Home Capital to defend itself from possible $70M claim

Home Capital Group Inc. says it has received a draft statement of claim from a partnership managed by West Face Capital Inc. containing allegations of misrepresentation.

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

Home Capital adds 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.

Read: HOOPP’s chief executive quits Home Capital board

As described in the draft claim, West Face built a significant short position in Home Capital in the spring and summer of 2013. It then reversed its investment strategy, covering its short position between the fall of 2013 and the spring of 2015.

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

In a release, Home Capital says if West Face commences the claim, the company intends to fully defend its conduct, as well as investigate the conduct of the various short sellers and the propriety of their actions, whether acting alone or in concert with others.

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.