To all OAIRP Members:

The OSB and the Court have become aware of a number of bankruptcy matters before the Court with common features associated with files connected to the failed donation tax shelter, “Global Learning Group, Inc.” and, more specifically, those individuals who may have utilized the services of a firm named “Huttonville”.

The common features seen in these files are detailed below, taken from public record sources, including a decision from Justice Conway which references the Huttonville firm.

Excerpt from the Ruling of the Honourable Justice B. A. Conway, May 11, 2023, Toronto, Ontario Superior Court of Justice:

There are a number of common features that run throughout the 11 files. All of the bankrupts were referred to the trustees by an accounting consulting firm called Huttonville. That firm worked with the individuals, reviewed their financial situations, and put together an information package for the trustees to whom the individuals were referred. The evidence is that Huttonville received next to nothing for all of the work it did - at most, $50.00 per case. The bankrupts gave undertakings to provide the Huttonville files to the trustees, but have not done so.

Typical debtor profile as observed in these matters:

Insolvency Strategy:

• Debtor willingly or unwillingly participated in tax evasion through “fake” businesses or charitable contributions;
• CRA disallowed these tax shelters retroactively, which created tax liability (possibly in the $60k-$200k range) representing over 75% of their total debt;
• Following the CRA decision, the debtor acquired new credit sources and maxed them out (the intent of which appears to be to defeat S 172.1 applicable to high-tax debtors);
• This strategy is being applied by multiple Tax Preparation Specialists.

Debtor Profile resulting from Insolvency Strategy:

• CRA debt (possibly in the $60k - $200k range and representing over 75% of their total debt), the result of disallowed charitable donations;
• New credit obtained within 6 months to a year prior to bankruptcy and generally maxed out;
• Recently retired, self-employed (or sole-proprietor with lack of books and records);
• +60 years old;
• Unsubstantiated separation/divorce agreements;
• Real Estate property – declared & undervalued (or) not declared/transferred undervalue;
• RRSP (Declared);
• Cash advances;
• Possibly referred through accounting firms.

The Toronto Bankruptcy Court would like to schedule a Case Conference with as many of the LITs firms who have files that match or are similar to the facts described above.  The OAIRP has agreed to assist in identifying those LIT firms so that the case conference can be organized to discuss how the Court, the OSB and the LIT community can deal with these related estates in an efficient and consistent manner.

Please send an email to OAIRPboard@gmail.com if your firm has any such files and designate a contact person who can be contacted to coordinate the scheduling of this hearing.

Thank you,
 
Ontario Association of Insolvency and Restructuring Professionals