Prince George bankruptcy trustee John S. Beverly & Associates is after more than $537,000, plus court ordered interest from Jarrett Anderson, the son of Carl Glenn Anderson, according to a June 28, 2012, Supreme Court 'Interim reasons for judgment' document.
According to the document, as part of the Area Finance and 439288 B.C. Ltd. bankruptcy proceedings against Glenn, the trustee is seeking a judgment against Jarrett, after learning that in August 2005, Glenn transferred assets in Gerobeco Holdings Ltd., a holding company he had 50 per cent ownership in, to Jarrett.
Local resident Garth Jarvis holds the other 50 per cent share in Gerobeco Holding Ltd.
Glenn was a shareholder and director of the troubled companies, Area Finance and 439288 B.C. Ltd., along with locals Doug Montaldi and Gordon Shanks. Both Anderson and Montaldi were embroiled in a British Columbia Securities Commission ruling that banned them from the securities market for 12 years.
Since this time, there has been an outcry from approximately 480 local creditors requesting a return on the tens of millions of dollars invested in both of the companies.
During a 2004 hearing into the troubled companies, both Glenn and Montaldi guaranteed repayment of invested funds and pledged all of their current and after acquired assets as security for those guarantees.
In November 2009, Glenn announced that he would be filing for bankruptcy and appointed John S. Beverly & Associates as his trustee.
Montaldi was petitioned into bankruptcy with Boale Wood and Company, by bankruptcy trustees, Price Waterhouse Coopers in May 2010, leaving approximately 480 local creditors wondering if they would see a return on their invested funds.
The recovery of funds is still ongoing and Price Waterhouse Coopers have estimated that creditors will receive less than 10 cents on the dollar, leaving liabilities of at least $35 million.
As reported in the June 28, 2012, document, one of Glenn's assets, was the 50 per cent share in Gerobeco Holdings Ltd.
As of Feb. 28, 2002, John S. Beverly & Associates reported that Glenn had valued his interest in Gerobeco at $850,000.
The interim reasons for judgment against Jarrett states that Glenn transferred his interest in Gerobeco to him, as well as a loan that was owing to Glenn.
In the trustees opinion, the fair market value at the time of the transfer was upwards of $187,000 for the shares and more than $350,000 for the loan.
In an agreement dated Aug. 15, 2005, Jarrett agreed to buy Glenn's shares in Gerobeco for $375,000 and Glenn had acknowledged that the purchase price had been paid in full, however according to the trustee, Jarrett admitted that he did not pay any money to Glenn towards the purchase price of Gerobeco.
By a subsequent agreement, dated Sept. 1, 2009, Jarrett transferred the shares in Gerobeco back to Glenn for $50.
The document states that in Jarrett's first affidavit, he said he agreed to accept the transfer of shares of Gerobeco and the loan as a favour to his father, and then at the request of his father, he transferred his interest in Gerobeco back to him. In the documents, Jarrett said he never received any money or benefit from the agreement and, other than signing documents when requested by Glenn, he took no part or interest in the affairs of Gerobeco.
According to the trustee, in 2005, Gerobeco's balance sheet valued its assets at more than $781,000 and its liabilities at $806,082. Its liabilities included more than $711,000 in loans owing to its two shareholders [Glenn and Jarvis].
By 2008, the trustee reported that Gerobeco valued its assets at $59,259 and its liabilities at $1,926, with no amounts owing to its two shareholders.
According to the document, the trustee does not know what assets were disposed of by Gerobeco after its assets were transferred to Jarrett.
The document also states that neither Glenn, nor Jarrett have produced copies of Gerobeco's financial statements for 2006 and 2007.
They did however produce an affidavit from Gerobeco's accountant, Doug Montaldi.
The document states that the affidavit was submitted as evidence from Montaldi to show that the August 2005 transfer of shares and a loan from Gerobeco to Jarrett occurred because there was a pre-condition specified by the Bulkley Valley Credit Union in lending the company $475,000 for a mortgage. Reportedly, the pre-condition was that Glenn would no longer be a shareholder, officer or director of Gerobeco.
During the court proceedings, the trustee was required to establish liability, by proving that there was a transfer of under value property between Glenn and Jarrett, that the transfer occurred within the period beginning five years prior to Glenn's bankruptcy and that Glenn was insolvent at the time of the transfer intending to delay, defraud or defeat a creditor.
In the document, Justice I.C. Meiklem states that there is no question that the transfer, for which there was no consideration [payment] falls within the definition of an 'undervalue' transfer [$50 transfer].
Justice Meiklem also states that there is no compelling evidence or argument to suggest that Glenn was not insolvent in August 2005.
"At the conclusion of the first session of this hearing, it appears that the elements required were established. I was troubled by the conflict between Jarrett's sworn evidence that he did not receive any benefit from the shares [of Gerobeco] or the loan before re-transferring the shares to his father, and the fact that the loans were reported as nil in the Aug. 31, 2008, financial statements of Gerobeco, whereas they had been approximately $700,000 in August 2005," Justice Meiklem said.
"The 2006 and 2007 financial statements for Gerobeco were not produced and there was no evidence to support his bare assertion, which, if true, would indicate that either the apparent transfer of property was a sham and not a bona fide transfer at all, or that he was a bona fide transferee, who subsequently allowed his father to dispose of the property on his behalf. If Jarrett did not receive any benefit from the transferred property, the question arises as to how the loan obligations of Gerobeco were eliminated during the time he was a director, shareholder and legal owner of the loan assigned to him by his father, "Justice Meiklem added.
In the document, Justice Meiklem states that Warren Chapman's [Jarrett and Glenn's lawyer] assertion that Jarrett was an innocent volunteer was a 'weak foundation' for his argument.
"In my view .... the onus shifted onto Jarrett to prove the evidence to the contrary," Justice Meiklem said, adding, "In regard to Jarrett's credibility and the opaqueness of the financial relationship between himself and Glenn, counsel for the trustee has noted that Jarrett's assertion that a company named 0702090 B.C. Ltd. operates three small businesses, which are his only source of income and from which he earns $30,000 per year before taxes. It is difficult to reconcile with the fact that T4s attached to his [Jarrett's] personal income tax returns indicate that his employer was Area Finance Inc. and indicate an income range of $40,000 to $42,000 from that source. My assessment of his creditability is also affected by the paradox to find him truthful in his present assertions that he actively participated in deceiving the Bulkley Valley Credit Union in August 2005."
Justice Meiklem granted leave to all parties to file further affidavit evidence regarding the matter before Aug. 31, 2012, at which time they will be reviewed and a ruling will be made or, if required, further submissions will be requested.