in 2010 I borrowed $20,000. on my line of credit to loan to…

in 2010 I borrowed $20,000. on my line of credit to loan to a relative who owned a corporate business. I had previously loaned funds and always received payments on time and the final balance was paid months prior to the last payment due date. A month after the loan I was asked to go into the office to audit the records to determine the problems and set up payment schedules, etc. to pay out creditors and monitor the cash flow. Through carefuly management I was abke to improve cash flow, monitor payments to crditors, I was repaid the borrowed funds plus the interest of $397.76 which I had paid on the loan. This repayment immediately paid off my line of credit. I billed for my time as well as mileage (68 km each way). and received a total of $11,103.36 in payment for March through to the end of February of the following year. The owners were told by the trustee that the bookkeeping was considered separately from other creditrs and I was paid for my time and mileage.

I have now received a letter from the bankruptcy trustee demanding that "Section 95 of the Bankruptcy and Insolvency Act provides that a pyament made to a creditor not dealing at arm's length with the bankrupt, within 12 monthsof the date of bankruptcy, which has tghe effect of giving that creditor a preference over another creditor, is void as against the Trustee." "As such, the payments are void and should be repaid for the benefit of all creditors. We have been directed to request repayment from you in the amount of $31,501.12."

I would like to know my position at this time. The extensive time spent going through past records was billed at a very low rate and would have been much more costly had an accounting firm been called in to do the work and their charges would have been honoured.

As the loan had been borrowed on my line of credit and the bank was repaid, I do not have the loan proceeds the company paid to me and would have to re-borrow to return the funds to the trustee.

Can I be forced to borrow the funds to be paid to the Trustee. In the event the funds were repaid to the trustee, would I then become a creditor and entitled to voting privileges and be entitled to payment of thee funds returned at the same rate as all other creditors. As such, that would probably put me in the position of the 2nd highesrt creditor and therefore a conflict of interest.

There are two other creditors who are pushing for repayment, one ofwhich allowed the account to go in arrears over a year and still continued to supply goods. I would suggest a counter suit, questioning their accounting procedures in allowing such extgensive delinquency.

I would appreciate any and all information you may be able to provie. I would also appreciate direction on how I might be able to meet with an expert in order to solve this problem.

With Kind regards
Betty [email protected]