Exam 29: Creditors Rights

I.M.Construction Ltd.decided to profit from the real estate boom and build a small retail and office building on land that it owns.Before the building is complete I.M.Construction Limited becomes insolvent.The property is subject to a mortgage that is not fully advanced and to many builders' liens.There have been inquiries from a number of parties who would be interested in renting space in the building.The real estate market is still booming.What practical advice do you have for the mortgage company and the lien holders?

As far as claims against the property of a bankrupted debtor go,the trustee pays the general creditors in priority to which of the following?

Under the Bankruptcy and Insolvency Act,what is a commercial proposal?

In the context of bankruptcy proceedings,liquidating dividends are

When is an undischarged bankrupt liable to a fine or imprisonment?

A builder's lien is available only to creditors who participate directly as workers,or who supply material for use directly in the construction work.

A secured creditor does not have to prove its debt before its debt ranks as a claim against the bankrupt's estate.

Where,just before declaring bankruptcy,a person transfers title of real property to his children telling them that he wants to protect the property from bankruptcy,the transfer is a fraudulent conveyance or transfer.

On a bankruptcy,preferred creditors rank in priority before secured creditors.

Under the Bankruptcy and Insolvency Act,the claims of unpaid employees against the assets of a bankrupt employer rank in priority

James had made a consumer proposal (Division II)to his creditors.He wanted a reduction and extension of time for the payment of his debts.A formal meeting was not requested by any of the creditors.Now the administrator must

What is the difference between a bankrupt person and an insolvent person?

Danny is thinking of bankruptcy for his business,but so far he has not made an assignment,nor is the business subject to a receiving order.Yet,because Danny meets all the requirements of bankruptcy,the Bankruptcy and Insolvency Act refers to Danny as

Use this fact situation to answer the related questions that follow. General Widgets is a large provincial manufacturing company that has been in business for a number of years,but when the economic recession began in 2008,the company found itself experiencing a lack of sales,which affected its ability to pay its suppliers.George is the principal shareholder of the company and has an outstanding shareholders loan of $100 000.00.Between January 2008 and February 2008,the company was managing to pay its creditors,although slowly,and its assets were sufficient to satisfy its indebtedness,but by the end of January 2008 its assets have shrunk well below its debt load.In March 2008,George ensures that the company repays his shareholders loan.Thereafter,in December 2008,the company actively decides to pay only its major creditor,a supplier with whom George is good friends.Also in December 2008,seeing that General Widgets is sinking deeper and deeper into debt,George decides to incorporate a new company into which he transfers $300 000.00 of General Widgets' assets.On March 1,2009,General Widgets makes a voluntary assignment in bankruptcy. In this case,the fact that between January and February 2008 the company was just managing to pay its creditors probably means that

A commercial proposal made by an insolvent person is an offer made by the debtor to its creditors

Brianna,a framing contractor,has a duly registered builders' lien on the property owned by Bowing Development.This lien gives Brianna the right to

Use the fact situation in Q2 to answer the related question that follows. Assume that the bank is a secured creditor of General Widgets and that its security is greater than the amount that the company owes to the bank,which enforces its security.In such a case,

Use the fact situation in Q2 to answer the related question that follows. Given the bankruptcy of General Widgets,the incorporation of the new company by George is

What is a fraudulent preference? Give an example of a fraudulent preference.

In Ontario,on a sale of assets,what normal searches should the buyer conduct?