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
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
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'
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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