NEW YORK (HedgeWorld.com)–Montreal-based animation moviemaker Cinar Corp. is involved in a hedge fund saga that could become an animated cartoon for grownups.
Former Cinar executives invested US$122 million of company funds in Globe-X Canadiana Ltd., a hedge fund originally based in the Bahamas. Since 2000, Cinar has been trying to get back the money. Globe-X refused to liquidate assets and recently moved to Anguilla, apparently to escape a Bahamas court order that it wind down operations. The quick-moving fund manager is fighting the company all the way in the courts.
Last week Cinar announced that it is suing its deposed president Ronald Weinberg and previous chief executive officer Hasanain Panju for US$59 million to make good the money that Globe-X is not returning. Cinar claims that the investment was unauthorized–it was made without the knowledge of the corporate board.
The two former executives have denied the claim. The corporation originally sued them and a co-founder of Cinar, Micheline Charest, two years ago for misappropriation of company funds. The new suit amends the earlier one.
Last summer Cinar petitioned the Bahamas Supreme Court for permission to close down Globe-X and appoint PricewaterhouseCoopers as liquidator. Globe-X had earlier agreed to make weekly payments but later defaulted on these payments, according to Cinar. A balance of US$39.4 million plus interest of US$4.7 million is still outstanding from the original principal of US$122 million.
The Bahamas court granted Cinar’s request in September. But Globe-X decamped to Anguilla, so this month Cinar petitioned the High Court of Justice of Anguilla to enforce the Bahamas order or issue a new order, as Globe-X had now incorporated under Anguilla law.
In the meantime, Globe-X is counter-suing Cinar in Anguilla for “alleged breach of contract, defamation and/or malicious falsehood.” It is demanding US$66 million.
Cinar shares plummeted after a financial scandal over two years ago. On another front, a California hedge fund is leading a group of activist investors in an effort to salvage Cinar–another story with unusual details.