In Re Fancy,a businessperson knew that he was facing substantial losses from pending litigation.Shortly before declaring bankruptcy,he transferred his interest in the matrimonial home to his wife.What was the result?
A) The Court reversed the transfer because it was unnecessary: The wife would automatically receive the matrimonial home once the bankruptcy took effect.
B) The Court allowed the transfer, determining the wife was not a co-conspirator.
C) The Court allowed the transfer, because transfers between spouses are exempt under the Bankruptcy and Insolvency Act.
D) The Court reversed the transfer, determining it was a prohibited settlement under the Bankruptcy and Insolvency Act.
E) The Court declined to exercise jurisdiction because a bankrupt has no status to appear in court.

Question

Quizplus · Accepted Answer

The Court reversed the transfer, determining it was a prohibited settlement under the Bankruptcy and Insolvency Act. Transferring the matrimonial home to his wife shortly before declaring bankruptcy was an attempt to avoid satisfying his creditors. The Bankruptcy and Insolvency Act prohibits settlements made by a person within one year of their bankruptcy if the purpose was to prevent the assets from being divided among the creditors. The transfer in this case falls under this category, and hence, it was reversed by the court.

In Re Fancy,a Businessperson Knew That He Was Facing Substantial