SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-14-10518-00CL

DATE: 2015-11-23

RE: IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36 AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF 1511419 ONTARIO INC., FORMERLY KNOWN AS THE CASH STORE FINANCIAL SERVICES, 1545688 ALBERTA INC., FORMERLY KNOWN AS THE CASH STORE INC., 986301 ALBERTA INC., FORMERLY KNOWN AS TCS CASH STORE INC., 1152919 ALBERTA INC., FORMERLY KNOWN AS INSTALOANS INC., 7252331 CANADA INC., 5515433 MANITOBA INC., 1693926 ALBERTA LTD. doing business as “THE TITLE STORE”

BEFORE: Regional Senior Justice G. B. Morawetz

COUNSEL:
Jonathan Foreman and Lindsay Merrifield, for the Ontario Consumers Class Action Plaintiffs.

James Harnum, Agent to Harrison Pensa

David Mann and Robert Kennedy, for DirectCash in CCAA Proceedings

Eric R. Hoaken, for DirectCash in Class Action Proceedings

Peter Griffin and Matthew Lerner, for Gordon Reykdal

Jeff Galway, for N. Bland

Mark Polley and Eric Brousseau, for National Money Mart Company

Andrew Faith and Jeff Haylock, for 1573568 Alberta Ltd.

Geoff R. Hall and Stephen Fulton, for the Monitor (FTI Consulting Canada Inc.)

Patrick Riesterer, for the Chief Restructuring Officer of the Applicants

Michael Byers, for Craig Warnock

Serge Khallughlian and Charles Wright, for the Ad Hoc Committee of Purchasers of Applicants’ Securities, including the Plaintiff in the Ontario Securities Class Action

Mary Margaret Fox, for ACE Insurance Company

Doug McInnis, for Axis Reinsurance Company

Brendan O’Neill and Carolyn Descours, for the Ad Hoc Committee of Noteholders

Rebecca Wise, for Albert Mondor, Michael Shaw, Ron Chicoyne, William Dunn and Robert Gibson

Ilan Ishai, for the McCann Entities

David Hoffner, U.S. Counsel for the Monitor in Chapter 14 Proceedings

Mark Mounteer

HEARD and ENDORSED: November 19, 2015

REASONS: December 23, 2015

ENDORSEMENT

onTARIO CONSUMER CLASS ACTIONS: settlement approval order

[1] The Ontario Consumer Class Action Class Members moved for an order approving three settlement agreements:

a. The Priority Motion Settlement Agreement;

b. The DirectCash Global Settlement Agreement; and

c. The D&O/Insurer Global Settlement Agreement.

Collectively, these settlements are referred to as the “Ontario Consumer Class Action Settlements”.

[2] The motion was not opposed.

[3] At the conclusion of oral submissions, the motion was granted with reasons to follow. These are the reasons.

[4] Counsel to the Class Members submitted that the Ontario Consumer Class Action Settlements are the result of a strong investigation, a vigorously contested legal process, and highly adversarial negotiations under complex circumstances. Over $10 million has been recovered with the potential for additional recoveries in the future.

[5] Counsel also submits that the Ontario Consumer Class Action Settlements are part and parcel of the global resolution of several outstanding legal contests surrounding the Applicant, its Directors and Officers and several parties with whom it did business. Further, counsel submits that the resolution of those controversies substantially benefits the CCAA process by facilitating the flow of significant benefits to creditors while achieving substantial finality in the affairs of the Applicant and several inter-relate parties.

[6] The following actions were commenced by Harrison Pensa on behalf of the Ontario Consumer Class Action Class Members:

a. Timothy Yeoman v. The Cash Store Financial Services Inc. et al. (Court File No.: 7908/12 CP, the “Cash Store Claim”);

b. Timothy Yeoman v. Gordon J. Reykdal, et al. (Court File No.: 4171/14, the “Directors and Officers Claim”); and

c. Ronald Payne and Timothy Yeoman v. Trimor Annuity Focus Limited Partnership et al. (Court File No.: 4172/14, the “Third Party Lender Claim”).

[7] Counsel advises that the Settlement Agreements will resolve the Cash Store Claim and the Directors and Officers Claim. In addition, the Settlements will partially resolve the Third Party Lender Claim. The claims of Ontario Consumer Class Action Class Members will continue as against the unsettled defendants in the Third Party Lender Claim.

[8] Counsel advises that the salient aspects of the settlements reached for Ontario Consumer Class Action Class Members are as follows:

a. Payment of $10,062,500;

b. Ontario Consumer Class Action Class Members are entitled to share in certain future Estate Action Litigation Proceeds which may arise from recoveries in certain legal actions taken by the Estate of the Cash Store in the future; and

c. The Estate of the Cash Store and Direct Cash have agreed to provide substantial information and data respecting Ontario Consumer Class Action Class Members and their loans with The Cash Store during the class period for the purposes of facilitating notice and settlement administration process.

[9] Counsel submits that the Ontario Consumer Class Action Settlements reflect strong results achieved in difficult and highly adversarial circumstances and as a result, they are fair, reasonable, and in the best interest of the Ontario Consumer Class Action Class Members.

[10] In determining whether to approve a settlement, the court may consider the following factors:

a. The likelihood of recovery or likelihood of success;

b. The amount and nature of discovery, evidence or investigation;

c. The proposed settlement terms and conditions;

d. The recommendations and experience of counsel;

e. The future expense and likely duration of litigation;

f. The recommendation of neutral parties, if any;

g. The number of objectors and nature of objections;

h. The presence of arms-length bargaining and the absence of collusion;

i. Information conveying to the court the dynamics of, and the positions taken by the parties during, the negotiations; and

j. The degree and nature of communications by counsel and the representative plaintiff with class members during the litigation.

(See: Munes v. Air Transat A.T. Inc., 2005 Carswell Ont. 2503 (SCJ).

[11] Counsel filed a comprehensive factum and in Part “C” detailed the application of factors to be considered on settlement approval.

[12] Having considered the evidence and the legal argument in support of the motion, I am satisfied that the Ontario Consumer Class Action Settlements meet the criteria required for approval. In arriving at this conclusion, I have considered:

a. The Settlements were negotiated at arms-length;

b. The Settlement benefits are favorable to Class Members;

c. There have been no objections made to the Settlements;

d. The matter was thoroughly investigated and researched by Class Counsel;

e. A settlement is preferable when compared against the prospect of contested litigation against the settling defendants with an uncertain outcome and duration; and

f. The Representative Plaintiffs and Class Counsel recommend that the Settlement be approved.

[13] The motion is granted and the order signed in the form presented.

Regional Senior Justice Morawetz

Date: December 23, 2015