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In the months before the Ontario Securities Commission stepped in, troubled fund manager Bridging Finance Inc. was deleting thousands of emails — including messages that referred to transactions now being called into question, the firm’s receiver alleges.

In a court filing on Wednesday, PricewaterhouseCoopers Inc. (PwC) said its forensics team is seeking to recover thousands of emails that were intentionally sought out and “hard” deleted by the Toronto-based investment firm, contrary to its own data retention policy.

According to PwC’s report to the court, the deleted records contained references to a numbered company and others involved in various transactions that are now coming under scrutiny.

In earlier filings seeking a court-appointed receiver, the Ontario Securities Commission (OSC) said its investigation found evidence of undisclosed conflicts of interest at the fund firm.

The regulator has not brought enforcement allegations in the case, and nothing has been proven.

In its latest report, PwC said that certain transactions between various Bridging Finance funds and Alaska-Alberta Railway Development Corp. (AARDC) raise “issues of concern,” including “transactions that appear to be outside the normal course of business of Bridging.”

Combined, the Bridging funds held assorted loans, convertible debt and equity assets related to AARDC of $316.6 million, which represented their single largest portfolio holding.

In a letter to investors in the funds, PwC said it has demanded repayment from AARDC, and it pledged to “take whatever actions are reasonably available” to maximize its recovery from those arrangements.

The report noted that on May 20, PwC was informed that AARDC’s legal counsel had resigned and that certain members of its management team have stepped down too.

So far, its requests for further information from AARDC and its owner, Sean McCoshen, have gone unanswered, PwC said.

The apparent email deletion effort included searches for “McCoshen” and a numbered company he controls that allegedly received over $80 million from various Bridging funds, PwC said.

According to the filing, the mass email deletion was a “laborious process that required nearly four months to complete.”

Between October and December 2020, approximately 34,200 messages were deleted, PwC alleged.

Alongside the revelations about the mass email deletions and questionable transactions, PwC also announced the formation of two advisory committees, including both retail and institutional investors in the Bridging funds, which will provide feedback from a range of perspectives on issues involving the ongoing receivership.

“We believe that the committees will provide us with a valuable, efficient and cost-effective means for obtaining input from unitholders, small and large,” it said.

Earlier this week, a group of Bridging investors issued a statement calling on the OSC and PwC to sell the company and/or the funds, given that redemptions and distributions from the funds have been suspended since the court stepped in and appointed a receiver.

In its latest letter to investors, PwC said that, given the ongoing OSC investigation and its own ongoing review of the Bridging portfolios, it’s not yet able to provide financial information on the firm or the funds.

It also pledged to launch a “rigorous sales and investor solicitation process” to maximize recovery for investors, but this remains subject to court approval.

Melissa MacKewn, partner with Crawley MacKewn Brush LLP in Toronto who is representing former Bridging Finance (BFI) CEO David Sharpe, said in a statement that “BFI is a valuable business and we understand that there are multiple parties interested in purchasing its assets and operations. Mr. Sharpe believes that an orderly transition of BFI to a new manager affords the best chance of preserving the value of the loan portfolios.”

In the meantime, PwC has recommended that the court suspend the limitation period on civil claims that could be brought by Bridging Finance investors against the funds for misrepresentations in the funds’ offering memoranda.

A court hearing has been scheduled for June 16 to consider PwC’s recommended pause on the limitation period and to approve the advisory committees, among other issues.