September 05, 2005
Ian Thow's creditors will convene September 12 at 10:00 am at the Hotel
Grand Pacific to decide their next course of action as they sort through
the mess created by the former Berkshire Investment Group mutual fund
First on the agenda will be the vetting of a proposal by Thow that could
see unsecured creditors receive up to 50 cents on the dollar.
However, as the Business Examiner was going to press, the status of the
poposal was much in doubt. According to Katherine Ducey, lawyer for a
number of plaintiffs, as of August 29, Thow's lawyer David Gagnon, of the
Vancouver firm Harper Grey, had withdrawn from the case as had two
law-firm associates. Gagnon confirmed this, stating: "we have ceased to
act for Mr. Thow."
On August 22, Thow filed a proposal with the Vancouver Office of the
Superintendent of Bankruptcy that offers to pay $12.5 million to 111
creditors (102 unsecured, nine secured) to resolve claims in excess of
The proposal lists equity in Thow's $7-million North Saanich home, the
sale of approximately one-half-million dollars worth of vehicles and
assorted personal effects as sources of funds.
However, a primary consideration for creditors is Thow's proposed use of
$5 million, to be supplied by a mystery third party.
Prior to filing notice at the Vancouver Courthouse that he was stepping
away from the Thow case, Gagnon refused to disclose the identity of Thow's
benefactor. Gagnon did confirm that the $5 million is not coming from the
Berkshire Investment Group. He said the identity would only be revealed to
bankruptcy trustee Michael Cheevers of Wolrige Mahon Ltd. Meanwhile,
Cheevers said the money must be in the bank before Sept. 12 in order for
the proposal to proceed.
According to Ducey, as of Sept. 1, the money had not been deposited.
Meanwhile, creditors contacted by the Business Examiner are concerned the
$5 million - if it really does exist - is coming from a stash Thow has
squirreled away and hidden from creditors.
The use of mystery, third-part money to appease creditors is not unique.
Most recently, in a grand-standing effort during a July sentencing
hearing, Peter Leask, lawyer for Frank Biller, convicted fraud artist and
former vice-president of defunct Eron Mortgage Corp., presented a $50,000
cheque to Rita Mortimer after she completed her victim-impact statement.
The cheque was meant to compensate Mortimer for money she invested 10 days
before the British Columbia Securities Commission shut down Eron. Leask
told Justice Mary Ellen Boyd the money came from a secret benefactor and
through his own trust account. If Biller had received the money directly,
as an undischarged bankrupt, he would have had to report it to his
bankruptcy trustee for possible distribution to other creditors.
According to Thow's July 25 notice of intention, he owes creditors
approximately $43 million. However, his yacht ($524,959.66), 1987 Bell
helicopter, Cessna Citation, Cessna Bravo ($15 million combined) have all
been seized by creditors. Approximately $3.7 million is owed to secured
Once secured creditors and seized assets are subtracted, money owed
unsecured creditors is approximately $13 million. It is estimated that
Thow has $2 million in equity in his North Saanich waterfront home. Once
it is combined with the mystery benefactor's $5 million, creditors may be
enticed to accept the offer, allowing Thow to avoid being forced into
bankruptcy by his former friends, business associates and clients.
As previously reported, Thow and Berkshire Investment Group are named in
several lawsuits. Plaintiffs allege that Thow sold them investments in the
National Commercial Bank of Jamaica which is controlled by Michael
Lee-Chin, president of Canada's AIC Limited. Lee-Chin is also founder of
the Berkshire Group and its three subsidiaries: Berkshire Investment
Group, Berkshire Securities and Berkshire Insurance Services. Berkshire
has vigorously denied involvement, insisting that Thow acted on his own.
Thow's British Columbia Securities Commission (BCSC) registration as a
company officer with Berkshire was terminated on June 1. Since then, the
RCMP's Integrated Market Enforcement Team and the BCSC have launched
By Lyle Jenish
Business Examiner editor