Warning signs may include:

• A transfer of real property to a spouse, relative, insider, or related corporation;

• A gift or sale for significantly less than fair market value;

• A new mortgage or security interest granted after collection demands begin;

• The movement of business assets into a newly created entity;

• A transfer that leaves the debtor unable to pay existing obligations;

• Unusual payments favouring one creditor over others while the debtor is insolvent; and

• Transactions that are undocumented, backdated, or inconsistent with ordinary business practice.

The existence of one warning sign does not automatically make a transaction unlawful. The court considers the governing statute, the debtor’s intention and financial condition, the consideration given, the recipient’s knowledge, the relationship between the parties, and the surrounding circumstances.

Depending on the facts, a creditor may seek:

• A declaration that the transfer is void or ineffective against creditors;

• An order returning property or its value;

• Tracing or recovery of identifiable proceeds;

• A certificate of pending litigation affecting transferred land;

• An injunction preventing further dealings with property;

• Disclosure concerning the transaction and disposition of proceeds; and

• Costs and other consequential relief.

Claims may arise under Ontario’s Assignments and Preferences Act, equitable principles, and applicable insolvency legislation. The legal test and available relief depend on whether the debtor is insolvent, whether the transaction occurred before bankruptcy, and whether the claim is pursued by an individual creditor, trustee, or other court-appointed officer.

We review title and corporate searches, banking records, agreements of purchase and sale, appraisals, loan records, tax documents, communications, and evidence concerning the debtor’s assets and liabilities when the transfer occurred.