RE: Asi Acoustical Supplies ltd.

RE: Asi Acoustical Supplies ltd.

The registrar held that the proceeds of the Winroc settlement are subject to the secured creditor's security and therefore are not assets of the estate; consequently the registrar cannot order payment to the trustee from those proceeds and the Winroc receipt must be excluded from the estate accounts.

Citation
2000 BCSC 1466
Parties
Bankrupt: ASI Acoustical Supplies Inc.; Trustee: MacKay & Company Ltd.; Creditors (objecting): Brian Black and George Willsie; Settlement Counterparty / Secured Creditor: Winroc
Court
Supreme Court of British Columbia
Jurisdiction
Canada
Judgment Date
5 October 2000
Procedural Posture
Bankruptcy Trustee Remuneration and Asset Realization / Application to Registrar for Taxation of Trustee's Statement of Receipts and Disbursements and Determination of Estate Entitlement to Settlement Proceeds
Outcome
Registrar excluded Winroc settlement proceeds from estate and ruled he has no jurisdiction to order secured creditor to pay trustee from secured assets; disbursements on statement #1 to be transferred to statement #2 but will not be paid because no estate funds exist.
Legal Topics
Secured Creditor Priority, Fraudulent Preference, Settlement Proceeds, Taxation of Trustee Accounts
Source Language
English
Bankruptcy and Insolvency Secured Transactions Trustee Remuneration Civil Procedure Secured Creditor Priority Fraudulent Preference Settlement Proceeds Taxation of Trustee Accounts

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Parties

ASI Acoustical Supplies Inc.

Bankrupt

MacKay & Company Ltd.

Trustee

Brian Black and George Willsie

Creditors (objecting)

Winroc

Settlement Counterparty / Secured Creditor

Procedural Posture

Bankruptcy Trustee Remuneration and Asset Realization / Application to Registrar for Taxation of Trustee's Statement of Receipts and Disbursements and Determination of Estate Entitlement to Settlement Proceeds

Legal Issues

  1. 1 Whether the registrar can order a secured creditor to pay the trustee from realisation of assets subject to security
  2. 2 Whether proceeds of a settlement of an alleged fraudulent preference are assets of the estate or subject to the secured creditor's charge
  3. 3 Whether the trustee may charge the estate for disbursements incurred preserving assets subject to security

Ratio Decidendi

The registrar held that the proceeds of the Winroc settlement are subject to the secured creditor's security and therefore are not assets of the estate; consequently the registrar cannot order payment to the trustee from those proceeds and the Winroc receipt must be excluded from the estate accounts.

Court Disposition

Registrar excluded Winroc settlement proceeds from estate and ruled he has no jurisdiction to order secured creditor to pay trustee from secured assets; disbursements on statement #1 to be transferred to statement #2 but will not be paid because no estate funds exist.

Orders

  • Exclude proceeds of the Winroc settlement from the Trustee's Final Statement of Receipts and Disbursements as they are subject to the secured creditor's security interest
  • Transfer the disbursements appearing on Statement #1 to Statement #2