The case of 9354-9186 Québec inc., et al. v. Callidus Capital Corporation 2018 QCCA 632 is making its way to the Canadian Supreme Court, and with it will come an examination of litigation funding in the insolvency context.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
The case of 9354-9186 Québec inc., et al. v. Callidus Capital Corporation 2018 QCCA 632 is making its way to the Canadian Supreme Court, and with it will come an examination of litigation funding in the insolvency context.
As reported in The Lawyer’s Daily, the court will decide if debtors under the Companies’ Creditors Arrangement Act will need creditor approval in order to obtain litigation financing. The trial court ruled that approval was unnecessary, but an appeals court overturned that decision.
In the underlying claim, gaming manufacturer Bluberi Gaming Technologies Inc. obtained CCAA protection in 2015. Bluberi is alleging their secured lender, Callidus Capital Corp., unlawfully triggered a liquidity crisis at the firm. Callidus’ secured claim in Bluberi was for $136MM, and the creditor purchased Bluberi’s assets when they came up for auction. Now Bluberi is suing its former creditor for $200MM in a damages claim.
Bluberi had asked the court to approve its litigation funding agreement with Bentham Canada, which is funding the case to the tune of $2MM, and will split the first $20MM of any payout with Bluberi’s attorneys. Callidus challenged that funding agreement as needing approval under the CCAA, however the trial judge found in favor of the plaintiffs, saying the agreement did not need to be submitted for approval.
Yet the Quebec Court of Appeal overturned that decision, and now here we are. Now the Supreme Court of Canada will decide if Bluberi’s funding agreement with Bentham must be subject to CCAA approval.
