Creditors should not have to rely on fraudulent conveyance claim

PETITIONS

Creditors should not have to rely on fraudulent conveyance claim

Judgment creditors obtained $317,731.17 judgment plus $20,000 costs and $5,000 appeal costs against debtor and were only able to recover $3,700 through garnishment. Debtor and wife lived luxurious lifestyle, but debtor claimed he lost everything in stock market, had no income, was supported by wife and owed money on credit cards and car leases, which were being paid by wife. At time of judgment, debtor was registered owner of 1% of matrimonial home, which he then transferred to wife. Application by judgment creditors for bankruptcy order against debtor. Application allowed. Judgment was continuing demand for payment and debtor conceded he had not met liabilities on it. Under plain meaning of Bankruptcy and Insolvency Act (Can.), debtor had also ceased to meet liabilities on other debts. That wife was voluntarily making payments on debtor’s leases and credit cards did not change fact that he was unable to do so. Even if judgment was only debt to be considered, it so was so large in proportion to assets and income of debtor, had been outstanding for two years with collection efforts unsuccessful, so it alone justified bankruptcy order. There were also suspicious circumstances surrounding funding for matrimonial home and debtor’s actions in trading in car for lower lease payments after judgment had been entered. Creditors should not have to rely on their fraudulent conveyance claim and bankruptcy would allow trustee to exercise buy-out rights on leased vehicles and investigate debtor’s property in Nigeria. Debtor adjudged bankrupt.
Okoakih, Re (Dec. 9, 2013, Ont. S.C.J., Newbould J., File No. 31-OR-207983-T) 235 A.C.W.S. (3d) 604.