Augusta backs claim in Canadian insolvency proceeding
Augusta Ventures is backing a claim against the former lawyers, auditors and financial advisors of Cash Store Financial Services Inc., a Canadian payday lender that filed for creditor protection in 2014.
Formerly a listed public company with over 500 branches across Canada, the company ran into liquidity issues after regulators suspended its right to offer loan products in Ontario, Canada’s most populous province. It was also facing significant litigation from customers and investors in relation to its lending practices and financial reporting, respectively.
The company has been under creditor protection for seven years. Substantially all of the company’s assets have been sold, and litigation claims against the company’s directors and officers and certain lenders have been settled. There remains, however, ongoing professional negligence claims against:
KPMG LLP, the company’s former auditors;
Cassels Brock & Blackwell LLP, the company’s former counsel; and
Canaccord Genuity Inc., the company’s former financial advisor.
Requiring funding to progress these claims to trial, the company has entered into a litigation funding agreement with Augusta Ventures to finance the anticipated disbursements. Augusta has also agreed to fund any court ordered costs awarded against the company to a maximum of CAD $8.5 million. Additional terms of the funding agreement have not been disclosed.
Thornton Grout Finnigan LLP and Van Kralingen & Keenberg LLP are counsel for the company. FTI is the court-appointed monitor overseeing the insolvency proceedings.
The court approved the funding agreement on October 28, 2021.