Reuters: Bankruptcy News: UPDATE 1-Sino-Forest auditor Ernst & Young resigns

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UPDATE 1-Sino-Forest auditor Ernst & Young resigns Apr 5th 2012, 15:56 Thu Apr 5, 2012 11:56am EDT * Auditor quits after Sino seeks creditor protection * Sino was granted creditor protection in Canada last week * Sino has been put under a delisting review by the TSX TORONTO, April 5 (Reuters) - Sino-Forest said on Thursday its auditor, Ernst & Young LLP, has resigned, just days after the embattled Chinese forestry company was granted creditor protection by a Canadian court. Sino-Forest's Toronto-listed stock tanked last June after a short-seller accused it of exaggerating the size of its Chinese forestry assets. The company claims that the allegations have paralyzed its business and it was granted creditor protection by the Ontario Superior Court of Justice last week under Canada's Companies' Creditors Arrangement Act (CCAA)- the equivalent of U.S. Chapter 11 filing. Trade in Sino's stock was halted last August and the company is still being probed by regulators. In light of Sino's creditor protection filing, the Toronto Stock Exchange put the company on review for delisting. The company's own independent investigation into the fraud allegations proved inconclusive and was unable to clear Sino-Forest of allegations leveled at it by short-seller Carson Block and his firm Muddy Waters. Sino-Forest and its executives, along with its underwriters and auditors, are all facing possible class action lawsuits due to the company's meltdown. Sino's inability to dispel the fraud allegations has also resulted in its failure to file financial results for 2011, prompting its auditor to step down. The company said it plans to sue Block, along with his firm and other unnamed parties for more than $4 billion in damages. Block, earlier this week, countered that Sino-Forest ought to be thriving if it has done no wrong. Sino-Forest is the most prominent among a series of recent accounting scandals that have tainted the image of Chinese companies listed in North America. The scandals have prompted trading halts, delistings, lawsuits and regulatory probes in both the United States and Canada. Link this Share this Digg this Email Reprints

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