An Ontario court has given Bridging Finance Inc.’s receiver the go-ahead to proceed with the firm’s liquidation.
Following a hearing on March 25, Chief Justice Geoffrey Morawetz of the Ontario Superior Court of Justice ruled that PricewaterhouseCoopers Inc. (PwC) could terminate the process it began last summer to find a buyer for the troubled fund manager. PwC was appointed as Bridging’s receiver a year ago at the Ontario Securities Commission’s request.
The sale process produced two final proposals — a cash bid and an investment offer — that were put before investors in January, along with a third option to reject both bids and have PwC oversee the liquidation of the firm and its funds.
After canvassing investors, lawyers appointed by the court to represent retail investors’ interests in the case reported that the majority of investors (about 65%) favoured rejecting both offers and sticking with the existing liquidation process.
In court filings, PwC indicated that it could take five years for that process to run its course, and it estimated that investors will end up recovering between 34¢ and 42¢ on the dollar, given likely losses at the firm’s funds. Bridging managed more than $2 billion in assets prior to the receivership.
“There appear to have been significant deficiencies in Bridging’s management of the loan portfolio, including the valuation of the loan portfolio and the [net asset value],” the receiver noted in its latest report to the court.
A handful of investors opposed the liquidation, arguing that they hadn’t been given adequate time or information about the three alternatives and that there may be a better deal available that could recover more money for investors.
In late February, the court gave the dissident investors a temporary reprieve. However, following the March 25 hearing, it denied a motion for a further extension.
Instead, the court granted PwC’s motion to reject both final bids and to terminate the sale process. It also gave PwC the power to liquidate certain fund assets without seeking court approval.