What is a Fraudulent Conveyance and what does it mean to Birch Mountain Shareholders?
That question is best answered by Mr. Howard Gorman in his white paper on Bankruptcy and Insolvency published on his bio page on the MacLeod Dixon website: http://www.macleoddixon.com/ourlawyers/gormanh.htm
Information on fraudulent conveyances start on page 33. The following excerpt is from page 35:
"The fraudulent conveyance provisions in the FPA and the transfer for undervalue provisions of the BIA (except for non-arm's length transfers made within one year of the date of bankruptcy) essentially require the Trustee or complaining creditor to establish an intention to prejudice other creditors or, conversely, an absence of good faith and no bona fides consideration. In reviewing such cases, courts generally refer to the existence of “badges of fraud” in determining whether an attack on an impudent transaction can prevail. Such badges of fraud typically consider the relationship between the parties, the severity of existing or impending financial difficulties, the reasonableness of purported consideration, any secrecywith respect to the transaction, etc." (highlights added for emphasis) Source: http://www.macleoddixon.com/documents/Recovery__Insolvency__Bankruptcy_and_Arrangements_in_Canada__March_2011_.pdf
What does "secrecy with respect to the transaction" mean?
Essentially, it describes a transaction that is not known to others or the bankcruptcy/receivership court. We've been looking for disclosure of the Pattison Option Agreement in the PWC receivership filings and court documents and cannot find any evidence of that disclosure.
So, we have to ask. Was the receivership court aware of the private agreement between a director of Brookfield and Brookfield?
IF a "secrecy" issue is reviewed by the courts, what does Mr. Gorman have to say about how the courts might remedy the situation?
Also on page 35:
"When a fraudulent conveyance application is successful, judgment is awarded as against the debtor and the recipient of the transfer compelling the return of the property and/or monetary judgment in an amount equal to the value of the property so that the Trustee and remaining creditors are put in the same position as if the impugned conveyance had not occurred. Similarly, where the Trustee establishes a transfer at undervalue, the court may declare that the transaction is void as against the Trustee, and may grant judgment for the difference between the actual consideration received and the fair market value of the property." (highlighted emphasis added)