Bankrupt’s assignment of claim for equalization wouldn’t benefit creditors

Bankruptcy and Insolvency – Property of bankrupt – Family law issues

Bankrupt and wife separated in 2016 and wife commenced family law proceedings. Bankrupt made voluntary assignment into bankruptcy. Bankrupt listed claim for equalization of property in amount of $794,000, comprised mainly of matrimonial home and wife’s pension, as asset. Trustee offered bankrupt’s claim for equalization to litigants in matrimonial proceedings after determining that creditors were not prepared to finance trustee’s pursuit of claim. Bankrupt offered no bid, but wife bid $25,111 plus HST, and trustee awarded bankrupt’s equalization claim to wife. Trustee brought motion to approve sale by tender of equalization claim of bankrupt to wife and bankrupt brought motion opposing approval of sale. Motion by trustee allowed; Motion by bankrupt dismissed. Bankrupt’s equalization claim vested with trustee as on date of bankruptcy, triggering event had occurred and application for equalization had been made. Equalization claim, to extent it turned on wife’s pension, was not exempt from vesting or realization by trustee as interest that vested with trustee was not interest in wife’s pension, but contingent interest in claim for money and no interest in wife’s pension could possibly arise until family court found bankrupt was entitled to net positive payment on account of equalization and family court exercised discretion to order that pension vest in husband to satisfy that obligation. Bankrupt made no complaint about procedure or tender process at time. Giving bankrupt opportunity to take assignment of claim for equalization back from trustee would not have benefited creditors. There was no evidence that what trustee realized was not best realization reasonably available.

Infusino, Re (2019), 2019 CarswellOnt 22086, Penny J. (Ont. S.C.J.).

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