After the collapse of Castor, numerous negligence claims were started in Quebec against C&L, the company’s auditors. A test case was advanced to determine the common issue of negligence for all of the claims started against C&L. In 2011 the Quebec Superior Court found that C&L was negligent in preparing the audits of Castor. In 2014 the Supreme Court of Canada dismissed C&L’s leave to appeal application rendering a final judgment against C&L. That judgment made it clear that the former partners of C&L may confront enormous personal liability given the quantum of the claims involved.
Thornton Grout Finnigan LLP was consulted by C&L to determine whether any viable solution could be found to what appeared to be an intractable situation. After extensive consultations and negotiations with various stakeholders, C&L filed for protection under the CCAA in order to globally resolve all outstanding claims related to Castor.
The CCAA proceeding has since resulted in a Plan of Compromise and Arrangement (the “Plan”) which gave global releases to C&L, all of C&L’s former partners and a number of other stakeholders. The CCAA filing brought an end to what was described by the Quebec Superior Court as “the longest running judicial saga in the legal history of Quebec and Canada.” The Plan was sanctioned by the Ontario Superior Court in July, 2015 and resulted in full releases for all defendants and potential defendants from liability associated with Castor including, C&L, the former partners of C&L, C&L’s professional liability insurers and other related parties. The releases meant that hundreds of individuals who might otherwise have faced personal bankruptcy were able to carry on with their lives, without the continuing threat of personal financial ruin.