Wednesday, September 17, 1997
Bre-X receivership stayed
But class-action suit lawyers given permission to cross-examine David Walsh
By MEL DUVALL
Calgary Bureau The Financial Post
Lawyers filing class action suits against Bre-X Minerals Ltd. attempted to push the company into receivership yesterday to stop the rapid depletion of its remaining
assets.
The lawyers, representing Canadian and U.S. shareholders, told a Calgary judge that money was evaporating from Bre-X's coffers at an alarming rate.
"These are shareholders' assets that are being depleted and, over the next week or two, we're talking about hundreds of thousands of dollars being spent," said
Clint Docken, a Calgary lawyer who is heading one of the suits.
Douglas McGillvray, a lawyer with another Calgary firm, Burnet Duckworth & Palmer, which has teamed up with Docken, agreed.
"The money is going out the door in a heck of a hurry and there's no indication it's to the benefit of those who have brought the [class action] suit forward," he said.
Justice Robert Cairns, who is hearing the matter, delayed a decision on whether to place Bre-X in receivership until Oct. 2, to give lawyers
for the company time to respond to the charges.
Bre-X lawyer Howard Gorman, of the law firm McLeod Dixon, said there are no reasons to justify taking such action.
Gorman said monies being spent by the company are being closely monitored and documented by Price Waterhouse and are not out of the ordinary.
"At this point and time I don't believe there is a reason to expand the role of the monitor," he said.
The Calgary hearing came just days after Price Waterhouse filed a report with the court, which shows Bre-X could run out of cash in as little as four months if it
continues to pile up legal and professional bills at current rates.
The company's net working capital position was reduced to $6.81 million on Aug. 31, compared with $12.8 million on May 8 when Price Waterhouse filed its first
report.
While the class action lawyers will have to wait two weeks to find out if they can push Bre-X into receivership, they were successful on another front.
The judge ruled they can cross-examine Bre-X chairman David Walsh over an affadavit he filed in support of the shareholders' class action suits. Docken said
Walsh acknowledges in the affidavit that fraud was at the heart of the biggest gold mining scandal in history and lawyers would like to determine exactly what he
meant.
"We're very happy with that ruling," Docken said outside the courthouse. "It is our intention to explore that part of his statement and look into other issues."
Walsh's cross-examination will not be public, but lawyers could use his responses in future proceedings.
The relatively brief hearing yesterday provided a glimpse into the proceedings that will evolve as police and private investigations into Bre-X unfold. At least seven
lawyers, representing various class action suits against the company, attended from as far away as Texas and New York in order to ask for status at future
proceedings.
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