PP#3

Question 1

Fraudulent Preferences Act

Answer 1

This is used by a creditor who was not paid by a debtor due the to the debtor declaring bankruptcy. The Fraudulent Preferences Act examines the commercial transactions that the debtor made in their last year before going bankrupt. Under the FPA you do not have to prove malicious intent but just that an unfair transfer of funds or property was committed.

Question 2

Statue of Elizabeth

Answer 2

The Fraudulent Preferences Act for actions committed over 1 year ago. The difference is in the statue of Elizabeth you have to prove there was a badge of fraud.

1. The transfer was made pending the creditors ability to obtain judgement.
2. The transfer documents contain false statements as to consideration.
3. The consideration was grossly inadequate.
4. Their was unusual haste to make the transfers
5. A close relationship was made between the parties that conducted the transfers.

Question 3

Corporate Bankrupcy

Answer 3

If a corporation declares conventional bankruptcy it will shut down permanently. That is why companies prefer Companies Creditor Arrangement Act (CCAA). It is an act that allows corporations to declare bankruptcy and then survive afterward as a profitable company. At this time, a trustee with run your company and attempt to make your company profitable again.

Question 4

Landlord Right of Distress

Answer 4

An exception to the PPSA, this right of distress allows a landlord the first priority to commercially valuable goods that are left abandoned on their property by a tenant who did not complete their debt obligations. This priority even supersedes that of anybody with a secured interest in those goods.

Question 5

Liens in respect to the PPSA

Answer 5

The landlords right of distress opens up the floor to other leans (or provisions resembling leans) that have superior rights to personal property. These rights are even superior to a perfected secured interest in the same items under PPSA.

These are: 
Builders Lien
Mechanics Lien
Possessory Lien
Warehouseman's Lien
Carrier's Lien

Question 6

Lien Holder vs. Secured Creditor

Answer 6

A Lien holder has a more secured interest as compared to a secured creditor. If this was not the case, lien holders would have to register interests and that would be impractical.