A shareholder and creditor of a bankrupt corporation sought an order restraining the trustee in bankruptcy from selling the estate’s interest in a lawsuit and requested authorization under s. 38 of the Bankruptcy and Insolvency Act to continue the action on behalf of the estate.
The trustee had received an offer from a secured creditor to purchase the estate’s interest in the litigation and conducted a process inviting competing bids from creditors.
The moving creditor declined to submit a competing bid but sought a s. 38 assignment to pursue the claim himself.
The court held that the trustee acted reasonably in exposing the asset to the market to maximize recovery for creditors and that no basis existed to interfere with the trustee’s decision.
The motion was dismissed and the trustee was authorized to complete the sale of the cause of action.
