A creditor of a bankrupt taxi company was authorized to pursue proceedings alleging that the transfer of several taxi dispatch telephone numbers to related parties constituted a fraudulent preference, fraudulent conveyance, or transfer at undervalue under the Bankruptcy and Insolvency Act and related provincial statutes.
The court held that the transfer arose from the exercise of a pre-existing secured note granting a right to acquire the assets upon default.
Claims under the Bankruptcy and Insolvency Act preference provisions, the Assignments and Preferences Act, and the Fraudulent Conveyances Act failed because the relevant intent was assessed at the time the security was granted and insolvency or fraudulent intent was not proven.
However, the court found that the transaction constituted a transfer at undervalue under s. 96(1)(b) of the Bankruptcy and Insolvency Act.
Judgment was granted against two respondents jointly and severally for the difference between the value of the telephone-number goodwill and the consideration received.
