In the proposed class action before the Superior Court of Quebec styled Lacerte c. Bruneau, et al., 500-06-001346-242, the proposed representative plaintiff claims that various defendants, including Taiga Motors Corporation (“Taiga”) and entities affiliated with Canaccord Genuity Group Inc., engaged in wilful misconduct contrary to the expectations of the investing public in carrying out of the SPAC merger transaction in 2021, and also misrepresented Taiga’s capability to achieve mass commercial production of its products.
In July 2024, a few months after announcing that it was suspending its production and laying off a significant portion of its workforce, Taiga sought protection from its creditors under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA”). Subsequently, Taiga’s common shares were delisted from the Toronto Stock Exchange, and its business was sold for $1 million.
What is a SPAC?
“SPAC” stands for Special Purpose Acquisition Company, which is a shell entity that is incorporated and raises funds through an IPO to acquire a business and bring it to the public market. Once a qualifying target company has been identified, a SPAC acquires the target and lists its securities on intended securities exchanges, thereby circumventing the high level of scrutiny that would have applied had the target company directly applied to be listed on the public market for the first time.
A SPAC transaction has specific requirements, including that the value of the business brought to the public market through the SPAC transaction must be equal to, at a minimum, 80% of the funds raised by the SPAC.
Moreover, a SPAC is required to complete its acquisition of a qualifying target within a prescribed time (usually 21 months), failing which it must be liquidated, and its funds be returned to the initial investors. These transactions are overseen by a “sponsor”, which provides funding and other indemnification or similar arrangements for the benefit of the SPAC.
In re Taiga Motors Corporation Canadian Securities Litigation
Taiga is a manufacturer and provider of electric off-road powersports vehicles based out of Montreal, Québec. It was incorporated in 2019 as a SPAC named Canaccord Genuity Growth II Corp. (“CGGC”). Then, in April 2021, CGGC acquired Taiga Motors Inc. (“TMI”) through a SPAC merger transaction, changed its name to Taiga, and listed its securities for trading on the Toronto Stock Exchange. The SPAC transaction was orchestrated by Canaccord Genuity Crop. and its affiliate company, CG Investments Inc. III, both of which are named as defendants in the proposed class action.
Over the course of the SPAC transaction, CGGC misrepresented to the investing public that:
- TMI had a fair market value of over $300 million, which would be well over 80% of the $100 million that CGGC had raised through its IPO; and
- Taiga was capable of claiming “leadership” and entering “mass-production of next-generation electric powersports vehicles and fully integrated modular powertrain technology.”
Then, in early 2023, Taiga issued a further misrepresentation that it was capable to achieve mass production and delivery of its vehicle in the range of up to 3,500 units.
All of these misrepresentations were publicly corrected in the year 2024, resulting in significant loss of shareholder wealth. In April 2024, Taiga disclosed that it was not able to achieve mass commercial production of its products on a sustainable basis or anywhere close to the production levels it had represented to the investors; in October 2024, Taiga’ business was sold for approximately $1 million within the CCAA proceeding.
This proposed class action is brought on behalf of:
all persons who acquired securities of Taiga at any time during the period from April 23, 2021 to April 2, 2024, both dates inclusive, and incurred a loss on their investment, except certain Excluded Persons.
More Information
KND Complex Litigation is counsel to the shareholder plaintiffs in Taiga. For more information, visit https://knd.law/class-actions/taiga-motors-corp/.
Taiga is currently in protection under the CCAA. Information regarding Taiga’s CCAA proceedings is available on the website of the Court-appointed Monitor at https://www.insolvencies.deloitte.ca/en-ca/Pages/Taiga-Motors.aspx.
For inquiries, please contact us by email at contact@knd.law.