MONTREAL -- A three-person committee of Cinar Corp. that was set up to settle a bevy of outstanding lawsuits and recover almost $60-million (U.S.) in offshore investments has spent more than $5-million (Canadian) in the past year with nothing to show for it, according to a report.
The so-called "litigation committee" was established last year in the wake of the sale of the Montreal-based children's entertainment company Cinar to a Toronto-based investment group headed by animation-company veteran Michael Hirsh.
Its mission is to settle as many claims as possible, including suits to recover about $59-million (U.S.) of Cinar cash invested in two offshore funds that court documents allege are related to Montreal hedge fund manager Norshield Financial Group and its president, John Xanthoudakis.
Norshield and Mr. Xanthoudakis have strongly denied that they had anything to do with Cinar's Bahamian investments.
The bulk of the litigation is related to allegations made more than five years ago that $122-million of Cinar money was invested in the Bahamas without proper approval of the board.
The report, recently sent to Cinar shareholders, states that no money was recovered in the 12 months from March 15 of last year to March 15, 2005.
However, "disbursements related to the specified litigation were $4.4-million (Canadian)," according to the report.
Since March, the payments have exceeded $5-million, which is the amount Cinar initially agreed to disburse to the committee. Despite that, Cinar has confirmed that "it is prepared to provide additional funding to enable the litigation committee to complete its mandate . . ."
Wesley Voorheis, the head of the committee, said in an interview yesterday it has not been easy to settle any of the lawsuits because of countless delaying tactics used by several opposing parties.
The three members of the committee collected $744,596 in fees in the year ended March 15, 2005, says a breakdown of expenses in the report.
© The Globe and Mail
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