An Ontario Superior Court justice has denied Difference Capital Financial Inc. CEO Michael Wekerle's motion to dismiss the bankruptcy notice taken against him by Rohit Sehgal.
However, the case to have Mr. Wekerle declared bankrupt would appear to have been significantly weakened as it was revealed in court Friday that a few days ago he sent a payment of just under $1.1-million (U.S.) to Mr. Sehgal with the objective of squaring things up.
"The money was paid," Mr. Wekerle said in a brief telephone call following the proceedings.
Mr. Sehgal filed the bankruptcy application in November, 2014, after Mr. Wekerle failed to pay a $1.4-million (U.S.) debt he alleged was owed to him. The legal fracas stemmed from a busted real estate deal regarding a glitzty New York condo that the two Bay St. veterans, and onetime close pals, had partnered up on. Neither Mr. Wekerle nor Mr. Sehgal appeared in court Friday.
Mr. Wekerle was represented by a gang of five lawyers. Mr. Sehgal had one lawyer and a fresh-faced law student show up on his behalf.
Jim Grout, lawyer with Thornton Grout Finnigan LLP, argued on behalf of Mr. Wekerle that Mr. Sehgal had limited recourse to the particulars of a promissory note that Mr. Wekerle had executed to him when they originally had done the real estate deal. He argued that Mr. Sehgal was not entitled to any other assets, and that the bankruptcy application should be dismissed. He noted that Mr. Wekerle and Mr. Sehgal are "big boys" and that "they knew what they were doing" when they entered into a business transaction, and that they both would have known that there were inherent risks.
Catherine Francis, lawyer with Minden Gross LLP, arguing on Mr. Sehgal's behalf, detailed the various attempts that were made over the past couple of months to try to get Mr. Wekerle to pay the debt owed to Mr. Sehgal, including multiple e-mails. Justice Herman Wilton-Siegel interjected saying "lots of communication, but no money. And a briefcase left in the Bahamas. I get it."
Ms. Francis revealed that, earlier this week, Mr. Wekerle sent a payment to Mr. Sehgal of just under $1.1-million (U.S.). But she argued that the debt was not settled in full and that her client is owed additional funds for various bits and bobs like furniture and artwork that was procured for the Tribeca condo at the centre of the legal spat.
Legal counsel for Mr. Wekerle and Mr. Sehgal declined comment.
A written explanation for Justice Wilton-Siegel's decision is expected by Monday.