The premise of CCAA is to keep a company alive to pay off debtors. Being in CCAA, at this point the first priority for Crystallex management is to keep the company alive long enough to collect the award, which somewhat satisfies their fiduciary responsibility to shareholders. How they keep the company alive may be up for debate but it seems the CCAA judge has no problem with the way things have transpired and it may be difficult to have the judge reverse himself.
That is also up for debate. Changing priorities is a matter of opinion I suppose. Managements obligation is to maximize shareholder value whether in CCAA or not. In our case where the value of the asset far outweighs the debt there is shareholder value even in CCAA protection. The noteholders wanted the whole company and our shares to go to ZERO. The judge agreed with Crystallex that there was sufficent money to pay off the debt and still have money for shareholders. Managements duty didn't change. They needed to keep the company afloat but still maximize shareholder value. They did the opposite. They maximized management value at the expense of shareholders.
Saying the judge had no problem is beyond misleading, The judge can only rule on what he is given and he was given a bag of crap from management. That is what happens when there is no representation by a shareholder group. Nobody to say wait a minute we are the only ones losing ground.
I have no idea if the judge will reverse himself as you say but I believe from the documents I have read including the one where Tenors interest rate is above what is allowed the judge will follow the law which says you can't receive that much compensation for your loan.
With shares being recogonised by management as having value in their motion to the court (remember Fung saying he was protecting shareholder interests) management reinforced their obligation to shareholders to protect them rather than selling them out.
It is pretty simple, and no one needs to be an expert to see that CCAA forces management priorities to change. Never noted anywhere that Crystallex managment is absolved of their fiduciary responsibilities to shareholders, but if that is your twist on it then so be it.
If you agree that management isn't absolved of their fiduciary duty then I'm sure a judge will as well. Once all the redacted stuff that Fung and the boys didn't want us to know is seen by Gowlings I would imagine it will be easy to determine if management was doing their fiduciary duty or only looking out for themselves. If the judge like most of us believes that management mislead us with over promising and under delivering while securing their own financial future at the cost of shareholder value it will be hard to say they did their fiduucuary duty.
NO twist here JC!
JJ
