A Canadian consumer lender, Cash Today Inc., has left creditors with potential claims of more than C$613 million ($430 million), while a court-appointed receiver struggles to account for the firm's loans and determine how investor money was used.
Edmonton, Alberta-based Cash Today reported more than 44,000 outstanding loans totaling about C$229 million at the end of last year. But when receiver MNP Ltd. inspected the company's offices last month, it found records of just 256 active loans worth less than C$900,000, according to a document filed in the Court of King's Bench of Alberta on Tuesday. The receiver identified about 270 creditors and debenture holders, but cautioned that the C$613 million in claims may be overstated by at least C$190 million. It still cannot determine the full extent of Cash Today's assets and debts.
The case offers a window into the risks lurking in Canada's lightly regulated lending industry. It has also prompted questions about how Cash Today handled money raised from investors. Some debt agreements required proceeds to be kept in separate bank accounts until used to buy loan portfolios. However, several investors provided records showing their money had been sent to a bank account belonging to a related company instead. Cash Today told the receiver it had no bank accounts in its own name, a statement confirmed by bank records. MNP said it couldn't establish whether the investor funds had been used as required.
Cash Today, founded in 2005, provided high-cost consumer loans from locations in Edmonton and Red Deer, Alberta. It was controlled through companies associated with Grant Patterson and Cameron Schiffner, who also served as directors of several other lending businesses. Patterson died the week of Sept. 21, according to information MNP received from the company's former lawyers. Schiffner resigned as a director effective Oct. 1, leaving operations in what the receiver described as a state of limbo. The receiver said its efforts have been complicated by management, which declined requests for in-person and virtual meetings and answered questions only in writing through lawyers, who later withdrew from the case. The company did not immediately reply to a request for comment.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing