Background
The Wise Stores Inc. was a retail store chain whose share were primarily held by the three Wise brothers. In 1992 they acquired Peoples Department Store, a competitor. From 1994 their business interests went through a difficult time. To cut down on costs they developed a scheme where certain inventory would be purchased through Peoples and then given to Wise on credit. Soon, Wise owed more than 18 million dollars to Peoples. By 1995, both Wise and Peoples declared bankruptcy. The creditors for Peoples bought an action against the Wise brothers for breach of their fiduciary duties as directors under section 122(1) of the CBCA by implementing the credit scheme.
The Trustees argued that the Wise brothers favoured the interests of Wise Stores over that of Peoples.
At trial the Quebec Superior Court found that the Wise brothers breached their fiduciary duty.
The decision of the trial judge was overturned by the Quebec Court of Appeal.
Read more about this topic: Peoples Department Stores Inc. (Trustee Of) V. Wise
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