Bankruptcy and Insolvency Act

Marginal note:Transfer at undervalue

• 96 (1) On application by the trustee, a court may declare that a transfer at undervalue is void as against, or, in Quebec, may not be set up against, the trustee — or order that a party to the transfer or any other person who is privy to the transfer, or all of those persons, pay to the estate the difference between the value of the consideration received by the debtor and the value of the consideration given by the debtor — if

  • (a) the party was dealing at arm’s length with the debtor and

    • (i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and that ends on the date of the bankruptcy,

    • (ii) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, and

    • (iii) the debtor intended to defraud, defeat or delay a creditor; or

  • (b) the party was not dealing at arm’s length with the debtor and

    • (i) the transfer occurred during the period that begins on the day that is one year before the date of the initial bankruptcy event and ends on the date of the bankruptcy, or

    • (ii) the transfer occurred during the period that begins on the day that is five years before the date of the initial bankruptcy event and ends on the day before the day on which the period referred to in subparagraph (i) begins and

      • (A) the debtor was insolvent at the time of the transfer or was rendered insolvent by it, or

      • (B) the debtor intended to defraud, defeat or delay a creditor.

• Marginal note:Establishing values

  (2) In making the application referred to in this section, the trustee shall state what, in the trustee’s opinion, was the fair market value of the property or services and what, in the trustee’s opinion, was the value of the actual consideration given or received by the debtor, and the values on which the court makes any finding under this section are, in the absence of evidence to the contrary, the values stated by the trustee.

• Meaning of person who is privy

  (3) In this section, a person who is privy means a person who is not dealing at arm’s length with a party to a transfer and, by reason of the transfer, directly or indirectly, receives a benefit or causes a benefit to be received by another person.