Cash Store (CCAA)
In May, 2014, we were retained by a class action law firm, Harrison Pensa LLP, to assist them with a class action they brought against Cash Store Financial Services Inc. and related companies (“Cash Store“) which alleged that Cash Store charged illegal interest and other cost of borrowing to borrowers of Cash Store payday loans. When Cash Store became insolvent and obtained protection from its creditors under the Companies’ Creditors Arrangement Act, R.S.C. , 1985, c. C-36 (“CCAA“), the class action was stayed (i.e. stopped) due to the broad stay of proceedings in the CCAA court order. Since the class action was uncertified at the time of the CCAA filing, one of the first things we did was bring forward a motion for a representation order for all of the class members. After a contested hearing, Regional Senior Justice Morawetz issued a decision granting the representation order. For a copy of the decision, please click here. Following the issuance of the representation order, we worked to file claims against Cash Store on a number of legal grounds, including constructive trust. We argued that the amounts for illegal interest and costs of borrowing must be returned to the borrowers before any payments to other creditors of Cash Store. We argued that those amounts constitute proceeds of crime and as such, cannot be used to pay other creditors of Cash Store. We entered into settlement negotiations which ultimately resulted in a meaningful settlement that will see cash distributions to eligible borrowers of Cash Store. To view the press release of Harrison Pensa with respect to the settlement, please click here. If you have questions with respect to applying for distribution please contact Harrison Pensa. Andrew Hatnay was lead counsel on this matter with assistance from James Harnum and Adrian Scotchmer.