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Kevin O'Leary addresses a news conference in Toronto on April 26, 2017.Nathan Denette

Kevin O’Leary says he is prepared to go to court to fight Canada’s election laws that prevent him from personally paying down debt from his failed federal Conservative leadership bid.

Mr. O’Leary, who has retained veteran securities lawyer Joseph Groia, said he wants to be able to pay back small-business owners who are suffering financially after providing services for the campaign, while the celebrity businessman tries to raise money for his bid, which racked up nearly $530,000 in debt.

“I’m doing this for the basic reason to try and ensure that I’m going to pay these people, because there’s no guarantee my fundraising will be successful,” Mr. O’Leary said in an interview.

After a high-profile fundraiser in Toronto in April sold fewer tickets than expected, Mr. O’Leary estimates he has raised about $130,000. According to the Canada Elections Act, candidates can contribute only $25,000 to their own campaigns, and a failure to repay campaign debts within three years could result in fines and up to three months in jail.

Mr. O’Leary said the fact that he can’t repay small vendors when he has the money himself is “so un-Canadian somebody has to shine a light on it.”

“I realize how unfair this is. I’m going to take it as far as I can take it. If it goes to the Supreme Court I’m okay with that,” he said.

In the meantime, Mr. O’Leary said he is planning more fundraising events in the fall and is launching a website, Wonderfunder.com, to solicit donations that he will match to the Canadian Olympic Foundation.

Jordan Owens, director of communications for Democratic Institutions Minister Karina Gould, said elections laws are based on the idea of a fair and level playing field, and limits on contributions and expenses “reduce the possibility of undue influence in our democracy.”

“Mr. O’Leary is subject to the same rules as all other leadership candidates. While he may be facing difficulty paying off his leadership debt 14 months after dropping out of the Conservative leadership race, he knew what the rules were when he decided to run,” she wrote in an e-mail.

In a letter to the commissioner of Canada Elections and the chief electoral officer sent late last week, Mr. Groia asks the top officials to revisit a previous request to allow Mr. O’Leary’s media company, O’Leary Productions, to loan the campaign $300,000, after attempts to secure bank loans were “unsuccessful.”

Mr. Groia - who successfully defended a man charged in one of Canada’s biggest stock-market frauds - called the current provisions of the law “constitutionally unsound.” He said many past leadership candidates have been unable to pay back a vast majority of campaign expenses, exposing them to potential prosecution and incarceration.

“We believe that this risk, along with the unreasonably low contribution limits allowed in leadership campaigns, are clear violations of candidates’ free speech, liberty, and voting rights under the Canadian Charter of Rights and Freedoms,” he wrote in his letter.

In an interview, Mr. Groia said that even if Mr. O’Leary is granted an exemption for the loan, the more likely remedy “is for the court to say this legislation is so bad it should be struck down.”

A spokeswoman for Commissioner of Canada Elections Yves Côté said the office does not confirm receipt of specific complaints, nor disclose whether it is conducting an investigation.

Meanwhile, a spokesman for Liberal MP Francis Drouin said Mr. Côté’s office has confirmed there will be no investigation into Mr. O’Leary’s fundraising practices. Mr. Drouin had asked the commissioner to investigate whether Mr. O’Leary broke the law when he held a fundraiser with his U.S. TV co-stars and promised to match the $2,000 ticket price with donation to a taxpayer-funded program for athletes.

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