Executive Summary: Key Legal and Evidentiary Issues

• Prior use of a Division I proposal, followed by a second insolvency and very large tax debts, raised concerns about the Bankrupt’s overall pattern of financial conduct.
• Persistent non-compliance with duties under the Bankruptcy and Insolvency Act (BIA), including disclosure of income, bank accounts, tax returns, assets and after-acquired property, was central to the trustee’s and regulators’ opposition.
• Inability to verify surplus income due to incomplete and inconsistent financial information left the trustee unable to determine whether required surplus payments were met.
• Questionable pre-bankruptcy and ongoing family law support arrangements, including high support payments shortly before bankruptcy and incomplete tax reporting of those payments, suggested potential manipulation of income and expenses.
• Undisclosed or poorly explained business and financial dealings (equipment purchases, corporate directorship in 141, relationship with WINKZZZ Inc., gambling, and credit cards) undermined the Bankrupt’s credibility.
• The court ultimately found multiple grounds under s. 173(1)(a), (c), (d), (e), (j), (k), (m) and (o) BIA proven and refused the discharge, emphasizing protection of the integrity of the insolvency system over debtor rehabilitation.

Background and prior insolvency history
William Walid Heidary is a chiropractor who became bankrupt for a second time in less than a decade. He had previously filed and successfully completed a proposal to his creditors under the Bankruptcy and Insolvency Act (BIA) in 2011, which was fully performed by October 16, 2016. Despite this earlier restructuring, he later accumulated substantial new debts, including approximately $1.7 million in unpaid income tax assessments as of his second bankruptcy. On April 23, 2019, he made an assignment in bankruptcy (the “Date of Bankruptcy”). On the same date, his professional corporation, Dr. William Heidary Chiropractic Professional Corporation (WH Corp.), also made a voluntary assignment into bankruptcy. The initial trustee for both estates was Scott Pichelli & Easter Limited, later replaced by Baigel Corp., which became the trustee of Mr. Heidary’s personal estate (the “Trustee”). After the Date of Bankruptcy, Mr. Heidary continued to practice as a chiropractor, this time as a sole proprietor operating under “Back on Track Wellness.”

Bankruptcy filings and surplus income issues
In January 2021, the Trustee filed its Report of Trustee on Bankrupt’s Application for Discharge under s. 170(1) BIA (the “s. 170 Report”). The report flagged numerous failures by the Bankrupt to perform his statutory duties and indicated that the Trustee would oppose his discharge under s. 173(1)(a), (c), (d), (e), (j), (m) and (o) BIA. A major area of dispute was surplus income. After Baigel Corp. replaced the prior trustee, it recalculated the Bankrupt’s estimated surplus income at $2,574.50 per month over 21 months, totalling $54,064.50, of which $42,840.00 had been paid by the date of the s. 170 Report. This calculation depended on the Bankrupt’s reported income and his claimed non-discretionary expenses, including very large monthly support payments. The Trustee needed detailed and reliable financial information—tax returns, banking records, and proof of support obligations—to confirm income and surplus income. However, throughout the administration, the Trustee reported that it was unable to verify the Bankrupt’s figures because of incomplete disclosure and contradictory information.

Family law arrangements and claimed support expenses
Shortly before bankruptcy, on March 15, 2019, Mr. Heidary entered into an Interim Separation Agreement with his estranged spouse. Under that agreement, he claimed non-discretionary expenses on his Initial Budget Statement of $13,757.00 per month for child support and $1,000.00 per month for spousal support. The Trustee noted that the separation agreement was executed less than two months before the Date of Bankruptcy, that it did not contain section 7 special expense provisions under the federal child support guidelines, and that, based on the income he reported at the time, the child support payments exceeded the amounts suggested by those guidelines. The Trustee repeatedly requested information to support the support payments and a copy of any final separation agreement, but this was not provided. Later, the Trustee compared the amounts reported as support in his 2020 tax return to the Interim Separation Agreement and his monthly income and expense reports and found that the allowable support deductions claimed for tax purposes were significantly lower than what he reported paying under the agreement. At the hearing, the Bankrupt testified that the final separation agreement was the same as the Interim Separation Agreement, that he remained current on support, and that he had not sought to vary the obligations despite asserting a drop in income from more than $700,000 in 2018 to about $250,000–$280,000 currently. He also admitted to paying tuition for two children in post-secondary education but had not previously disclosed these payments to the Trustee.

Trustee’s investigations and undisclosed dealings
In parallel with the s. 170 Report, the Trustee conducted deeper investigations. It prepared a report under s. 205 BIA (the “s. 205 Report”) describing non-compliance with the Bankrupt’s duties and discrepancies in information given to the Trustee, stakeholders and the Official Receiver. Subsequent supplementary reports (First and Second Supplementary Reports) leading up to the first discharge hearing in January 2022 emphasized continuing failures to comply. Associate Justice McGraw adjourned that first discharge hearing sine die and issued a Production Order requiring the Bankrupt to provide extensive documentation within 45 days. For the renewed discharge hearing in December 2025, the Trustee filed a Third Supplementary Report summarizing the Bankrupt’s partial and disordered compliance with the Production Order. The Bankrupt delivered unsorted documents, forcing the Trustee to spend considerable time reconciling them against what had been ordered, and even then, the Trustee reported that the information remained insufficient to verify income, surplus income, or assets. The Trustee reported that the Bankrupt had not provided a current asset list. It discovered that he had purchased equipment from WH Corp.’s trustee for about $21,264.00, supported by an appraisal, with no bill of sale, no court order approving the related-party sale, and no disclosure of this after-acquired property as required by the BIA. The Trustee also found banking evidence suggesting that the Bankrupt was making payments on financed or leased business equipment without supplying any supporting contracts or disclosure to the estate.

Corporate and business interests: 141 and WINKZZZ Inc.
The Trustee’s work revealed that Mr. Heidary continued to be connected to a numbered Ontario company, 1419552 Ontario Inc. (“141”). A lease dated August 1, 2004 named 141 as tenant for the business premises, and an amending agreement in 2015 showed 141 “operating as Back on Track,” with the Bankrupt as guarantor. A 2023 corporate profile confirmed that 141 was incorporated in 2000 and listed the Bankrupt and his estranged spouse as officers and directors. This raised a legal issue under s. 118(1) of the Ontario Business Corporations Act, which disqualifies an undischarged bankrupt from acting as a corporate director. The Trustee noted that the Bankrupt had not disclosed his interest in 141. The Third Supplementary Report also raised concerns about another entity, WINKZZZ Inc., incorporated in 2020 and producing pillows. While the corporate records showed an employee, Adelina Doppler, as the sole officer, the WINKZZZ website described the Bankrupt as its “creative designer,” and media reports suggested he might have a proprietary interest. Banking records showed payments totalling $29,100.00 from the Bankrupt to WINKZZZ between November 2011 and January 2022, but he gave no details to the Trustee. The Trustee even suspected he may have induced investors to lend to WINKZZZ without disclosing that he was an undischarged bankrupt. At the hearing, the Bankrupt denied owning shares or holding a formal role beyond creative design, stating he merely bought a small number of pillows at wholesale and resold them to patients. The court ultimately found the evidence insufficient to conclude that he was the de facto owner of WINKZZZ, but held that his failure to disclose his involvement and payments to the Trustee was troubling and contributed to credibility concerns.

Bank accounts, credit cards, gambling and lifestyle evidence
The Trustee discovered that the Bankrupt initially claimed to have only one account at First Ontario Credit Union, but during the administration it became apparent there were numerous undisclosed bank accounts and credit cards. The Trustee’s financial review indicated that between July 2019 and January 2022, the Bankrupt engaged in extensive transactions including casino expenditures, travel, golf, hotels, dining, personal expenses, payments to various credit cards, transfers to different bank accounts, presumed support payments, and business-related equipment and landlord payments. The Trustee also found that he used a TD Visa credit card on a joint account with a person named Mark Doppler, apparently related to his employee, and that the cardholder name on that account was “Dr. William Heidary.” At the hearing, the Bankrupt admitted using several credit cards—one with Mark Doppler as primary holder, one with his current wife as primary holder, and one Capital One card—without disclosing the first two to the Trustee and without telling the issuing bank that he was an undischarged bankrupt. The s. 205 Report had already compared his limited admissions about gambling to casino cash withdrawals, showing far higher activity. At the hearing he described himself as addicted to gambling, said he had “self-excluded” for a period, but admitted to gambling again after the self-exclusion expired and had not sought professional treatment. He also acknowledged making a $22,000 post-bankruptcy loan to his father, drawn from a CIBC account, which has not been repaid, and which he said was later netted against his settlement with MOS. Again, there was no clear, coherent disclosure of this transaction to the Trustee. The Trustee reported that it could not reconcile his personal income and expense summaries with the Back on Track Wellness accounting records, bank statements and credit card statements, and that without full and complete information, a proper reconciliation was impossible.

Tax compliance and CRA’s concerns
The Trustee confirmed that it held copies of the Bankrupt’s 2019 (pre- and post-bankruptcy) and 2020 tax returns and that CRA’s counsel confirmed that he had filed returns for 2021 through 2024. However, the Trustee did not receive copies of those later returns and could not verify the Bankrupt’s reported income or the actual taxes paid for those years. According to CRA information, the Bankrupt was current on GST/HST and payroll accounts and did not owe arrears for 2019 post-bankruptcy or for 2020–2022, but he owed $82,367.88 for 2023, including tax, interest and penalties. CRA argued that the Bankrupt is a sophisticated debtor who arranged his affairs to minimize apparent surplus income, including sustaining very large support obligations he had not moved to vary despite a claimed drop in income. CRA also highlighted that his apparent after-tax income was hard to reconcile with his high rent, support payments, and unknown MOS settlement payments, noted scant information about his current wife’s income, and pointed to weak and incomplete evidence about his gambling and a $22,000 loan to his father.

The Bankrupt’s response and Notice of Dispute
In a Notice of Dispute to the Third Supplementary Report, the Bankrupt denied operating or having an interest in any business other than his sole proprietorship. He claimed that he had adequately provided information for the Trustee to verify income and surplus income, asserting that the Trustee’s calculations were based on arbitrary figures and failed to give him credit for taxes actually paid. According to his own calculations, once income tax was taken into account, he believed he had overpaid surplus income—estimating a surplus obligation of roughly $23,000 for 2019 and nothing thereafter. He disputed any overpayment of child support relative to guidelines and its impact on surplus income. He said he had supplied Notices of Assessment for 2020–2023 and maintained that he was current with taxes up to and including 2023. He denied any ownership or funding of WINKZZZ and described 141 as merely a shell company for the lease. At the hearing he testified about his age, family situation, renting arrangements, and practice, stated that his bank accounts at several institutions were frozen and that he used Meridian Credit Union accounts instead, acknowledged the post-bankruptcy loan to his father, and testified that he had settled the MOS judgment on confidential terms. On cross-examination, however, he repeatedly responded that he either was not asked for information, did not know he was obliged to provide it, or could not recall whether he had done so. In several instances he admitted that he had not provided material information—such as his current address, details of new bank accounts, certain credit cards, the new $35,000 business asset he acquired post-bankruptcy, or the terms of his loan to his father and settlement with MOS.

Positions of the parties on discharge
The Bankrupt argued that refusal of discharge would be unduly harsh after more than six and a half years in bankruptcy. He submitted that any gambling debts were largely pre-bankruptcy, that he had rehabilitated himself by keeping up with tax and support obligations and settling the MOS fraud claim, and that his failures of disclosure could be addressed through conditions on a discharge. He relied on the Ontario Court of Appeal’s decision in Bank of Montreal v. Giannotti, which stresses that outright refusal of discharge is an extraordinary remedy reserved for exceptional cases, and asked for a conditional discharge instead. CRA opposed discharge on multiple grounds under s. 173(1), both those set out in its Notice of Opposition and those identified by the Trustee in its Third Supplementary Report. CRA stressed that he was not an “honest but unfortunate debtor” but rather a sophisticated debtor who had not come clean with the Trustee or the court. The OSB briefly submitted that discharge is intended for honest debtors in difficult circumstances and that the Bankrupt’s conduct and non-compliance disqualified him from such relief. The Trustee likewise argued that the discharge should be refused. It relied on case law such as Re Brar and Re Zakharov, where discharges were denied to protect the integrity of the system, and pointed to what it saw as a sustained pattern of non-cooperation, selective disclosure, unexplained post-bankruptcy gambling of at least $20,000, continued directorship in 141 despite legal disqualification, and unexplained funding for a $35,000 piece of equipment.

Court’s analysis and application of the BIA
Associate Justice Kriwetz applied the principles from Bank of Montreal v. Giannotti, emphasizing that the BIA aims to rehabilitate “unfortunate” debtors but only where they are “honest” and have made full disclosure. The court underscored that integrity and transparency are central to the bankruptcy system: a dishonest debtor, or one unwilling to fully disclose financial affairs, is not entitled to relief. In that framework, the court examined the combined effect of the Bankrupt’s conduct: repeated failures to fully cooperate with the Trustee, incomplete and inconsistent financial disclosure, late and partial compliance with the Production Order, undisclosed or inadequately explained banking, business and personal transactions, continued directorship in 141 contrary to statute, incomplete disclosure of support and tuition payments, and unresolved questions about gambling, the loan to his father, and the true scale of his financial obligations relative to income. While the court did not go so far as to declare him the de facto owner of WINKZZZ, it found that his non-disclosure of his involvement and related payments again reflected a broader pattern. The court concluded that the evidentiary record established the facts supporting multiple grounds under s. 173(1)(a), (c), (d), (e), (j), (k), (m) and (o) BIA. It accepted that the length of the bankruptcy—since April 23, 2019—was largely a result of the Bankrupt’s own conduct. In the court’s view, because the Trustee still lacked the “full and complete information” necessary to assess issues such as surplus income and after-acquired property, it was not possible even to design appropriate conditions for a discharge.

Outcome and implications of the decision
The court refused Mr. Heidary’s discharge. It held that he had not demonstrated that he was an “honest but unfortunate debtor” eligible for the relief provided by the BIA, and that to grant a discharge—conditional or otherwise—on the record before it would undermine public confidence in the integrity of the insolvency system. Instead, the court left the door open for rehabilitation at a later stage: it authorized the Bankrupt to re-apply for a discharge after one year, but on the strict understanding that he must cooperate fully with the Trustee and make full disclosure of all relevant financial information. In this outcome, the successful parties were the Trustee (Baigel Corp.), the Canada Revenue Agency (through the Attorney General), and the Office of the Superintendent in Bankruptcy, all of whom opposed the discharge. No new or specific monetary award, damages figure, or quantified costs order in favour of any party can be determined from the decision; the relief granted was the refusal of discharge itself, rather than a money judgment or a stated sum in costs.