damages mentioned.

Facts and outcome of the case

Background and procedural history

Hugo Bernard and Nick Bernard were declared bankrupt by the Superior Court of Quebec on June 19, 2025, following applications by Banque Laurentienne du Canada, Q-12 Capital, S.E.C., and Q-8 Capital, S.E.C. The court appointed PricewaterhouseCoopers Inc. as the proposed trustee. The Bernards’ counsel withdrew the day before the hearing, and the Bernards requested an adjournment, which was denied. This was their second request for an adjournment, and they had previously agreed not to seek further delays. The court found that the Bernards had not met their burden to show the adjournment request was not a subterfuge.

Appeal and legal arguments

The Bernards filed a declaration of appeal and a request for leave to appeal de bene esse. Their request for leave to appeal was denied, but the court did not rule on whether they had an appeal as of right. The respondents then filed a motion to dismiss the appeal, arguing there was no right of appeal and, alternatively, that the appeal was manifestly doomed to fail. The Bernards argued that section 193(c) of the Bankruptcy and Insolvency Act applied because the property involved in the appeal exceeded $10,000. The respondents cited jurisprudence requiring proof that the judgment resulted in a loss of property value exceeding $10,000, which they argued the Bernards had not provided. The court found that the respondents had proven debts of approximately $18 million and that the value of the Bernards’ assets exceeded $10,000, satisfying the requirement for an appeal as of right.

Court’s analysis

The court determined that the Bernards had a right to appeal under section 193(c) of the Bankruptcy and Insolvency Act. However, the court concluded that the appeal was manifestly doomed to fail. The withdrawal of counsel was due to the Bernards revoking their lawyer’s mandate, and the denial of the adjournment was justified. The court found no procedural unfairness or prejudice to the Bernards, as they presented the same arguments at trial and on appeal. The court also rejected the argument that creditors must exhaust alternative remedies before seeking bankruptcy, citing established jurisprudence. The court found no abuse of process or improper motive by the respondents. The discretionary power to refuse bankruptcy orders under section 43(7) Lfi was not justified in this case, as the trial judge had analyzed the circumstances in detail and exercised discretion appropriately.

Outcome and costs

The court granted the respondents’ motion to dismiss the appeal and dismissed the Bernards’ appeal of the June 19, 2025 Superior Court judgment. The court awarded costs (“frais de justice”) against the Bernards. No damages were awarded or specified in the decision.