The Ontario Superior Court has ruled
that claims for professional misconduct can still be brought
against directors and officers despite a class action settlement
and release regarding the same situation. The settlement was part
of Sino-Forest's Plan of Compromise and Reorganization
following a bankruptcy triggered by allegations of corporate fraud.
This decision highlights the complexities of concurrent class action and regulatory
proceedings, especially in the context of the CCAA.
Background
A securities class action against Sino-Forest Corporation, its
senior officers and directors, and others was commenced in July
2011 after Sino-Forest filed for CCAA protection. In July 2014, the
Ontario Superior Court approved a settlement with a former CFO of
the company, which required payment of $5.6 million for the benefit
of Sino-Forest's stakeholders and provided a release under the
auspices of the CCAA. The notice for the class action settlement
was directed to all
