When a non-profit society begins the process of dissolution, creditors with legitimate claims face a precarious moment. The orderly wind-up procedures contemplated by Alberta's corporate registry statutes assume good faith on the part of directors and a transparent accounting of assets before distribution. But what happens when the timeline and circumstances suggest that assets may have been moved beyond the reach of creditors before dissolution was even contemplated publicly, or when certain creditors appear to have been favoured over others? Alberta law provides remedies rooted in centuries of equity jurisprudence, modernized through statutory codification, that allow aggrieved creditors to challenge transactions designed to defeat their legitimate expectations. Understanding these remedies, their elements, and their practical application is essential for any creditor facing a wind-up scenario where the numbers simply do not add up.
The foundational principle underlying fraudulent conveyance law is straightforward in its moral logic: a debtor should not be permitted to place assets beyond the reach of creditors while retaining the benefit of those assets or while favouring certain parties over others who have equally valid claims. In Alberta, this principle finds statutory expression in the Fraudulent Preferences Act, which as of the date of authorship continues to govern transactions that prefer one creditor over another and conveyances made with intent to defeat creditors generally. The Act operates alongside common law principles that remain relevant for interpreting statutory provisions and filling gaps where the legislation does not speak directly to a particular factual pattern. For a creditor facing a dissolving society, these tools represent the difference between accepting an insulting fraction of what is owed and pursuing meaningful recovery against assets that may have been improperly transferred.