KPMG and Cassels Cleared of Negligence in Cash Store Collapse

The Ontario Superior Court has dismissed all claims against KPMG LLP and Cassels Brock & Blackwell LLP stemming from the high-profile insolvency of The Cash Store Financial Services Inc., a former payday lending chain that collapsed into insolvency protection in 2014 following mounting regulatory sanctions and liquidity pressures. The Court revealed that the litigation was funded under a litigation funding agreement with Augusta Pool 4 Canada Limited, an England-based funder, which included profit-sharing arrangements with several participants, including the Court-appointed Chief Restructuring Officer. The Court did not find the funding arrangement illegal but expressed discomfort that key witnesses—particularly the CRO in the insolvency proceedings—held undisclosed financial interests tied to the case’s outcome. The Court observed that such arrangements may be “necessary in certain circumstances to fund meritorious litigation,” but emphasized that they raise concerns when individuals presented as neutral officers of the court also stand to gain financially.

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