Investors in the funds of failed alternative asset manager Bridging Finance Inc. (BFI) won’t be getting any money back this year after all — as the proposed distribution to those investors is facing a fresh legal challenge.
A hearing to consider a proposal from Bridging’s court-appointed receiver, PricewaterhouseCoopers Inc. (PwC), to distribute $473 million to investors in the Bridging funds was originally scheduled for Dec. 9. However, PwC revealed in a letter to investors that investors will have to wait until the new year for the court to weigh in on its proposal.
The letter noted that the methodology that PwC has used to determine the amount of the proposed distribution is facing a challenge from firms, which have unresolved claims against the funds’ assets. As a result, the court hearing has now been pushed to Feb. 3, 2025.
According to the receiver’s latest report, PwC has so far recovered $698 million of the Bridging funds’ assets. However, there are three outstanding claims on those assets, totalling about $296 million.
Those outstanding claims have been rejected by PwC. However, the claimants are appealing that decision and are waiting for their dispute to be adjudicated by a court-appointed officer, which is expected sometime next year.
In the meantime, PwC was proposing to make an interim distribution to retail investors, whose funds have been in limbo since April 2021 — when Bridging was put into receivership at the request of the Ontario Securities Commission (OSC). It’s expected that investors will ultimately recover between 34% and 42% of their investments, as the funds’ assets were allegedly mismanaged and overstated.
As part of the proposed distribution process, PwC had to seek court approval for its proposed methodology for allocating the recovered assets to particular funds, which it sought to do based on each fund’s share of the loans that have been collected. Then it was meant to pay out those assets to investors on a pro-rated basis.
However, that methodology is now facing a legal challenge from firms with unresolved claims against the funds’ assets.
In a filing, lawyers for one of those firms (with an unresolved $213 million claim) argued that the receiver is seeking “very significant, novel” relief in their motions on the proposed interim distribution — which, if granted, could prevent it from ever realizing on its claim on the funds’ assets, if that claim is upheld as valid. It was also argued that this would undermine the claims adjudication procedure adopted by the court.
Ultimately, PwC agreed to adjourn the motions, which will now be heard in early 2025.