The Erie County Supreme Court has ordered Lisa Lake Langley and her Buffalo, N.Y.–based company, Emerge Capital Management Inc., to pay judgments totalling more than US$280,000 to three former Emerge Canada Inc. employees who lent nearly US$200,000 to the U.S. firm and haven’t been repaid.
According to the judgments, which were entered on Aug. 5, Langley and Emerge Capital Management are ordered to pay US$213,069 to an Ontario-based former employee of Emerge Canada, US$35,210 to a Quebec-based former employee and US$32,733 to another Ontario-based former employee.
Langley is founder, president and CEO of both Emerge Capital Management and Toronto-based Emerge Canada. A lawyer for Langley and Emerge Capital did not respond to a request for comment.
In January, Emerge Capital and Langley sent a settlement offer to the former employees and asked the court to postpone the proceedings to allow for negotiation. The former employees declined the offer.
Then, Emerge Capital and Langley provided three cheques totalling US$20,000 to the former employees’ lawyer on April 26, but the cheques allegedly bounced, according to sworn statements.
The plaintiffs lent Emerge Capital Management a total of US$199,763.24 on Jan. 5, 2023, when they were senior leaders of Emerge Canada, according to exhibits filed with the Erie County Clerk.
The employees were also to receive equity in Emerge Canada at the same value as their loans to the U.S. company, with their share to be based on Emerge Canada’s valuation as of Dec. 31, 2022.
The employees were to receive a lump-sum repayment with 25% interest “upon closing of [third-party] funding, expected within the next day,” copies of the promissory notes said. The official due date for the loans was a year later, on Jan. 5, 2024.
But the promissory notes were amended on April 19, 2023 — less than two weeks after Emerge Canada’s ETFs were placed under a cease-trade order — to change the repayment date to May 15, 2023, with both parties agreeing.
Emerge Capital Management agreed to pay an additional 1% interest per month if it missed the repayment deadline.
The May 15 deadline was not met, the former employees alleged. Four days prior, the Ontario Securities Commission had suspended Emerge Canada’s registration due to capital deficiency, stating that the firm was likely deficient at some point prior to Sept. 30, 2022.
The three former employees have also filed suit in Ontario against Emerge Canada Inc., Langley and two other directors of the firm. The plaintiffs are seeking damages for alleged breach of contract and unpaid wages, among other things.
A statement of defence filed in February denies the allegations and requests the action be dismissed.
In Erie County, meanwhile, Emerge Capital Management faces three additional allegations of unpaid wages.
In the first case, a woman hired in February 2022 as an executive assistant with Emerge Capital alleged she was not paid wages from Dec. 16, 2022, until March 6, 2023, when she was “constructively discharged from her employment.” The woman further alleged she was dismissed “in retaliation for her complaints of labour law violations, including failure to pay wages.”
In March 2024, Emerge Capital and Langley filed a response to the complaint, denying the claims against them and asking the court to dismiss the complaint.
Last week, the law firm representing the defendants requested to withdraw as counsel, citing unpaid legal fees. Barclay Damon LLP, which also represented Emerge Capital and Langley in the loan repayment case, stated in a a motion dated Aug. 7 that Emerge Capital and Langley “have continually failed to make payment for the services Barclay Damon provided.”
Emerge Capital and Langley will be able to argue against Barclay Damon’s withdrawal at a hearing scheduled for late September. In the meantime, the court ordered a stay of proceedings.
Barclay Damon did not respond to a request for comment.
Two men filed separate complaints with the Erie County Clerk in April and July, respectively, alleging that Emerge Capital and Langley owe them each tens of thousands in back pay. Both complaints alleged that payroll issues began in January 2023 and that Emerge Capital’s health insurance was cancelled in the first quarter of 2023.
Emerge Capital and Langley have not responded to the allegations.
Charlie Spiring, who has been a shareholder of Emerge Capital Management since September 2018, declined to comment on the litigation. Spiring is also the founder and chair of Wellington-Altus Financial Inc.
Allan Hiebert, associate vice-president, corporate communications, with Wellington-Altus Private Wealth Inc. said in a statement that Spiring never served on the board of Emerge Capital Management and never had an employment, executive or officer role in the organization, “so he would have no access to any information that is not available to the general public.”
Further, “Mr. Spiring received written approval from [the Investment Industry Regulatory Organization of Canada] prior to his purchase of a minority stake in Emerge Capital Management back in 2018 for US$672,000,” Hiebert stated. “This minority interest reflected a 35% equity stake in the company; however, it is presumed that these shares are without any value whatsoever.”
With files from James Langton