Wayland Group Corp. (CSE: WAYL, FSE: 75M, OTC: MRRCF)
THERE IS NO CHARGE TO JOIN THE CLASS ACTION; SOCIAL MEDIA MAY CONTAIN FALSE INFORMATION. INVESTORS ARE PRESUMED TO BE INCLUDED WITHIN THE CLASS ACTION IF THEY PURCHASED DURING THE CLASS PERIOD.
Ontario Superior Court of Justice, Court File No.: CV-19-114-0000CP
Wayland Group Corp. (“Wayland”) is a Canadian cannabis producer which at all times relevant to this action was in the process of expanding its main production facility in Langton, Ontario (the “Langton Facility”). This securities class action relates to Wayland conducting multiple offerings thereby raising tens of millions of dollars from investors, and making representations:
- About how the proceeds from those public offerings would be used;
- Regarding when each phase of the expansion of the Langton Facility would be completed and how much each phase would cost;
- That the expansion of the Langton Facility was fully-funded from prior public offerings; and
- about the increase in the pro forma output and revenues that would be achieved from the additional cannabis that would be produced beginning in 2019 as a result of the expansion of the Langton Facility.
Despite the Company’s repeated representations of material fact however, in a series of public corrective disclosure statements (i.e. storm warnings) released between October 1, 2018 to August 2, 2019 (the “Public Corrective Disclosures”), Wayland revealed that:
- The expansion of the Langton Facility was not fully-funded;
- The expansion would not be completed by when the Company had represented it would be and would cost more than the Company represented;
- Wayland would not achieve the production or revenue targets the Company had represented it would achieve in 2019;
- Wayland would not be able to release its annual 2018, Q1 2019, and Q2 2019 financial statements and MD&A;
- Its shares were subject to a Failure to File Cease Trade Order issued by the Ontario Securities Commission; and
- Its auditor was resigning because of undisclosed problems, the board of directors were firing its CEO, and two members of the Board (one of whom was on the Audit Committee and the other on the Corporate Governance and Compensation Committee) were resigning under suspicious circumstances.
The Public Corrective Disclosures had the foreseeable effect of removing the artificial inflation in the Company’s stock price that had resulted from the aforementioned misrepresentations, thereby causing damages to Wayland’s shareholders.
On December 2, 2019 (the “Filing Date”), Wayland Group Corp., (“Wayland”), Maricann Inc. (“Maricann”) and Nanoleaf Technologies Inc. (“Nanoleaf”, and collectively with Wayland and Maricann the “Companies” or the “Applicants”) applied for and received an order (the “Initial Order”) for protection pursuant to the Companies’ Creditors Arrangement Act (“CCAA”), R.S.C.1985, c.C-36, as amended, from the Ontario Superior Court of Justice Commercial List (the “Court”). The Initial Order was amended on December 4, 2019 (the “Amended and Restated Initial Order”). The Amended and Restated Initial Order was amended on December 16, 2019 (the “Second Amended and Restated Initial Order”). The Second Amended and Restated Initial Order includes among other things, a stay of proceedings against the Companies, and the appointment of PricewaterhouseCoopers Inc., LIT as monitor of the Applicants (“PwC” or the “Monitor”).
On behalf of investors, Morganti & Co., P.C. has also filed an appearance in the CCAA Proceeding. During the CCAA Proceeding, it was disclosed that Wayland’s directors and officers insurance policy has a total of $22.5 million. In the past, Morganti & Co. has been successful in securing shareholders’ claims against the available insurance, i.e., Allied Nevada Gold Corp. and Guestlogix Inc.
On July 9, 2020, we were successful in getting the court to Order a lifting of the Stay of Proceedings that applied to our class proceeding since December 2019 when Wayland entered CCAA protection.
On July 14, 2020, we succeeded in having the claims asserted in our class proceeding excluded from an Order that otherwise bars claims against the former officers and directors of Wayland for conduct that occurred before April 24, 2020. We have named new individual defendants in a proposed Fresh as Amended Statement of Claim to notify the insurers of our additional claims. The Fresh as Amended Claim cannot be filed with the court until after the expiry of the remaining Stay of Proceedings on December 4, 2020.
Claim or Motion for Authorization issued: September 3, 2019
Class Period: January 24, 2018 to and including August 2, 2019
Motion Record in Support for Statutory Claim Filed: TBA
Judge: Justice Raikes
Shareholders’ Canadian Counsel: Andrew Morganti and Albert Pelletier, Morganti & Co.
Corporate Defendants’ Canadian Counsel: Lawrence Ritchie, Oslers Hoskin & Harcourt LLP.
Underwriter Defendants’ Canadian Counsel: John Fabello, Torys LLP