Four and a half years after shares in Crocus In-vestment Fund ceased trading, there is light at the end of the tunnel for investors. And the 34,000 Manitobans who entrusted their money to the labour-sponsored investment fund are no longer afraid it’s a freight train.

In April, Justice Kenneth Hanssen of the Manitoba Court of Queen’s Bench approved the final three settlements in the $200-million class-action lawsuit against the now-defunct Crocus fund.

The three deals — with the fund’s former directors and officers; Wellington West Capital Inc. of Winnipeg, one of Crocus’s former underwriters; and PricewaterhouseCoopers LLP, Crocus’s former auditors — are worth almost $10 million. When combined with previous agreements with the Province of Manitoba and the Manitoba Securities Commission, the class action is set to reap about $12.5 million from five defendants.

Not all of that will be headed unitholders’ way, however, as the class action’s lawyers are due to receive one-third of that amount to cover their fees.

David Klein, the Vancouver-based lawyer representing the unitholders in the class action, says he was “very pleased” with Hanssen’s decision: “It’s almost the end, we’re very close to the end.”

Klein says that provided unitholders don’t opt out of the class action — a strategy that wouldn’t make much sense, in his opinion — they won’t have to lift a finger to receive a credit in their RRSP accounts. The vast majority of Crocus units are held in registered accounts because of the tax benefits attached to venture-capital financing in labour-sponsored vencap funds, in addition to the usual tax benefits afforded RRSP contributions.

Klein is also quick to note that although many investors are looking forward to getting money back from Crocus, the only way they’ll get cash in their pockets is if they remove it from their RRSPs, triggering tax consequences.

Russ Holmes, the Deloitte & Touche LLP partner handling the Crocus receivership, said in a prepared statement that the judge’s decision cleared the final hurdle for him to apply to the receivership court “as soon as possible” to request distribution to Crocus shareholders.

“The ultimate decision and process regarding the distribution will continue to rest with the Court of Queen’s Bench,” Holmes’ statement says. “Assuming all necessary approvals are received on a timely basis, it is estimated that a distribution may occur by mid- to late summer.”

It’s not the first time a distribution has been bandied about. Holmes openly discussed returning money to the unitholders more than three years ago, but his application was turned down by a Manitoba judge.

For Bernie Bellan, the outspoken Crocus unitholder who spearheaded the class-action lawsuit, the news that his lengthy odyssey is almost over was music to his ears: “I feel relieved. This ridiculous logjam has been removed, but I don’t think it will be an easy process to get this money into [unitholders’] hands. It looks like we’re going to be waiting months yet for the money.”

Bellan says that because the fund is sitting on $66 million in cash, it’s reasonable for unitholders to expect a $5-a-share payout from Deloitte. “That would be a welcome surprise to a lot of people,” he says. “I think the receiver has some obligation to inform the [unitholders how much money they’ll have coming their way].”

In Deloitte’s most recent quarterly report, the receiver pegged the value of Crocus units at $6.21 each. They’ve edged upward a few pennies in the past couple of years, but they’re well off the record high of $15.39 set during the fund’s heyday almost nine years ago or even the $10.45 level when trading was halted in December 2004 amid serious concerns over the valuations of holdings in the fund’s portfolio.

Net income for the most recent quarter and year-to-date was $46,000 and $187,000, respectively. Crocus has accounts receivable of about $3 million and a carrying value of the remaining investee companies of almost $20 million.

In an odd twist, the delay in getting money back into the hands of unitholders has proven beneficial. Charlie Spiring, CEO of Wellington West, says although the rest of the market was falling down an elevator shaft, Crocus’s heavy cash position made it one of the best-performing investment vehicles in Canada over the past 12 months.

“Cash was the only asset class that was good last year,” he says. “The [Crocus] investors will be able to redeploy [the cash] in the market. The sooner they get it, the sooner they can take advantage of the [low prices].”

@page_break@Investors will also see a slight bump in the value of their RRSPs, Spiring notes. Because Crocus has been dormant for so long, investment houses have been valuing it at zero. When the cash starts to flow from the receiver, Spiring says, it will be like newfound money.

“It took a long time,” he adds, “but, collectively, people have pulled [Crocus] over the goal-line.”

The collapse of Crocus, once the focal point of Manitoba’s vencap scene, began in the autumn of 2004. The fund was put into receivership the following June. IE