March 30, 2021
EncoreFX Inc., a Victoria, British Columbia-based financial services company providing foreign exchange risk management services and cross-border payment solutions, had its bankruptcy proceedings continued under the CCAA on March 30, 2021. Exactly one year earlier, on March 30, 2020, the company voluntarily assigned itself into bankruptcy as a result of atypical volatile foreign exchange market conditions driven mainly by the impact of the COVID-19 pandemic. Due to the extreme market volatility, several of the company's clients were OTM on their transactions. Under the terms of the company's standard ISDA agreements with its third-party banking counterparties (the "Liquidity Providers"), the company was required to pay significant additional margin to the Liquidity Providers to cover the value of the OTM contracts. The Plan of Compromise and Arrangement (the "Plan") entered into under the CCAA seeks to avoid the depletion of the company's assets resulting from extensive and uncertain litigation. The Plan aims to achieve this by providing a global resolution of certain claims against the company. The stakeholders with the largest claims filed against the company include Gustavson Capital Corporation, which filed a secured claim against the estate in the amount of $35.9 million, and Andreas Wrede, who filed a property claim for approximately $29.0 million. EY was appointed monitor. Counsel is MLT Aikins for the monitor, Jones Emery Hargreaves Swan for Gustavson Capital Corporation and Stikeman Elliott for Andreas Wrede.