Home Capital Group Inc. said Tuesday it has received a draft statement of claim from a partnership managed by West Face Capital Inc. containing allegations of misrepresentation. Both companies are based in Toronto.

The alternative mortgage lender said the draft, which has not yet been filed in court, is claiming damages of $70 million.

“The company believes it has valid defences and, if West Face commences the claim, the company intends to fully defend its conduct, as well as to investigate the conduct of the various short sellers and the propriety of their actions whether acting alone or in concert with others,” Home Capital says in a statement.

The company says the claim was prepared on behalf of West Face Long Term Opportunities Global Master LP, a Caymans Island limited partnership which opted out of a global settlement in connection with a class action lawsuit earlier this year.

In June, Home Capital agreed to pay $30.5 million to settle a class-action lawsuit and a matter before the Ontario Securities Commission concerning allegations of misleading disclosure.

Raymond James analyst Brenna Phelan noted that Home Capital currently trades at a discount to its closest peer, Equitable Bank.

“While the penalty itself is manageable, we believe this statement, as well as any future court case, will serve as a reminder of skeletons in the closet,” Phelan wrote regarding the potential lawsuit from West Face.

Home Capital says the West Face claim describes building a significant short position in Home Capital in the spring and summer of 2013 before covering its short position between the fall of 2013 and the spring of 2015.

West Face says it covered its short position during a period in which it now believes that market prices of Home Capital shares were inflated due to incomplete public disclosures.

“West Face acted alone in its short position and did not act in concert with any other short sellers,” the investment manager says in a statement.

The firm says it has not traded Home Capital shares since April 2015.