CBI PIC Class Action
This is the specific page for the CBI PIC Class Action. Check back to this page frequently for updates.
UPDATE: January 5th, 2016
We are now in the process of concluding the class action settlement in this matter, which will involve the return of participation fees to those investors who initially contributed to the class action.
As we have noted previously, the likelihood for recovery for both the CBI PIC and CBI Venu / Keystone projects is low due to the existence of mortgages and encumbrances which exceed the value of the investment properties. We are evaluating options for investors to move forward to obtain some form of recovery. Please keep checking our website and monitor your e-mail addresses for updates.
UPDATE: September 28th, 2015
CBI PROPERTY INCOME CORPORATION SETTLEMENT FAQ
We have received multiple e-mails and phone calls from investors with respect to the settlement. Please note that due to the volume of calls and e-mails we receive, we cannot answer individual questions about the settlement. We have reviewed the questions that investors have sent us, and we have found some common themes. We have provided our response to these questions below
1. What is the settlement exactly?
The settlement is $60,000.00, which will go towards paying legal fees, disbursements (out of pocket expenses), and paying out the investors who contributed to the cost of funding this class action lawsuit at the commencement of the litigation. If you did not contribute initially to fund the litigation, you will not be receiving any of the settlement funds.
2. Why did you agree to settle for such a relatively small amount compared to the overall investment?
There are two general reasons for why we decided to settle. The first reason is through examination of the Cadmans, we determined that a class action lawsuit would not provide any recovery for investors. Unlike the CBI Lakehouse project, where investors are able to recover the property, the properties involved with the CBI PIC project are heavily mortgaged through development financing, which is ahead in priority to the investors.
The CBI PIC investors are involved in two projects currently: the Keystone Communities project (with the CBI Venu / Keystone investors) and the CBI Keystone Business Park project (with the CBI Keystone Business Park investors).
For the Keystone Communities project, there is a Royal Bank of Canada mortgage worth far more than the value of the property. And that RBC mortgage is in default. There are also trade creditors in front of investors. Meaning there is no equity there. For the Keystone Business Park, those investors in that specific project are ahead in priority to those of PIC, for an amount which is at least twice the value of the property. So there is no equity there either for PIC investors.
Due to the low likelihood of recovery, continuing with the class action would not yield any benefit for CBI PIC investors. Litigation will not be a way to try to advance interests of investors. The monies are lost. Steps to press litigation will inevitably press the creditors with priority to proceed, thereby depriving PIC investors of any hope of finding a business solution here to mitigate their situation.
The second reason is that for the Keystone Communities project in particular, the CBI PIC investors and CBI Venu / Keystone investors are both competing to get value out of the one property. Litigation pits these projects against each other. However, with litigation discontinued, there is a possibility of investors to recover something if both groups come together to bring in a competent developer to re-finance, deal with structuring payment of the creditors in priority, and to complete development of the Keystone Communities property. This is the only way for investors to recover. The class actions are an impediment to that solution. Faced with this, the representative plaintiff agreed that the best course of action would be to discontinue the litigation in order to pursue a potential business solution. The known investors also agreed with this.
3. I did not fund the litigation initially and I will not receive any benefit. Why should I agree to this?
Investors have the right to Opt-Out if they so choose. However, we ask investors to agree to this settlement so we can begin to make arrangements for investors to make an application to re-develop and re-finance the Keystone Communities project with the CBI Venu / Keystone investors.
The effect of Opting-Out will be that investors can start their own lawsuit. However, as we described in Question 2, the likelihood of recovery through litigation is, in our opinion, non-existent. It would be a waste of further legal resources and monies.
Should investors Opt-Out and commence new lawsuits, our ability to help investors re-develop will be significantly hindered, as the CBI Group will be dealing with new lawsuits rather than working with us to give investors control and re-develop the Keystone Communities project.
Bluntly, litigation is not the answer. The only chance here for any recovery is for investors to work together
4. If I Opt-Out can I continue the current lawsuit? Can I still participate in any re-development?
Opting-Out does not prohibit you from participating in the re-development of the Keystone Communities project in the future. However, as we stated before, Opting-Out and carrying on a lawsuit will not assist anyone in that goal. It is not likely people opting out will be starting their own lawsuit, for a variety of reasons.
You will not be able to continue the current lawsuit and would have to bring an entirely separate one. The current lawsuit will be settled and discontinued
5. Why am I only hearing about this now post-settlement? Why was I not notified previously?
Prior to the settlement approval, we did not have the investor lists. We were only aware of the investors who reached out to contact us and help fund the initial litigation. The Defendants were in control of the lists and were responsible for contacting investors about the Notice of Settlement Approval Hearing in June 2015. The defendants sent out notice of the intent to settle back in June. We are now in possession of the investor lists and are contacting investors via e-mail (or mail if we do not have your e-mail address). If you have not been contacted, the forms can be downloaded HERE or at the “Information Forms” section to the left of this page.
6. Why am I not getting any notifications when other investors are?
The investor lists contain the addresses and e-mails of investors at the time of their investment. If your address and e-mail address has been changed then we are unable to contact you. Please contact us via e-mail and we will re-send the form to you. Alternatively you can download the forms HERE or at the “Information Forms” section to the left of this page.
We are updating investor information when you provide the same to us so we can contact you for future updates.
7. What is the likelihood that the re-development will be successful?
It is too early to tell at this stage what the potential re-development would look like, whether it would be successful, and if it is, what investors’ potential for recovery would be.
We still believe that this is the only chance for investors to see some form of recovery.
8. When is the investors’ meeting to discuss re-development?
We are hoping to hold an investors meeting in early 2016 to discuss re-development options with investors in the CBI PIC and CBI Venu / Keystone projects.
9. I invested through Olympia Trust as an RSP investment. Are you aware of my investment?
Regardless of whether investors invested through Olympia Trust or directly with the CBI Group, we have your contact information. For the purposes of settlement, this makes no difference.
10. I received T5 slips / other tax slips for this investment, but have not received any actual investment income. How do I address this with the CRA?
Unfortunately we cannot answer any questions related to the tax aspects of this matter, as we are solely dealing with the litigation and settlement. We recommend seeking the advice of a tax professional for any tax issues arising.
UPDATE: September 10th, 2015
CBI PROPERTY INCOME CORPORATION LAWSUIT CERTIFIED
This matter has now been resolved in accordance with the settlement agreement which received unanimous and overwhelming approval. This settlement ends the litigation for investors in the Property Income Corp matter. The funds received as settlement shall be put towards the cost of funding the litigation. Investors who contributed funds at the outset shall be made whole and have their contribution returned to them.
As opposed to the CBI Lakehouse project, the CBI PIC investment did not involve the development of any lands itself, and was always intended to be an additional loan on multiple other projects created by the Cadmans in the CBI Group. In this instance, litigation is fundamentally not the way that PIC investors can see any return. The various projects that PIC investors are involved in pit the PIC investors with the investors in other projects, creating a dispute over priority to any return on investment.
The sworn evidence received in this matter is there is no equity in any project in which PIC mortgages are held. What this means for investors is that litigation is not the way that investors will ever see any return.
The only way for CBI PIC investors to make a return on their investment is to bring in a competent developer with new financing, so that these projects can be developed and value can be created for investors. We will be working with CBI PIC investors following the resolution of this claim to try and find a competent developer who can come in and finish the projects in which investors are placed. This will help the investor group in that specific project as well as the PIC investors. Our focus is to find a way to create value for investors without creating priority disputes between investors. And this will be in the face of situations where current debts exceed asset values in all of the projects. So we do not want to create unrealistic expectations. As we said previously, the sworn evidence received is there is no equity in any of the PIC mortgages. For new development options to be pursued, it will take a lot of work with creditors and for investors to work together to find solutions that cannot be constructed through legal process.
For the CBI PIC investors, we can clarify that we have litigation ongoing with the Keystone Business Park. The CBI PIC investors’ interest is reflected on a mortgage on title, which is behind in priority to the actual investors in the CBI Keystone Business Park project itself. As it currently stands, there is not sufficient value in the asset that will result in payout to PIC investors after repayment to the Keystone Business Park investors on their mortgage. That is consistent with the sworn evidence.
Once the litigation is resolved, we will be in contact with investors to discuss some potential go forward strategies with competent developers to find a way to create value for investors.
We thank investors for their cooperation and patience in this matter. McGuigan Nelson LLP is working diligently to help investors to try and obtain some return on their investment in this property.
Click here to review the Notice of Settlement Approval, Opt – Out Form, and Claim Form, or visit the Forms page to the left. We ask that investors fill out the claim form to allow us to identify your investment, which will enable us to contact you to hold an investor meeting in the near future to discuss go the best way to move forward.
UPDATE: August 7th, 2015:
As we are getting closer to the Settlement Approval Hearing for the CBI Property Income Corp and CBI Venu / Keystone projects on September 9th, we have heard from a number of investors who received the Notice of Settlement Approval Hearing and they have expressed some confusion about what to do and what is going on here. Please note that we cannot respond to each individual investor as it takes a significant amount of time. We have been updating our website frequently as more information becomes available.
We would like to provide the following clarification to investors, as there seems to be some confusion about what is happening:
Given the fact that we are likely years away from getting to and through a trial, there is no money or appetite of investors to run a trial, and the fact that the Cadmans have confirmed that the PIC and Venu / Keystone projects have no funds to collect on, there really is no choice here.
Faced with these risks, we have structured a proposed settlement which allows investors who have contributed towards the legal disbursement costs of the litigation to recover those amounts, which frees us to seek a negotiated business solution with other creditors. If you are not happy with this, you are entitled to Opt-Out, and you can try to sue on your own, if you cannot accept any of the above.
We understand that this information is hard to process and accept. Please do not “shoot the messenger”. Bluntly, these projects have failed and the money is spent. And unfortunately, most of the monies were distributed out at the front end of these investments and all of that was disclosed to you in your Offering Memorandums.
We hope this clarifies some of the concerns investors have about the settlement. We look forward to updating investors after September 9th, 2015. We trust everyone will opt in, and we look forward to meeting all of you when we try to put together a structure to complete the Venu project and PIC investors will also be involved in our attempt to deal with the Keystone Business Park.
UPDATE: July 9th, 2015:
Notice of Settlement Approval Hearing
Kevin McGuigan is pleased to announce that on June 23rd, 2015, Justice Macleod granted the Settlement Approval Hearing Order. This will mean the following: In the next several weeks, investors in the CBI Property Income Corp investment will receive a “Notice of Settlement Approval Hearing” from Defendants’ counsel. This means that a date has been set for the court to approve the settlement between Class Members and the Defendants.
If you do not receive anything about CBI PIC and you are an investor, please email Kevin at firstname.lastname@example.org directly. Please only email if you do not receive the forms. If you receive the forms, you do not have to do anything at this time. If you do not approve of the settlement as proposed then review the Notice, which will set out your options.
We have a return date of September 9th, 2015, before Justice Macleod. At that application, we will seek to approve the settlement. If the settlement is approved, then a second notice will be sent to all investors, informing everyone of the settlement. At that time investors will either make a claim to be a part of the settlement, or have the option of opting out of the settlement and proceeding with their own individual claim against the Defendants.