Quadriga CX saga sparks race among Canada’s law firms
The widow of Quadriga Fintech Solutions Corp. founder Gerry Cotten spent $300,000 to help the shuttered cryptocurrency exchange secure court-approved protection from creditors, keeping clients owed millions at bay. Now she’s looking to be repaid.
The Vancouver-based firm has been under creditor protection since Feb. 5 with Ernst & Young acting as the monitor sorting through Quadriga’s dealings. That came at a cost and Cotten’s wife, Jennifer Robertson, agreed to provide “interim financing" totaling $300,000 to the estate -- with half of that used for professional fees tied to filing for the Companies’ Creditors Arrangement Act and appointing new directors for the firm, according to a January court filing.
Quadriga’s plans for $24.7 million in a disbursement account are included in Ernst & Young’s latest report, and the monitor said it intends to make disbursements at the direction of Quadriga to fund the proceedings. Quadriga is currently overseen by Robertson and her step-father Tom Beazley as directors.
A cashflow report signed by Robertson on March 1 projects $1.1 million in disbursements from March 2 to March 8, including $300,000 for "repayment of shareholder advances" as the biggest single amount. Other costs include $200,000 for Ernst & Young and $250,000 for its lawyers, $229,842 for Quadriga’s law firm and $17,000 for independent contractors.
Richard Niedermayer, Robertson’s lawyer, declined to comment on the repayment request.
The spending plan concerns the law firm representing Quadriga clients who are still owed $260 million in cash and cryptocurrencies due to the firm’s closure.
“We are concerned about the repayment by the applicants of $300,000 to Ms. Robertson in the first week of March contemplated by the filed cash flow projection," Cox & Palmer partner Gavin D. F. MacDonald said in a March 4 letter.
The letter notes that the monitor had requested information regarding assets and transactions from the law firm representing Robertson and Cotten’s estate and a consent agreement to preserve assets while it reviews the information.
“The repayment contemplated by the cash flow is inappropriate until such time as the monitor has reviewed the requested information and satisfied itself as to the source of funds used to fund the CCAA proceeding."
A hearing is scheduled today in Nova Scotia Supreme Court to discuss issues including whether to appoint a chief restructuring officer for Quadriga and extend the period for court protection.