Heather Park Properties (Bankruptcy of)

Heather Park Properties (Bankruptcy of)

Court found Gechman, as controlling mind, extracted funds from HPP and converted them to his personal funds and paid them toward settlement of his personal Arizona judgment; the Nov 5 and Nov 30, 2010 transfers fell within the three‑month pre‑initial bankruptcy period and are void under s.95 BIA (presumed and proven intent to prefer); the Sept 2, 2010 transfer is void under s.3 of the FPA; the assignment from the Gechman estate to the HPP estate is valid and not champertous; therefore the total disputed funds ($2,128,829) are payable to the Trustee.

Citation
2013 BCSC 2175
Parties
Applicant / Trustee in Bankruptcy: PricewaterhouseCoopers Inc. (Trustee of Heather Park Properties Ltd.); Respondents / Judgment Creditors: Flash & the Boys Inc. and other "Arizona lenders"; Debtor / Assignor: Jacob Gechman; Bankrupt Company / Estate: Heather Park Properties Ltd.
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
29 November 2013
Procedural Posture
Bankruptcy and Insolvency Proceeding Converted to Civil Action (consolidated Bankruptcy Litigation) / Summary Application Heard in the Bankruptcy Proceedings During Reserved Trial Time; Court Seized of the Bankruptcy and Action
Outcome
Transfers totaling $2,128,829 were declared void as against the Trustee and are payable to the Trustee of the HPP estate.
Legal Topics
Avoidable Transfers, Fraudulent Preference, Fraudulent Conveyance, Section 95 BIA, FPA S.3, Assignment, Maintenance and Champerty, Trust Funds and Fiduciary Breach
Source Language
English
Bankruptcy and Insolvency Trusts and Fiduciary Duties Property Law Civil Procedure Avoidable Transfers Fraudulent Preference Fraudulent Conveyance Section 95 BIA +3 more

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Parties

PricewaterhouseCoopers Inc. (Trustee of Heather Park Properties Ltd.)

Applicant / Trustee in Bankruptcy

Flash & the Boys Inc. and other "Arizona lenders"

Respondents / Judgment Creditors

Jacob Gechman

Debtor / Assignor

Heather Park Properties Ltd.

Bankrupt Company / Estate

Procedural Posture

Bankruptcy and Insolvency Proceeding Converted to Civil Action (consolidated Bankruptcy Litigation) / Summary Application Heard in the Bankruptcy Proceedings During Reserved Trial Time; Court Seized of the Bankruptcy and Action

Legal Issues

  1. 1 Were the disputed funds the property of HPP or of Jacob Gechman personally?
  2. 2 Were the transfers avoidable as preferences under s.95 of the BIA?
  3. 3 Were the transfers voidable under s.3 of the Fraudulent Preference Act (FPA)?

Ratio Decidendi

Court found Gechman, as controlling mind, extracted funds from HPP and converted them to his personal funds and paid them toward settlement of his personal Arizona judgment; the Nov 5 and Nov 30, 2010 transfers fell within the three‑month pre‑initial bankruptcy period and are void under s.95 BIA (presumed and proven intent to prefer); the Sept 2, 2010 transfer is void under s.3 of the FPA; the assignment from the Gechman estate to the HPP estate is valid and not champertous; therefore the total disputed funds ($2,128,829) are payable to the Trustee.

Court Disposition

Transfers totaling $2,128,829 were declared void as against the Trustee and are payable to the Trustee of the HPP estate.

Orders

  • Respondents shall pay $2,128,829 to the applicant (Trustee) forthwith.
  • Parties are at liberty to address the issue of costs.