The Receiver brought a motion seeking a declaration that certain transfers made by the debtor to third-party creditors were transfers at undervalue under section 96 of the Bankruptcy and Insolvency Act, and an order for repayment.
The debtor's principal had breached a preservation order by using a tax refund to pay personal and corporate debts owed to the third parties, who received the funds in good faith without knowledge of the receivership or the court order.
The court found that while the transfers met the criteria for transfers at undervalue, the exceptional circumstances of the case warranted exercising discretion to not require the third parties to repay the funds.
The Receiver's reports and fees were approved.
