Two Quebec companies in bankruptcy
Published Friday July 3rd, 2009
Two related Quebec companies that admitted to illegally selling securities in New Brunswick have declared bankruptcy.
Centre de traitement d'information de credit inc., possibly known as Groupe Financier CTIC, and CITCAP Groupe Financier inc., are now in bankruptcy, the New Brunswick Securities Commission reported Thursday.
The companies and their principal, Patrick Gauthier, raised more than $5.7 million from 63 New Brunswick investors between 2006 and 2008, and the commission believes there could be more investors they don't yet know about. Its investigation is still underway.
Securities commission executive director Rick Hancox said he isn't sure how much investors will get back.
"It is unlikely they will get their full return," he said.
On May 7, Quebec's securities regulator froze the two companies' funds, securities and assets along with a third related company called Gestion financière Appalaches inc.
The three companies, Gauthier and three other people: Réjean Lessard, Benoit Mercier and André Traversy were also banned from trading securities.
Hancox said this is good news because the companies can no longer spend investors' money they had on May 7. But he said the Quebec regulator, who could not be reached for comment Thursday, is still trying to determine how many investors there were and how much there is to return them.
The group of companies also sold investments in Quebec and Ontario.
On May 14, CTIC, CITCAP and Gauthier, admitting to selling securities in New Brunswick without a licence and committed to submitting a financial audit for fiscal 2006 and 2007 by Oct. 15.
The companies could not be reached for comment Thursday.
"We might not get our audited financial statements," Hancox said Thursday.
He said CTIC and CITCAP were offering New Brunswickers investments in loans.
"They would go out and buy accounts receivable from different companies, package the loans as investments and then sell those investments to investors with the expectation the interest they made off the loans would provide the interest for the investors," Hancox said.
Though he said this practice itself is not illegal it is uncommon, and the securities commission said CTIC and CITCAP didn't provide enough information about their companies and practices for investors to make an informed decision.
The securities commission encourages anyone who bought securities from any of the related companies or individuals to seek professional advice from a lawyer or accountant with respect to their rights under the bankruptcy.
The commission asks anyone with questions or information to contact them at 1-866-933-2222 or through their website: nbsc-cvmnb.ca
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