The failure of alternative fund manager Bridging Finance Inc. (BFI) has spawned a flurry of litigation from the firm’s court-appointed receiver, PricewaterhouseCoopers Inc. (PwC), as it seeks to wind down the firm and recover assets for investors.
According to its latest report to the Ontario Superior Court of Justice, PwC has launched a series of lawsuits against various players in the saga, including the firm’s former executives and directors, its former auditors, and parties to the major transactions at the centre of the allegations of misconduct from the Ontario Securities Commission (OSC).
None of the allegations in the lawsuits, or from the OSC, have been proven.
As a result of the firm’s collapse, investors in the Bridging funds are expected to lose over $1 billion collectively. Yet, the receiver is seeking over $3.7 billion in damages in its various legal actions.
The first suit, filed on April 12, seeks $1.4 billion in damages against the firm’s former auditor, KPMG LLP.
At the end of April, the receiver also brought a claim seeking $1.7 billion against the former executives and directors of Bridging, including the husband and wife team that built the company, David and Natasha Sharpe, and its initial financial backers, Jenny and Rock-Anthony Coco, along with others.
Additionally, the firm has filed suits on behalf of various Bridging funds against Gary Ng, the former owner of investment dealer PI Financial Corp. who bought a stake in Bridging, allegedly on the strength of secret loans from the Bridging funds. The suits seek $160 million in damages.
Similarly, on behalf of certain funds, PwC has also sued Rishi Gautam, the CEO of cannabis company GrowForce and director of a company that the OSC alleged was used to hide the source of financing for Bridging to buy a management interest in one of its funds. That suit is seeking $38 million.
On behalf of the fund manager itself, the receiver also filed an action seeking $160 million and US$5.8 million against Sean McCoshen, the central figure in several transactions that the OSC alleged amounted to fraud, involving loans from the funds to Alaska-Alberta Railway Development Corp., GrowForce, and Peguis First Nation.
The other major claims include an action against Bridging’s insurer, Chubb Insurance Company of Canada, for $90 million in damages; and claims seeking repayment from various fund borrowers, including $172 million from Peguis First Nation and Chief Peguis Investment Corp.
The report also noted that PwC is trying to track down certain offshore assets, including “funds transferred by certain former principals of Bridging to, among other jurisdictions, Liechtenstein and the Cayman Islands.”
The receiver is also seeking the court’s permission for a pair of transactions to sell assets owned by certain Bridging funds.
The OSC’s enforcement hearing in the Bridging case resumes July 19 and is set to run to February 2024.