It is authority for the proposition that one must return to the Family Court and seek to set aside the Order in that court, not bring collateral proceeding in the Bankruptcy Court. In Ontario, the decision of the Saskatchewan Court of Appeal in Ostapowich (2) has largely held sway. In brief, this “rule” purports to prevent a Bankruptcy Court setting aside an Order of a Family Court. Very frequently, when Trustees in Bankruptcy have challenged such Fraudulent Conveyances / Preferences in the Bankruptcy courts, their efforts have been defeated by the Collateral Attack Rule. Thereafter, he bankrupts himself, sure in the knowledge that the house is safe from his creditors. He alleges matrimonial breakdown and thereupon obtains a Family Court Order sanctioning the transfer. A husband (or wife), on the eve of bankruptcy transfers his share in the matrimonial home to the wife. The asset protection schemes at risk constitute those of a crude, yet very widespread nature. The judgment in Peake v Dashney (1) has wide implications for those practitioners engaged in asset protection, trustees in bankruptcy and counsel engaged in attacking or defending dispositions involving Orders made in Family Court property settlements. In a landmark ruling, the Ontario Superior Court has rejected the so-called Collateral Attack defence, much used in Fraudulent Conveyance litigation. Setting Aside Fraudulent Conveyances – A New Judicial Trend? Professional Misconduct and Disciplinary Tribunals.
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