Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m J u n e 2 0 1 4 43 lEgal rEport/insolvenCy T he Supreme Court of Canada's decision in March to deny a rogue group of investors leave to appeal in the Sino-Forest class action settlement presents a good example of the power of the Compa- nies' Creditors Arrangement Act when up against class proceedings legislation. On March 13, the SCC denied Invesco Canada Ltd. and a group of other investors leave to appeal a settlement that released Ernst & Young LLP from any claims arising from its auditing of Sino-Forest Corp. As Bennett Jones LLP lawyers and Sino-Forest counsel Robert W. Staley, Derek J. Bell, and Jonathan G. Bell wrote in an update on the firm's web site after the decision: "Sino-Forest is the most prominent, but not the first CCAA filing to address the relationship between class actions and CCAA pro- ceedings. The tortuous narrative con- tains important lessons for class action and insolvency practitioners." The settlement is part of Sino-For- est's plan of compromise and reorga- nization following a bankruptcy trig- gered by allegations of fraud. Plaintiffs alleged the company misrepresented its finances. In March 2013, Ontario Superi- or Court Justice Geoffrey Morawetz approved the EY settlement, which was supported by all parties to the CCCA proceedings including the mon- itor, Sino-Forest's major creditor, and a group of plaintiffs looking to gain back lost investments in a proposed class action. Investors were prohibited from opting out of the settlement. However, Invesco objected because it wanted the right to opt out and pursue its own claims. At the time of Sino-Forest's collapse, Invesco held just 1.6 per cent of the company's outstanding shares. "There were other much larger share- holders who supported the settlement and that was one of the things Justice Morawetz noted when he approved the History shows invesco plaintiffs, with their limited investment, didn't have much of a chance in sino-Forest class action. by jennifer brown When class actions and the CCAA clash justin rEntEria

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