Companies have scrapped in court before

Representatives of Anson in Toronto and Dallas could not be reached for comment.

The lawsuit alleges defamation, injurious falsehood, intentional interference with economic relations, civil conspiracy and unjust enrichment, and is seeking general and aggravated damages amounting to $450 million.

Among the claims in the lawsuit is an allegation that some guarantors who owed money to Callidus “filed false ‘whistleblower’ complaints against Callidus through the Ontario Securities Commission.” Then, once the whistleblower complaints were filed, it alleges “the Conspirators worked together to leak allegations contained in the complaints to the media in order to generate media interest.”

It is alleged that the “conspirators” sought to spread rumours within the financial industry that Callidus and Catalyst were the subject of OSC whistleblower complaints and subject to investigations by the OSC and Toronto Police, as part of an effort “to undermine the public confidence in both firms.”

There was no such investigation into Catalyst or Callidus, the firms say in the 33-page statement of claim.

The lawsuit says the story was nonetheless shopped to media outlets including a magazine, a newspaper, and a wire service before the Wall Street Journal published a story on Aug. 9, 2017.

The lawsuit alleges that story was timed to come out late in the day to assist the funds and individuals shorting Callidus shares.

Steve Severinghaus, senior director of communications at Wall Street Journal parent Dow Jones, said in an emailed statement that the news organization is “confident in the fairness and accuracy” of its reporting.

Catalyst and competitor West Face, which both invest in distressed companies, have scrapped in court before, including a prominent dispute involving a former Catalyst employee who left to work at West Face.

Catalyst lost a case in which it alleged misuse of confidential information by West Face in the takeover of WIND Mobile Inc.

The action was dismissed “in its entirety” in August of 2016, with the judge saying he had “considerable difficulty” accepting much of the evidence presented by Newton Glassman, managing partner of Catalyst.

“He was aggressive, argumentative, refused to make concessions that should have been made and contradicted his own statements made contemporaneously in emails,” Justice Frank Newbould said in his August 2016 ruling. “I viewed him more as a salesman than an objective witness.”

The decision is under appeal.

A spokesperson for Catalyst and Callidus declined comment on the latest lawsuit, in which the plaintiffs are also seeking to recoup “the cost of the ‘investigation’” of the alleged misconduct.

According to the statement of claim, the firms’ investigation “resulted in sworn statements, discovery of emails and other facts and evidence” on which the lawsuit is based.