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ADMINISTRATION OF ESTATE - Sale of property - Trustees in bankruptcy

Wednesday, May 09, 2018 @ 8:42 AM  

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Appeal by a company, HPCB-Online, from a review under s. 100 of the Bankruptcy and Insolvency Act of its purchase of book inventory from a related bankrupt company; cross-appeal by creditors of the bankrupt business from the review. Prior to being assigned into bankruptcy, the bankrupt, Half Price Computer Books (HPCB), sold a portion of its inventory to HPCB-Online, which was a related company. HPCB’s creditors then had the sale reviewed under the Bankruptcy and Insolvency Act. The reviewing judge determined that HPCB-Online bought the inventory for less than fair market value and ordered that it pay the creditors the difference. On this appeal, HPCB-Online sought to set aside this order and argued that the reviewing judge did not properly assess the property’s fair market value. The creditors cross-appealed seeking judgment against the appellants and argued that the reviewing judge was required to accept the trustee’s opinion regarding the value of the property’s worth.

HELD: Appeal allowed; cross-appeal dismissed. A new trial was ordered. It was open to the judge to reject the trustee’s opinion as unreliable. The judge erred when he based the property’s fair market value on the gross proceeds from the property’s retail sale. The valuation approach the judge used was not consistent with the definition contained in s. 100(2) of the Act.

Randen v. HPCB-Online Ltd., [2018] B.C.J. No. 600, British Columbia Court of Appeal, R.J. Bauman C.J.B.C., L. Fenlon J.A. and B. Fisher J., April 6, 2018. Digest No. TLD-May72018005