In the coming days, investors in the funds of failed alternative fund manager, Bridging Finance Inc., should start to see some money back for the first time since the firm was ordered into receivership back in April 2021.
Earlier this year, the Ontario Superior Court of Justice approved an initial distribution of $321 million to Bridging investors, which represents about 19.6% of the $1.6 billion of the net cash invested in the funds.
According to a notice from the firm’s receiver, PricewaterhouseCoopers Inc. (PwC), most of that money is being returned through Fundserv, which is sending wire transfers to investment dealers that have clients in the Bridging funds. Dealers will then be responsible for allocating money to clients based on Bridging’s unitholder records.
The transfers to dealers began earlier this week, May 6, although it’s expected to take a week or so for that money to start turning up in investors’ accounts. For investors that bought their funds outside of Fundserv, direct distributions are expected to start in the week of May 12.
While the overall share of money being returned to investors is less than 20% of what was invested, for most funds, the proportion that investors are getting back is closer to 39% — whereas investors in the flagship Bridging Income Fund (BIF) and BIF RSP fund, are only getting back 2.7% and 3.5%, respectively, due to ongoing litigation, which resulted in $221 million being held back from the initial distribution to investors.
The dispute over that $221 million won’t be adjudicated until November. The outcome of that dispute may result in more money being returned to investors, and it’s also expected that there may be further distributions to investors based on loan recoveries by the receiver, and other ongoing litigation.
Under the distribution methodology, investors who bought U.S. dollar denominated funds will get their money back in U.S. dollars. These distributions will be impacted by the fact that the exchange rate has moved against them — the Canadian dollar is down by about 11% from the time that the firm was placed into receivership to when funds were made available for distribution to investors, and are being converted back into U.S. dollars.