SCC decision upends how provincial courts interpret bankruptcy law in relation to student loan debt

The Supreme Court of Canada has released a decision that will impact how provincial courts across Canada interpret bankruptcy law—and could have practical implications for students borrowing government loans, says partner Jeremy Opolsky.

In Piekut v. Canada (National Revenue), 2025 SCC 13, the SCC dismissed the appeal of Izabela Piekut, who made a consumer proposal under the Bankruptcy and Insolvency Act (BIA) in 2013 to be released from repaying her government student loans.

Izabela pursued studies between 1987 and 2003 that were supported by government loans, followed by a self-funded master’s program that ended in 2009. One of the exceptions under the BIA, however, is that an individual cannot be discharged from student loan debt within seven years of being a student. The SCC ruled that for BIA purposes, Izabela stopped being a student in 2009—only four years before filing her consumer proposal. 

Jeremy led a Torys team made up of Mike Noel and Alison Schwenk to represent the Canadian Alliance of Student Associations as intervener.

The 6-3 majority decision "strikes a contrast with the court’s previous decision in Poonian about exceptions from the fresh start that is incumbent with the discharge from bankruptcy,” Jeremy said in an interview with Canadian Lawyer. “In that case, the court narrowly construed the exceptions, but here they were willing to give the exceptions a much broader interpretation.”

“We argued that the interpretation sought by the government, the single-date approach, would create an absurdity,” Opolsky added. “The majority found otherwise.”

One lesson from the case, Jeremy said in an interview with Law360, “is the continuing importance of bilingual interpretation for federal statutes. A lot turned ... on reconciling the French and English versions of the federal BIA.”

He also added that the decision could have potential drawbacks for students who have borrowed government student loans and who are returning to school.

“Returning to school and taking advantage of interest relief will reset the clock on the availability of relief in bankruptcy from those debts, if the financial need arises,” he said.

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