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#Written by David Tam, 1996.           #
#davidkftam@netscape.net Copyright 1999#
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David Tam
Tuesday, November 12, 1996.

                             Business Press Review
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Enchin, Harvey. "Small software developer takes on CIBC in court battle."
The Globe and Mail. Thursday, November 7, 1996. B14.
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    The founder and president of Cigam Entertainment Inc., Howard Greenspan,
has filed a $3-million lawsuit against CIBC, claiming that it mishandled his
business account, causing his business to fail.  This is a counter-lawsuit
against CIBC's original lawsuit against Mr. Greenspan, which demanded repayment
of a promissory note, overdraft, and a personal line of credit, totaling to
$150 000.

    In Mr. Greenspan's counterclaim, he claims that CIBC top executives were
promoting a new, more flexible lending policy to knowledge-based businesses,
however, these offerings were not applied to Cigam's account.  In April of
1994, CIBC's president of personal and commercial banking presented the bank's
new lending policy to a parliamentary committee.  This policy would take into
account the "invisible", knowledge-based assets of a business.  It would also
recognize potential revenue and cash flow for lending purposes.

    In November of 1994, Cigam relied on those new policies to obtain a line of
credit from CIBC to finance its operations.  However, during the past summer,
CIBC managed to mishandle the account and the claims and policies made
previously no longer applied.  As a consequence, the bank demanded additional
security -- a collateral mortgage on Mr. Greenspan's personal property.
Cigam's banking arrangements deteriorated rapidly, causing immediate negative
affects to the operations of the company.

    During these events, Mr. Greenspan attempted to have CIBC value his
company's assets in accordance to the new policies it had claimed in April of
1994.   He brought his concerns to senior executives and the CIBC ombudsman,
but they claimed to have no knowledge of the new lending policies the president
had declared.  Eventually, this led to the bankruptcy of Cigam Entertainment
Inc.

    This article shows some of the communication problems between banks and
small businesses.  As mentioned in class, banks tend to give small business a
hard time even if they have been loyal customers for many years.  Banks must
learn to understand small businesses.  Irony can be seen in the fact that last
week CIBC announced a $100-million fund to finance early stage ventures in
knowledge-based industries, especially in computer software and multimedia.