Sanctions handed down by securities regulators don’t disappear with bankruptcy proceedings, a British Columbia court has ruled.

The Supreme Court of B.C. issued a decision confirming that monetary penalties and disgorgement orders from regulatory proceedings are exempt from a bankruptcy discharge.

The ruling followed an application from the B.C. Securities Commission (BCSC) seeking an order to ensure that Thalbinder Singh Poonian and Shailu Poonian wouldn’t avoid monetary sanctions as a result of their bankruptcy.

In 2015, the BCSC ordered the Poonians to pay more than $19 million in penalties and disgorgement after the commission found that the pair had engaged in market manipulation.

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According to the court’s decision, the Poonians owe more than $25 million to creditors, including $4.3 million to the Canada Revenue Agency (CRA), in addition to the BCSC sanctions. Their bankruptcy trustee has recovered less than $3,200 from the Poonians’ assets.

In 2020, the Poonians sought a discharge from bankruptcy absolving them of their debts, which was opposed by the BCSC and the CRA. That application was dismissed.

The court that heard the BCSC application said the Poonians argued that the penalties imposed by the BCSC aren’t equivalent to sanctions imposed by a court, and shouldn’t survive bankruptcy proceedings.

However, the court rejected the argument, saying it was “satisfied that the Poonians’ actions were morally unacceptable and harmful to society, such that they should not be rewarded with a release of those debts through the statutory discharge under the [bankruptcy law]. “