Halifax, Toronto law firms to represent Quadriga clients owed millions, judge rules
A Nova Scotia Supreme Court judge has appointed Toronto law firm Miller Thompson along with the Halifax firm Cox & Palmer as representative counsel for 115,000 clients of disgraced cryptocurrency exchange QuadrigaCX.
The firms already represent 252 creditors who are owed a total of $15 million. Approximately $180 million of investors' funds are missing after QuadrigaCX founder Gerald Cotten of Halifax died in India Dec. 9.
The company did not reveal his death for more than a month.
Court documents filed by Cotten's widow, Jennifer Robertson of Halifax, say Cotten never shared the passwords to his encrypted computers where he stored the company's cryptocurrency reserves.
A total of seven law firms from Toronto and Halifax were vying to take on the role of representative counsel for creditors as QuadrigaCX seeks protection under the Companies' Creditors Arrangement Act (CCAA).
In his decision Tuesday, Justice Michael Wood wrote that "the most important role for representative counsel is to provide accurate information and advice about the CCAA proceeding to all users, and to ensure that their legitimate interests are taken into account throughout the proceeding."
He cautioned it's not the role of representative counsel to "undertake their own investigation" into what happened to the missing crypto-coins, a task that falls to court-appointed monitor Ernst and Young.
Wood noted many of Quadriga's clients are "extremely upset, angry and concerned about dishonest and fraudulent activity."
For that reason, he wanted to appoint representative council as quickly as possible.
Wood said he chose the team of Miller Thompson/Cox & Palmer because:
Both firms have extensive insolvency experience, while Miller Thompson has "additional depth" in cryptocurrency.
The firms' proposal is focussed on minimizing costs, which will be borne directly by Quadriga's clients.
The firms proposed a "reasonable" communications strategy, including a presence on social media.
The firms recognized the efficiency of co-operating with Ernst and Young and didn't try to rush the process to win their appointment.
In his decision, Wood directed the monitor and Miller Thompson/Cox & Palmer to start organizing a "user group" of Quadriga's jilted clients.
He also asked them to draft a formal order outlining their responsibilities moving forward.
If the monitor and representative counsel are unable to agree on terms, Wood committed to resolving those issues on or before the next court date of March 5.
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