Canadian Superior Energy Inc., Calgary, (Toronto, Amex: SNG) has responded to a letter sent by shareholder Palo Alto, Calif.-based investment advisory firm Palo Alto Investors LLC which motioned for Canadian Superior’s executive chairman Greg Noval and other members of the board to step down following the company’s petition for bankruptcy protection through the Companies' Creditors Arrangement Act.

V. Phil Lalonde of the law firm Brownlee LLP spoke for Noval, claiming Palo Alto’s letter contained statements that were defamatory and inaccurate.

In its original letter, Palo Alto claimed Noval has “insurmountable conflicts of interest” with the shareholders. These include his involvement in Canadian Superior’s loan of a C$14-million bridge facility to Challenger Energy Corp., Calgary, (Toronto Venture: CHQ) in September and his ownership in Excalibur Energy (U.S.A.) Inc. and Global LNG Inc., two companies involved in the New York-New Jersey area joint venture Liberty Natural Gas Project with Canadian Superior.

Palo Alto reports, “In our opinion, Mr. Noval has been and continues to direct the business of Canadian Superior to focus primarily on enhancing the value of his investment in Challenger. The board has been complicit in his actions.”

In response to these allegation, Lalonde says Noval’s position chairman of Canadian Superior and his former position as chairman of Challenger prior to Oct. 23 had existed for years and were publicly know, that Palo Alto invested aggressively in Canadian

Superior in fall 2008 despite the issues it now is complaining about, Noval is not the largest shareholder of Challenger and that the C$14-million loan was properly reviewed by the Alberta Securities Commission.

Lalonde also requests Palo Alto publishes an apology in Marketwatch or his law firm will file a lawsuit against the advisory firm for defamation.

Canadian Superior has operations offshore Trinidad and Tobago, offshore Nova Scotia, in western Canada, the U.S. and North Africa.