Overview
Case Number: CV-24-729269-00CP
Practice Area: Canada Securities Investor Protection
Court: Ontario Superior Court of Justice
Class Period Start Date: 05/09/2023
Class Period End Date: 22/07/2024
Table of Contents
CUSIP: 16550A
ISIN: CA16550A1075
Updates
December 19, 2024 – The Court approved two motions made by FTI Consulting Canada Inc. under the Companies’ Creditors Arrangement Act (“CCAA“): an order approving the Bidding Procedures for the Sale and Investment Solicitation Process in respect of the CCAA Parties, and an order approving the Key Employee Retention Plan. Both Orders can be viewed here.
November 7, 2024 – The stay of proceedings against Chesswood Group Limited and related CCAA Parties was extended to January 31, 2025.
October 29, 2024 – FTI Consulting Canada Inc. was appointed by the Court as monitor of Chesswood Group Limited and related parties under the CCAA, pursuant to an initial order later amended and restated on November 7, 2024. The Monitor was granted expanded powers over the CCAA parties’ financial affairs and operations, and a stay of litigation was granted until November 8, 2024.
Case Background
This class action protects investors who purchased Chesswood Group Ltd. securities between May 9, 2023 and July 22, 2024.
Chesswood is a publicly traded Canadian holding company who represented that its business and financials were strong, that it was in compliance with its debt covenants, and that investors could rely on its published financial statements.
On June 14, 2024, Chesswood disclosed—in ambiguous terms—that it had breached debt covenants tied to a $300 million credit facility and was being forced to sell assets. It did not disclose that the assets were being sold to one of its own directors, or that it would need to restate its financial statements. This disclosure caused Chesswood’s share price to fall from $7.49 to $3.75, a drop of roughly 50%.
On July 22, 2024, Chesswood announced it would restate its first-quarter financial statements and related disclosures. The share price fell sharply again, from $2.81 to $2.66, and continued declining to $2.35 the following day. Chesswood has since acknowledged it may also need to restate its 2023 annual financial statements.
Investors allege they suffered foreseeable losses as a result of these corrective disclosures.
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