Background
A man ran a fraudulent scheme obtaining $65M from investors through his investment company from 2009 to 2017. He paid himself director fees of $8M over this period. In 2016, he informed his investors that the company is unable to pay back the investors, despite they signed agreement that their capital is guaranteed. Thus, the disgruntled investors filed legal suit against him. In 2019, the man divorced his wife, and transferred all asset to his wife as divorce settlement. Total asset transferred include 4 condominiums and undisclosed amount of money. He also agreed to pay for the mortgage and child maintenance of $2,000/month even though he will be penniless after giving everything away.
Judgement
High Court Judge noted that the transfer under the divorce order would not be “immunised” from the bankruptcy action. This was especially so because the order was so onerous on the husband that this raised suspicion that the couple had an ulterior motive in their split.
Verdict
Injunction order was granted against the wife asset to satisfy creditors.
Moral of the story
In asset division due to divorce, key principle of matrimonial law is that each spouse is entitled to a “just and equitable” share of the family’s assets.
In this case, the divorce order was so disproportionally skewed in favor of one party which makes it obvious that the divorce was a collusion to defraud creditors.
