TORONTO, June 28, 2018 /CNW/ - GrowthWorks Canadian Fund Ltd. (the "Fund") today announced that it has obtained an order of the Ontario Superior Court of Justice (the "Court") further extending the "Stay Period" until and including March 31, 2019 pursuant to the Fund's proceedings under the Companies' Creditors Arrangement Act (Canada) (the "CCAA"). The Fund also provided a further update on the CCAA proceedings, including the litigation involving the Fund's former manager.
Extension of the Stay Period
The extension of the "Stay Period" until and including March 31, 2019 continues and extends the stay of proceedings, which has stayed certain creditor claims and the exercise of contractual rights against the Fund.
Legal Proceedings Involving the Former Manager of the Fund
As previously announced, on May 18, 2018 the Court released its judgment in the trial held to consider the legal proceedings commenced against the Fund by the former manager of the Fund, GrowthWorks WV Management Ltd. (the "Former Manager"), together with certain counter-claims made by the Fund against the Former Manager (the "Former Manager Litigation"). In its judgment, the Court found that the Former Manager had breached its standard of care owed to the Fund and that the Fund had properly terminated the management agreement between the Fund and the Former Manager.
The Fund and the Former Manager were each entitled to seek leave to appeal the Court's judgment by bringing a motion before the Ontario Court of Appeal no later than June 8, 2018. Neither party brought the necessary motion prior to that deadline and, accordingly, the judgment may no longer be appealed. However, the Fund and the Former Manager have been unable to agree upon the form of the formal judgment setting out total amounts, including legal costs, awarded by the Court to each party in connection with the Former Manager Litigation. As a result, the Fund anticipates that it will be necessary to have the Court settle the form of the judgment, which will require further submissions to the Court. The timing and outcome of that process cannot be predicted with certainty.
Update on CCAA Proceedings
With the Former Manager Litigation largely completed, the Fund is now primarily focused on the orderly disposition of its remaining portfolio investments. The Fund estimates that the current net asset value of investments is approximately between $17.5 million and $26.2 million. However, until opportunities arise and dispositions of portfolio assets are completed, it is difficult to determine with certainty the ultimate value of the remaining assets of the Fund. As such, until such time as those assets are liquidated, the Fund will not know how much value is available for distribution to its unsecured creditors and equity holders. The board of directors of the Fund (the "Board") currently anticipates that, if an orderly liquidation is pursued, the Fund can be wound up within the next 18 to 24 months.
In light of the successful outcome of the Former Manager Litigation, the Fund is also planning to complete the claims process that was commenced in January 2014 and, at the appropriate time, update the claims process to call for post-filing claims. In addition, the Board, with the assistance of the Fund's financial, investment and legal advisors and in consultation with the Monitor, intends to explore and evaluate strategic alternatives reasonably available to the Fund in order to determine whether there are alternatives to the Board's orderly liquidation strategy that should be considered, including a possible sale of all or substantially all of the Fund's portfolio investments and its tax losses. The Fund has engaged CCC Investment Banking as a financial advisor to assist the Board in its strategic review, including a limited market check with respect to portfolio value. The Fund anticipates that its review will take between 90 and 120 days to complete. However, the Fund does not intend to periodically or otherwise disclose developments with respect to the strategic alternatives review process unless the Board has approved a specific transaction or action plan, except as required by applicable law.
This press release contains forward looking statements, including statements with respect to the Fund's proceedings under the CCAA. These forward-looking statements reflect the Fund's current views and are based on certain assumptions, including, but not limited to, assumptions as to future operating conditions and courses of action, general economic and market conditions and other factors the Fund believes are appropriate. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in these statements, including, but not limited to, the outcome of the Board's strategic alternatives review; the outcome of the Fund's negotiations with the Former Manager regarding the Court's judgment as to amounts payable by the parties in the Former Manager Litigation or the Court's further determination in relation to that litigation; the risk that dispositions of the Fund's portfolio investments, together with the Fund's cash resources, will not yield proceeds sufficient to satisfy in full claims of the Fund's creditors or any distribution to the Fund's shareholders; the risk that claims by third parties against the Fund may adversely affect the Fund's ability to wind up its affairs and make distributions to its stakeholders and may involve substantial expense and, in either case, could require the Fund to pay substantial amounts if those claims are successful, thereby reducing or depleting entirely the Fund's liquidity and amounts available for distribution to its creditors or shareholders (or both); and those risks and uncertainties disclosed in the Fund's regulatory filings posted on SEDAR at www.sedar.com. These risks and uncertainties may cause actual results, events or developments to be materially different from those expressed or implied by such forward-looking statements. Unless required by law, the Fund does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or results or other factors.
SOURCE GrowthWorks Canadian Fund Ltd.
For further information: FTI Consulting Canada Inc., the Court Appointed Monitor of GrowthWorks Canadian Fund, has established the following website containing information concerning the CCAA proceedings: http://cfcanada.fticonsulting.com/gcfl/; You may also contact the Monitor at: Hotline: 1-855-431-3185, Email: [email protected]