Citing concerns that aggrieved investors in failed fund manager Bridging Finance Inc. may soon run out of time to sue their financial advisors or dealers over losses, the court-appointed lawyers for the Bridging funds’ investors are seeking to suspend the limitation period for civil actions.
On April 5, the Ontario Superior Court of Justice will hear a motion from Bennett Jones LLP (which was appointed to represent the collective interests of the Bridging funds’ investors) seeking a pause on the deadline for claims. The suspension would mean individual investors won’t lose the opportunity to possibly sue their advisors or dealers in connection with Bridging’s downfall, which is expected to result in over $1.2 billion worth of investor losses.
In court filings, the firm indicated that it will bring a motion seeking a court order tolling possible claims against any advisor, planner, broker, bank or brokerage firm in the case.
The motion comes with the two-year anniversary of Bennett Jones being appointed to represent investors in the receivership approaching on April 30.
Bennett Jones indicated in its filings that it’s concerned retail investors may not be aware that the firm is not investigating or pursuing any litigation on behalf of individual investors, and that it will be up to investors to pursue legal actions on their own.
Its mandate as court-appointed counsel for investors was to represent investors’ interests in the receivership proceeding, but not to pursue investors’ claims against advisors or firms.
It also suggested that some investors may be waiting until the receivership wraps up before launching any legal action so they can properly quantify their losses.
“Representative counsel is concerned that limitation periods applicable to unitholder advisor claims may expire before unitholders realize that they must personally pursue such claims,” Bennett Jones said in its filings.
As it stands, the magnitude of investor losses due to Bridging’s failure remains uncertain. The firm’s receiver, PricewaterhouseCoopers Inc., is attempting to maximize the recovery for investors. That process is expected to recover between $700 million and $900 million of the $2.1 billion invested in Bridging funds.
Without an order suspending the limitation period, investors with possible claims against their advisors or dealers “would suffer significant prejudice,” Bennett Jones said, or the court may face an avalanche of legal actions or motions seeking similar tolling orders.
“This could lead to uncertainty and a multiplicity of proceedings in advance of the second anniversary, and is not the most just and convenient way to preserve the significant number of unitholder advisor claims that may exist,” it said.