The Ontario Superior Court of Justice has issued a court order declaring Thomson Kernaghan as a bankrupt and appointing Ernst & Young Inc. as trustee in bankruptcy.

Ernst & Young Inc. has taken control of Kernaghan’s property and operations, including customer accounts, and is working with the Canadian Investor Protection Fund to determine the extent to which CIPF funding will be required to facilitate the transfer of Thomson Kernaghan’s customer accounts to other investment dealers.

The trustee has confirmed that prior to the bankruptcy Thomson Kernaghan’s management team developed a plan to voluntarily wind up Thomson Kernaghan’s retail operations. The plan included the transfer of the customer accounts to other securities firms. Thomson Kernaghan took initial steps to implement this plan but determined late last week that it did not have sufficient short-term cash to cover all client credit balances.

As a result, the Investment Dealers Association suspended Thomson Kernaghan from dealing with the public and asked CIPF to safeguard Thomson Kernaghan’s customers. Accordingly, CIPF sought a court order appointing the trustee, which activated the CIPF’s ability to provide emergency funding to cover asset deficiencies in customer accounts.

With financial assistance from CIPF, the trustee intends to resume the transfer of customer accounts to other stockbrokers later this week with a view to completing the transfer of most customer accounts within the next two to three weeks. The Trustee confirms that its top priority is moving customer assets and accounts to solvent dealers as quickly as possible.

In the meantime, although no withdrawals can be made from a Thomson Kernaghan account until it has been transferred, customers may request emergency liquidating trades to convert securities in their accounts to cash. Customers wishing to request a liquidating trade may call (416) 860-6109 to reach an authorized representative. General customer inquiries should be directed to (416) 943-2156.

A procedure is also in place to respond to urgent requests for compassionate payments necessary for immediate living expenses or specific events, such as closing the purchase of a home or other major asset. These requests should be made through the general customer inquiry number. Requests for compassionate payments must be accompanied by appropriate documentation so that the request can be evaluated. Clients who normally
receive RRIF payments do not need to make a specific request for compassionate payment. These payments will be paid automatically by the trustee.