VOLUNTEERS NEEDED

Since June 2009 The Shire Investors Committee has worked with legal, securities, and political systems to create a voice for the victims of Shire International and to support the victims as an information collection point. The current committee members have served our community for over two years and are now stepping down (October 2011).  New volunteers are required to continue to provide a voice for the community.  If you are interested in continuing to have a voice and wish to volunteer, please contact the committee at investor@telus.net and use the subject line "VOLUNTEER".  Any other emails and phone calls will no longer be returned as the current committee has now ended their term. 

Should you be represented by John Blair by BLG Canada, his office can be reached at

John D. Blair, Q.C.
tel: (403) 232-9723
jblair@blg.com

Best regards,
The Shire Investors Committee

Update on ASC and Properties...

Alberta Securities Commission

The ASC keeps its investigations highly confidential and does not disclose information to the public about the status thereof.  Due to the number of parties, properties and documents, this is a complex investigation even by ASC standards and it is not particularly surprising that allegations (charges) under the Securities Act have not yet been filed by the ASC.  Based on our knowledge of the facts, we are expecting that the ASC will eventually either issue charges or enter into settlement agreements with the responsible parties.  In a typical ASC settlement agreement, the respondents admit to Securities Act violations and penalties arising therefrom, generally including a fine as well as removal from the capital markets.  Under ASC procedures, the first anyone will learn of either charges or a settlement will be a posting on the ASC website.  While we anticipate that one of those two things will happen, we are not privy to the details of the ASC investigation and it is possible that the ASC could decide not to pursue enforcement action.  From our perspective, this would be a surprising outcome.

Shire Properties

As many of you are aware from the periodic updates on the Ernst & Young website, progress has been slow with respect to the marketing and sale of the various Shire properties. 
 


You will recall that Debtor In Possession (DIP) financing was obtained early in the CCAA proceedings, with the amount of the DIP loan currently being $2,200,000.00.  The DIP financing, by court order, is secured first against Shire’s unencumbered properties and secondarily, against the properties that are subject to registered security such as mortgages.  The DIP financing carries 18% interest.
 


The terms of the applicable court order provide that if an encumbered (mortgaged) property is sold, the proceeds will be paid towards the DIP financing, with the secured creditor then having a claim for the amount of their security, less a contribution to the DIP financing based on the value of the sale.
 
On September 13, 2010, we attended a court application in the CCAA action brought by Investit Financial to amend the formula so that a secured creditor would be paid out from a sale, less only a holdback for a potential contribution to the DIP financing based on the list price of the properties.  The theory behind that is that the secured creditors may currently be reluctant to sell the properties or realize on their security out of a concern that they will bear a disproportionate contribution to the DIP financing by being first to sell.
 


Needless to say, from the investors’ perspective as unsecured claimants, the best outcome is for the properties to sell as quickly as possible, stop the accruing interest to the security holders and hope that the properties sell for a sufficient amount to retire the security, pay out the DIP financing and leave a balance for distribution to unsecured creditors.  Therefore, we are supportive of any procedure or formula that expedites sales at a reasonable price.
 
The only property to have sold at the moment is the Winn River (Minaki Lodge) property.  

On September 13, 2010 the court approved the sale of those lands for $1.2 million.  This price was consistent with an appraisal that had been obtained for the property.  The sale price will cover the amount outstanding on the mortgage to Kody Stokes and the amount allocated to the DIP financing, but will not leave much if any excess for unsecured creditors.
 


A sale of the Orillia Property is likely to occur at $1.7 million in mid-October when all sale conditions have been met.  Other properties remain at various stages of listing and negotiation.  We will continue to monitor those proceedings, with a view to taking whatever steps may be necessary to maximize possible return to the investors.  For example, if a sale was proposed at an unreasonably low price, then, even if the price were satisfactory to the security holder in question or the DIP lender, we would oppose that.
 

ASC Enforcement Order - Robert Smylski

The Alberta Securities Commission Enforcement order regarding Robert Smylski can be found here.  You are encouraged to read the entire order especially if you purchased Shire investments via Robert Smylski.

Excerpt:

II. FACTUAL BACKGROUND
(snip)

B. Respondents' Admissions
[9] In the Admissions Statement, Smylski acknowledged receiving independent legal advice (and, indeed, he was represented at the Hearing) and voluntarily making admissions, including the following:

(snip)

• some of the securities the Respondents sold were offered by Stoneset, LibertyGate Investment Corp. ("LibertyGate"), Focused Life Settlements, Focused Money Solutions Inc. ("Focused Money") and Shire International Real Estate Investments Ltd. ("Shire International");

Class Action Update - July 12, 2010

Its been a slow slog this spring with legal processes taking a long time (as they always do!).  An update to Class Action members was sent out last night.  If you missed this update, please advise us at investor@telus.net so that we can verify your status on the mailing list. 

Due to the great numbers of investors who have joined the class action, we have now moved to a mail distribution service called Mail Chimp.  This is the reason for the change in the formatting of the update emails.

If you are not a member of the class action, you will not receive class action updates.  And yes, you can still join - email investor@telus.net for details.

There have been no general updates with regards to Shire but we believe the ASC must be in the later stages of their investigation based on the general time frame of other ASC investigations.  When we see some change, we'll post to the blog and send out a general update. 

Shire Victims Group Reacts to White-Collar Crime Bill Revival

Justice Minister Robert Nicholson and MP Christian Paradis were in Montreal on Monday to meet with victim's groups from the Earl Jones, Mount Real and Norshield debacles and announced that the Tories will be re-introducing a crime bill that was scuttled when the prime minister prorogued government for two months in December.


The new bill, tabled in the House of Commons simultaneously with the announcement, is called "Standing Up for Victims of White-Collar Crime Act" and replaces the previous Bill C-52, which had passed two readings before Parliament was adjourned.


The Shire Victims Group Committee is pleased to see the re-introduction of the proposed legislation. Victims of white-collar crime are piling up in the wake of the recession and are desperate for justice to be served. The legislation is one step in the right direction with much more work to be done in the future to protect all Canadians. Canada currently holds the unenviable third highest rate of fraud in the world with 56% of Canadians falling victim, according to PriceWaterhouse Coopers November 2009 Global Economic Crime Survey.


“The proposed legislation would require judges to consider demanding offenders make restitution to their victims in all fraud cases. It would permit the court to prohibit the offender from taking employment or doing volunteer work involving authority over other people’s money. The court would also be permitted to receive and consider a Community Impact Statement that would describe the losses suffered as a result of a fraud perpetrated against a particular community, such as a neighbourhood, a seniors’ centre or a club.“ (Government of Canada, Department of Justice (May 3, 2010). Government of Canada Introduces Legislation to Stand Up for Victims of White-Collar Crime”. Press Release.)