Man walks the ladder of success and reaches the top

A long-running process to wind up a failed labour-sponsored investment fund — the Manitoba-based Crocus Investment Fund — may be wrapping up after 17 years, as the fund’s receiver is seeking court approval to make its final distribution and terminate the receivership.

The fund, which once managed over $200 million in assets, entered receivership in 2005 following an investigation by the Manitoba Securities Commission (MSC) that raised concerns about the valuation of its portfolio.

While the MSC ultimately settled an enforcement case with former directors of the fund in 2011 — they agreed to one-year trading and director/officer bans for disclosure and oversight failures at the fund — the receivership is only now nearly complete.

On Jan. 17, the fund’s receiver, Deloitte Restructuring Inc., applied to Manitoba’s Court of Queen’s Bench to pay a fourth and final distribution to the fund’s former shareholders, totalling about $5.2 million, and to discharge the receivership.

Shareholders have until Feb. 25 to voice an objection to the receiver’s application.

Deloitte began distributing funds to shareholders in 2009. According to its most recent report, about $72.3 million has been distributed to former shareholders of the fund so far, and a class action recovered another $7.5 million.

When it entered receivership, the fund’s capitalization amounted to about $188 million, with the vast majority of that total ($185.2 million) held by retail investors (it had 33,569 Class-A shareholders).

If the court approves the final distribution, shareholders will have until Sept. 30 to claim their funds. After that, unclaimed funds would be paid to the provincial government.

Of the distributions made so far, about $2 million remains unclaimed.