In the Matter of the Bankruptcy of ASI Acoustical Supplies Inc.

In the Matter of the Bankruptcy of ASI Acoustical Supplies Inc.

The Registrar correctly concluded on the material before her that the settlement proceeds were accounts receivable subject to the secured creditor's security interest and therefore not estate assets available to pay the trustee's fees; the trustee acted at his peril in collecting those funds without arrangements to protect secured creditors, and the appeal is dismissed.

Citation
2000 BCSC 1838
Parties
Trustee in Bankruptcy (appellant): MacKay & Company; Bankrupt Company: ASI Acoustical Supplies Inc.; Opposing Secured Creditor: Brian Black; Opposing Secured Creditor: George Willsie
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
22 December 2000
Procedural Posture
Bankruptcy Appeal / Appeal From Registrar's Decision
Outcome
Appeal dismissed
Legal Topics
Fraudulent Preference, Priority of Secured Creditors, Trustee Remuneration, Accounts Receivable Security
Source Language
English
Bankruptcy Law Insolvency Secured Transactions Fraudulent Preference Priority of Secured Creditors Trustee Remuneration Accounts Receivable Security

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Parties

MacKay & Company

Trustee in Bankruptcy (appellant)

ASI Acoustical Supplies Inc.

Bankrupt Company

Brian Black

Opposing Secured Creditor

George Willsie

Opposing Secured Creditor

Procedural Posture

Bankruptcy Appeal / Appeal From Registrar's Decision

Legal Issues

  1. 1 Are settlement proceeds from an alleged fraudulent preference subject to the secured creditor's security interest or assets of the bankruptcy estate?
  2. 2 Did the Registrar err in treating the settlement proceeds as accounts receivable covered by security and therefore not available to pay trustee remuneration?
  3. 3 Does the fact that only a trustee can commence a preference action alter the priority of secured creditors over settlement proceeds?

Ratio Decidendi

The Registrar correctly concluded on the material before her that the settlement proceeds were accounts receivable subject to the secured creditor's security interest and therefore not estate assets available to pay the trustee's fees; the trustee acted at his peril in collecting those funds without arrangements to protect secured creditors, and the appeal is dismissed.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed
  • Costs awarded to Mr. Black and Mr. Willsie in the amount of $250.00 each, payable forthwith