Crystallex: a claim in US dollars and an answer at the 2011 exchange rate

When Crystallex International Corporation issued US$100 million of 9.375% notes in 2004, the permits for its Las Cristinas gold project in Venezuela had not yet been obtained, and its chairman, Robert Fung, helped negotiate the form of the notes. "I was directly involved in negotiating the form of the Notes in 2004, including the provision in the form of Notes that repayment of the Notes would be made in Canadian dollars, rather than US dollars," he swore on September 16. The notes fell due on December 23, 2011, the day Crystallex filed under the CCAA, per the Affidavit of Robert Fung, Sept. 16, 2026, paras. 1, 21–22, 34, 38. At that day's noon rate a Canadian dollar bought US$0.9796, per the Notice of Position, Aug. 19, 2026 (Ex. "H"), p. 132, n. 3; the noteholders' August 28 affidavit quotes the Bank of Canada at US$0.7226 on August 25, 2026, per the Supplementary Affidavit of Scott Reid, Aug. 28, 2026, para. 10.

The exchange rate is one of the questions now headed for a hearing in December. Computershare Trust Company of Canada, the trustee for the notes, filed its claim on July 9 under the supplemental claims procedure Justice Conway ordered on May 12. It claims US$505,459,631.66 on the notes through July 13, 2026: US$188,198,213.88 that the standstill order established as an irrevocable proven claim, and US$317,261,417.78 of interest on that amount at 9.375% since December 31, 2015. It adds C$6,167,040.86 in post-standstill fees and expenses of its counsel, Goodmans LLP, US$5,165,917.39 in pre-filing fees and expenses, and interest and fees from then on, per the Trustee Claim, July 9, 2026 (Ex. "C"), Sch. A, paras. 4–8, 11, 17(a), and Supplemental Claims Procedure Order (Ex. "A"). The claim's headline total was reported here on August 18.

On August 19 Sergio Marchi, the independent director, who answers claims on Crystallex's behalf under that order, delivered his notice of position. It allows US$187,948,213.88 under the standstill agreement, a US$250,000 additional post-filing expense amount, subject to the monitor's confirmation, and the US$5,165,917.39 of pre-filing fees, which it ranks at the eighth level of the court-approved waterfall: US$193,364,131.27 in all, converted to Canadian dollars at the noon rate of December 23, 2011. Post-filing interest is "NIL," per the Notice of Position, Aug. 19, 2026 (Ex. "H"), p. 132, and Supplemental Claims Procedure Order (Ex. "A"), para. 26. Mr. Fung swears, on Mr. Marchi's information, that Crystallex does not dispute the claim for those amounts, per the Fung Affidavit, para. 3.

Where the interest stops

On interest the notice relies on Nortel Networks Corporation (Re), 2015 ONCA 681: the "Interest Stops Rule applies to this CCAA proceeding and prohibits the payment of post-filing interest to unsecured creditors, including the Trustee as it relates to the Trustee Claim, unless the Court orders otherwise." With neither the net proceeds nor the pool of allowed claims yet known, the notice continues, "There is an insufficient factual basis for the Independent Director or the Court to consider whether the granting of post-filing interest" is appropriate. If interest is payable, the notice says, it can be calculated only on US$104,135,273.97, the principal amount of the claim at the filing date, because the amounts on which standstill interest was calculated were agreed "by settlement only for the duration of the Standstill Period"; and the independent director believes the court should apply a common rate to all unsecured claims, at most the BIA rate of 5%, on a simple basis. The post-standstill fees are disallowed under the standstill agreement, by which the trustee was to be reimbursed for further post-filing expenses "in an amount of up to US$250,000." And foreign-currency unsecured claims "must be converted into Canadian currency using the exchange rate as at the date of filing, not the payment date," per the Notice of Position, Aug. 19, 2026 (Ex. "H"), pp. 132–133.

The trustee's claim, filed first, had staked out the other side. Apart from the Goodmans fees, it is "denominated, asserted and payable in U.S. dollars"; any conversion would come at the Bank of Canada rate on the future date it is made, and, for illustration, at the June 30, 2026 rate of US$1:C$1.4210 the US$505,459,631.66 would be C$718,258,136.59. Its interest accrues daily, each day's unpaid accrual becoming an amount in default that bears interest the next (or, in the alternative, semi-annually), per the Trustee Claim (Ex. "C"), Sch. A, para. 17(d), (h). Scott Reid, whose Stornoway funds are part of the ad hoc noteholder committee, swore on August 28 that he disagrees with the disallowance and with the conversion of "claim amounts that this Court has already ordered be irrevocably accepted in U.S. dollars to Canadian dollars at a 15-year old exchange rate." The claim, he swore, "should be admitted by the Court in the full amount asserted, as well as in the currencies asserted," per the Reid Supplementary Affidavit, para. 10 and the Reid Affidavit, Mar. 26, 2026, para. 1.

Mr. Fung gives the company's account of the standstill figure. The June 5, 2013 order gave the noteholders a proven claim for interest at 9.375% to May 20, 2013, US$13,747,995.93, and at an aggregate 20% simple rate to December 31, 2015, US$64,564,943.98, which he calls "a significant premium for the Company to pay" for room to pursue the arbitration. By December 2015 the arbitration proceedings had concluded, the high rate was, in his account, diluting potential recoveries to shareholders, and the Court of Appeal had decided Nortel; the board let the standstill end on December 31. He describes the noteholders' steps, beginning before the filing, as "highly disruptive to Crystallex's attempts to obtain the best result for all of its stakeholders," per the Fung Affidavit, paras. 17–18, 93, 96–100. No reply to this evidence was in the record by October 2; reply records are due October 21, per the Revised and Amended Timetable, Oct. 2, 2026.

Three experts for the independent director

Mr. Marchi's September 30 record carries three expert reports. James M. Peck, a retired United States bankruptcy judge who presided over the Lehman Brothers cases, writes that s. 502 of the U.S. Bankruptcy Code fixes foreign-currency claims at the petition-date rate, an approach "undisputed in the relevant case authority" and, he says, followed in UK administrations and in Singapore. The rule "protects the estate from gaming of the system and posturing among creditors about alternative dates for currency conversion." He allows that the date carries "serious economic significance" here, given the Canadian dollar's fall over "the unusually long fifteen-year time span," and adds: "I am quite confident that no one envisaged being involved in a still pending and unresolved restructuring fifteen years later." In the US, in his view, the length of the case would not alter the rule. The report offers no opinion on the conversion date under Canadian law, per the Expert Report of James M. Peck, Sept. 16, 2026, paras. 1, 3–5, 9–12, 15.

Robert Rauch, a former Gramercy Funds Management portfolio manager, takes up the securities Venezuela delivered under its 2018 amended settlement: an agreed market value of about US$319.6 million when received, on a face value of about US$1.35 billion, according to Mr. Fung, who swore in August that had Crystallex acceded to the committee's "prior repeated urgings to liquidate those securities, it would have done so at values substantially below where those securities trade today," per the Fung Affidavit, para. 135 and the Affidavit of Robert Fung, Aug. 19, 2026, para. 14. Mr. Rauch's opinion is that it is unlikely Crystallex could sell all or a large portion of a portfolio of Venezuelan sovereign and PDVSA bonds of that face amount, before the terms of Venezuela's restructuring are substantially known, "without causing a substantial downward impact on the market prices at which the bonds would transact." An attempt to sell the position, or a sizable portion of it, could, he writes, retrace 50% to 100% of the bonds' 2026 rally, roughly 22% to 44% below current prices. "Absent a compelling need for near-term liquidity, in my opinion a value-maximizing strategy may be to defer a substantial sale until the restructuring has been completed," which he assumes will take about three years, per the Expert Report of Robert L. Rauch, Sept. 16, 2026, paras. 1–2, 7, 9–10, 12, 45.