A Manitoba bankruptcy trustee has obtained a $1,816,000 judgment after a court found that a cottage sale and related share transfer were used to put assets beyond creditors’ reach.
In Standing (Re), 2026 MBKB 123, delivered September 9, 2026, Justice Bowman of the Court of King’s Bench of Manitoba ruled for Caplan and Company Ltd., trustee of Thomas Harold Standing’s bankrupt estate. The award represents the cottage’s entire gross sale proceeds, with pre-judgment and post-judgment interest at a commercially reasonable rate. The reasons do not specify that rate.
The court rejected the defendants’ central position that the property had belonged to a family trust since 2010 and therefore was unavailable to the estate. It found a fraudulent conveyance, a transfer at undervalue and civil conspiracy. Those are civil findings, not criminal convictions; the judgment does not establish that the trustee has collected the money.
Corporate changes followed the business shutdown
Standing incorporated 6136380 Manitoba Ltd. in 2010. The company acquired the lease for a Falcon Lake cottage from his parents, and a new cottage was built. Standing remained its sole director for approximately 11 years, during which no shares were issued until March 2021.
On March 5, 2021, the Manitoba Securities Commission issued a cease-trading order against Standing and Sigmar Mortgage Services Ltd. that effectively shut down his businesses. Lawsuits followed that month.
Later in March, a bare-trust agreement was executed and shares in the cottage-owning company were issued to Bobbi-Lynn Standing, his wife. The cottage was sold that spring. She became the company’s sole director and officer in July, shortly before Standing and two of his companies made bankruptcy assignments on July 29, 2021.
The trustee challenged the arrangements after learning of the cottage. Standing had not listed the property or his interest in the company in his bankruptcy statement of affairs. His position was that they were not his assets to disclose.
Defendants said the trust long predated financial trouble
The defendants argued that the company had always held the cottage for Bobbi-Lynn Standing and the family, including future generations. They said the 2021 documents formalized an arrangement intended when the company was incorporated, rather than creating a new ownership structure on the eve of bankruptcy.
Standing described the arrangements as legitimate tax and estate planning, with personal assets held separately from his business interests. The defendants emphasized that there was no evidence of creditor difficulties in 2010 and that incorporating a company or transferring property within a family is not inherently improper.
They also relied on a contractor’s recollection that Standing had described the company as a family trust while the new cottage was being built. They argued that an earlier trust intention could be established without a contemporaneous written declaration.
Bowman did not accept the evidence. The judge found the Standings unreliable on material matters and gave little weight to the contractor’s vague recollection of a conversation more than a decade earlier.
The reasons identified inconsistencies between trial testimony and earlier examinations, missing documents that might have corroborated the asserted arrangement, and financing records that did not establish the claimed source of cottage-construction funds. The judge also contrasted the claimed family beneficiaries with the 2021 agreement’s identification of Bobbi-Lynn Standing alone.
Timing and inadequate consideration supported the findings
Under Manitoba’s Fraudulent Conveyances Act, the court considered whether property had been conveyed with the intention of defeating, hindering, delaying or defrauding creditors. Bowman inferred that intention from the evidence, including the inadequate consideration, close relationship, rapid sequence of transactions after the business shutdown and absence of earlier documentation supporting the alleged beneficial ownership.
The judge found that the trust intention most likely arose in 2021. Even accepting the defendants’ alternative 2010 account, Bowman concluded that the evidence demonstrated an intention to shelter assets from potential creditors. The finding did not depend simply on the parties being spouses.
The Bankruptcy and Insolvency Act provided a separate basis for relief. The judge found that the transaction involved non-arm’s-length parties, inadequate consideration and transfers within the year before bankruptcy. For that category of transfer at undervalue, proof of an intention to defraud was not necessary.
The asserted trust did not answer the trustee’s claim. Bowman found insufficient reliable evidence establishing the required certainties of intention, trust property and beneficiaries at the relevant time. The later agreement did not credibly establish the earlier arrangement alleged by the defendants.
The judge also found that the Standings had knowingly acted together to deprive creditors of the ability to collect, establishing the civil tort of conspiracy.
Gross proceeds, rather than a reduced ownership share
The defendants argued that any recovery should be limited to Standing’s proportionate interest in the net proceeds after secured debts were paid. Bowman rejected that approach, finding the entire gross proceeds an appropriate damages measure in the circumstances.
The court declared the sale and share issuance void as against the creditors and awarded the trustee $1,816,000 plus interest. If the parties cannot agree on costs, they may seek a further appearance to make submissions.
