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NWT Uranium drops court case over Union loan
2013-01-17 18:45 ET - Street Wire
by Mike Caswell
NWT Uranium Corp. has dropped the case it launched in the Supreme Court of British Columbia against Union Securities Ltd. over a $500,000 loan. The company claimed that it had lent the money to Union as an advance on a $10.8-million financing, and said that Union had pledged all of its assets as security. NWT's reasons for dropping the lawsuit are not clear. The company filed a notice of discontinuance on Monday, Jan. 15, and stated in a requisition that the case was adjourned by consent, which usually occurs when a matter is settled out of court.
NWT launched the case on Dec. 10, 2012, when it filed a petition at the Vancouver courthouse. It said that it had advanced $500,000 to Union in March, 2012, when the firm was in financial difficulty. The company had agreed to invest $10.8-million, and the $500,000 represented a refundable deposit.
Ultimately the $10.8-million financing did not complete, and NWT demanded the return of the $500,000. According to the petition, the advance was secured by all of Union's assets, but shortly after NWT demanded the money back Union announced a deal to sell all of its accounts to PI Financial Corp.
Around the same time, Union head John Thompson told NWT that the money would be repaid upon closing of the PI deal, the petition stated. Union, however, ceased operating on Oct. 15, 2012, without repaying the money. The petition sought a court order enforcing the company's security over Union's assets.
For its part, Union said it planned to pay the money back. In a response filed on Dec. 18, 2012, the firm claimed that it remained subject to the jurisdiction of the Investment Industry Regulatory Organization of Canada, and needed approval from the regulator before it could repay the money. So far it had not received that approval.
Union also denied there was any security agreement. The terms of the advance were simply that it was for $500,000 interest free.
Union asked that the petition be dismissed.
Also a respondent in the case was PI Financial. In a brief response, PI said that there was no allegation it was party to any agreement. If a judge were to find that there was a security agreement, then PI said it would argue that the agreement was not binding on it.
NWT was represented by Vancouver lawyer Ronald Josephson of Josephson Associates. Union was represented by Brent Meckling of Taylor Veinotte Sullivan, and PI was represented by Stephen Warnett of Borden Ladner Gervais LLP.
NWT, which was halted on Jan. 14, was last at five cents.
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