On July 15, 2015, the Ontario court granted an Order approving settlement of the Castor Holdings litigation. This case involved Coopers & Lybrand, PricewaterhouseCoopers LLP, and insurers defending claims brought by creditors amounting to over $1.5 billion.

This was accomplished with the use of the Companies' Creditors Arrangement Act ("CCAA"). While the CCAA is often used to maintain the status quo while a debtor company reorganizes its affairs, the long-outstanding Coopers & Lybrand litigation illustrates the flexibility of settling numerous complex claims within the CCAA.

Castor Holdings was a private financial intermediary which experienced phenomenal growth from 1986 to 1990, with assets totalling over $1.8 billion in 1990. However, by July 1992, Castor Holdings declared bankruptcy and litigation ensued, with plaintiffs collectively claiming in excess of $1.5 billion.

Much of the litigation has focused on Castor Holding's auditor, Coopers & Lybrand. In 2011, the Quebec Superior Court held that Coopers & Lybrand was negligent in performing its services as auditor to Castor Holdings from 1988 to 1990. In 2013, the Quebec Court of Appeal held that the trial judge's decision was substantially correct and leave to the Supreme Court of Canada was ultimately denied.

In 2014, 4519922 Canada Inc. ("451"), a partner of Coopers & Lybrand, obtained protection under the CCAA. Generally, the CCAA is only applicable to corporations, not individuals or partnerships. However, in this case the Court extended the CCAA stay to the partnership, Coopers & Lybrand, on the basis that the operations of the two were so intertwined that not extending the stay to Coopers & Lybrand would, in all likelihood, undermine any ability to achieve a global settlement of the Castor-related litigation.

On July 15, 2015, the Court issued a Sanction Order, approving a settlement which would see various parties contributing a total of US $99.25M and CAD $113.4M for distribution amongst the creditors of Castor Holdings. Features of the Plan and Sanction Order include:

  • Contribution of $74.5M from approximately 300 former partners, with further contributions from Coopers & Lybrand, its insurers, and others;
  • Comprehensive releases preventing the commencement and continuation of actions against Castor Holdings, Coopers & Lybrand, its partners and those parties' affiliates; and
  • An extension of the stay of proceedings until the CCAA proceedings are terminated by Order of the Court.

After 23 years of litigation, including 26 separate actions claiming in excess of $1.5 billion in damages, it appears the Castor Holdings litigation is nearing an end.

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