You can’t always get what you want, but if you try sometimes, you just might find, you get 45 extra days and a new CRO.
Troubled Canadian cryptocurrency exchange QuadrigaCX and its court-appointed monitor, Ernst & Young (EY), spent March 5 in court working out the details for an extended stay of proceedings and the approval of the exchange’s new chief restructuring officer (CRO). The two companies continue to search for the exchange’s notorious missing funds, as well as for the money needed just to finance the Companies’ Creditors Arrangement Act (CCAA) proceedings.
45 Days and 45 Nights
On February 5, the Nova Scotia Supreme Court granted QuadrigaCX creditor protection, giving the exchange a 30-day stay of proceedings while it worked to access its inaccessible cryptocurrencies stored in cold wallets. On February 25, Jennifer Robertson, one of QuadrigaCX’s two directors and the widow to the exchange’s deceased owner, Gerry Cotten, filed an affidavit asking that the court allow more time for EY and the exchange to collect the available assets needed to fund the proceedings and repay money owed to affected users. A separate motion filed by the exchange specified that it was looking for an additional 45-60 days.
Now, according to a report from the Canadian news outlet CBC News, we know that QuadrigaCX and EY were given a 45-day extension to their stay of proceedings. In a separate letter, Cox & Palmer, one of the law firms chosen to represent QuadrigaCX’s affected users, agreed with the extended stay of proceedings, although the law firm had asked that it be limited to 30 days.
QuadrigaCX’s New CRO
Robertson’s February 25 affidavit also asked that the Nova Scotia Supreme Court appoint Peter Wedlake, partner and senior vice president for the auditing firm Grant Thornton, as QuadrigaCX’s CRO. Robertson argued that Wedlake’s experience providing insolvency services and his proximity to Grant Thornton’s involvement in the crypto industry would aid the exchange in its search for personal and owed funds.
CBC News reporter Jack Julian live-tweeted yesterday’s court proceedings and confirmed that the court approved Wedlake’s hire. However, the approval didn’t come easily. Along with the court questioning the move to hire a CRO instead of expanding EY’s capability, Cox & Palmer raised concerns in its letter about the CRO’s ability “to effectively oversee the Applicants and not be overruled by the other directors, and avoid any duplication of effort between the CRO and the Monitor.” To help prevent any director foul play or duplicated work, EY agreed to approve the CRO’s work in advance.
Paying Back Robertson
In EY’s second report, the monitor stated that Robertson had paid it a retainer fee of 50,000 Canadian dollars (CAD) before the legal proceedings began, and another CAD$150,000 on February 6. In EY’s third report, issued earlier this week, the monitor asked for Robertson to receive CAD$300,000 as a form of repayment for her initial funding. (It’s not immediately apparent how this figure was arrived at.)
In Cox & Palmer’s letter, the law firm took issue with the repayment request, stating it would be “inappropriate” for Robertson to receive the payment until EY has “satisfied itself as to the source of funds used to fund the CCAA Proceedings.” In yesterday’s court hearing, it was decided that the request for repayment would be deferred. No timetable was provided for when the decision might be made.
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