- Quadriga needs to come up with $23.5 million to pay the lawyers handling its restructuring proceedings
- Time is running out
Quadriga Fintech Solutions is at risk of running out of funds forits restructuring. The crypto exchange has been working with the firm Ernst & Young Inc. as monitor. According to the firm, unless Quadriga is able to access money from banks and other payments processors, there will be not enough money to cover the cost of this process.
Quadriga Sought Help Amidst the Controversy
The crypto exchange owes some C$260 million spread over 115,000 clients. Since February 5, 2019, they have been going through a restructuring under Canada’s Companies’ Creditors Arrangement Act. The company suspended operations in January and sought help.
Quadriga reportedly lost access to C$190 million of their customers’ assets after their CEO, Gerald Cotton, suddenly passed away. He died while traveling in India in December and took the cold wallets’ passwords with him to the grave. No one in the crypto exchange company he founded knows how to recover the crypto held for clients.
Jennifer Robertson, Cotten’s widow, has initially provided retainers amounting to C$50,000 to both law firm Stewart McKelvey and Ernst & Young. Last February 6, she again provided an additional C$150,000 to the monitor. According to Ernst & Young’s second monitor report, the funds are now in danger of running out. They filed the report on Wednesday in Nova Scotia Supreme Court, which says:
“The applicants currently have no accessible funds to fund the CCAA proceedings, other than the interim financing provided by Ms. Robertson which will be exhausted in the near term.”
$23.5 million short
Ernst & Young suggested 3 sources to fund the court proceedings. These sources include 1,004 bulk drafts totally C$5.84 million that were delivered to Stewart McKelvey before the proceedings began, second is the C$25.3 million in Bank of Montreal bank drafts held by Costodian Inc., and then third is the undisclosed amounts held by 9 third-party payment processors on behalf of Quadriga.
On February 15, Costodian Inc. released four drafts which represents C$20.3 million. However, it still holds a draft of C$5 million and a U.S. draft for $70,000 that it won’t deliver unless there’s a court order. Moreover, there’s also an issue of hesitation from Royal Bank of Canada. In a report, Ernst & Young said:
“RBC has been cooperative. However, as a stranger to the CCAA proceedings, RBC has expressed hesitation to accept and disburse the BMO drafts, bulk drafts and future amounts, without direction and relief from the court.”