QuadrigaCX Legal Update 2018/10/08


Below is the text I received from Miller Thomson today regarding QuadrigaCX.

On October 7, 2019, the Trustee served a motion seeking approval of a settlement agreement among Jennifer Robertson, Robertson, in her capacity as the executor of the estate of Gerald Cotten (the “Estate”), Thomas Beazley, certain entities controlled by Jennifer Robertson (the “Controlled Entities”), the Trustee and the Official Committee of Affected Users (with respect to specific sections of the settlement agreement).

In summary*, as part of the settlement:

  • Jennifer Robertson, the Estate and the Controlled Entities agree to transfer to the Trustee any assets, property or undertaking, situated anywhere in the world, whether known or unknown, other than certain excluded assets which are set out in Schedule “C” to the Settlement Agreement.
  • Thomas Beazley agrees to transfer to the Quadriga estate, his right, title and interest in any of his assets that were (a) directly or indirectly transferred to Beazley by Quadriga, Cotten and Robertson assets which originated from Quadriga or Cotten, or (b) purchased using proceeds of assets transferred by Quadriga and/or Cotten.
  • Jennifer Robertson and Thomas Beazley will be (i) required to submit sworn financial statements disclosing the nature, value and location of all of their assets (including the Estate and the Controlled Entities), and (iii) subject to an examination, under oath, pursuant to Section 163 of the Bankruptcy and Insolvency Act.
  • Jennifer Robertson and Thomas Beazley also agree to provide ongoing cooperation to the Trustee. These are known as the “Cooperation Obligations”.
  • The Trustee and the Official Committee, on behalf of the Affected Users, agree to release Jennifer Robertson, the Estate, the Controlled Entities and Beazley from any and all claims with respect to receiving assets from Quadriga or Cotten, and any involvement or conduct with respect to Quadriga or Cotten. The express terms of the release language are set out in the Settlement Agreement.

The releases provided by the Trustee and the Official Committee are null and void if it is determined by the Court that:

  • Robertson or Beazley wilfully failed to disclose any assets that would be subject to the Settlement Agreement of either Robertson, the Estate or the Controlled Entities in the sworn financial statements her and Beazley are required to provide;
  • Robertson or Beazley become aware of any assets that are required to be disclosed under the Settlement Agreement and weren’t disclosed in their sworn financial statements and fail to notify the Trustee of such assets or take reasonable steps to assist with transferring such assets to the Trustee; or
  • Robertson or Beazley breach any of their Cooperation Obligations.

The Settlement Agreement was heavily negotiated among the parties over several months. Ultimately, the Official Committee determined that entering into the Settlement Agreement was in the overall best interests of Affected Users as it results in a significant amount of assets (valued at over $10 million) being transferred to the Quadriga estate for distribution to creditors and avoids the time, delay, expense and uncertainty of litigation.

Representative Counsel, on behalf of the Official Committee, will be filing with the Court materials in support of the Settlement Agreement that will be made publicly available.

A copy of the Trustee’s motion record can be found here: 12 and 3. A copy of the Settlement Agreement can be found here.

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