business man using magnifying glass to inspect documents
ridvan_celik/iStock

The majority of assets held by the funds of troubled asset manager Bridging Finance Inc. remain under review by the firm’s receiver, PricewaterhouseCoopers Inc., and aren’t receiving repayments, according to a new report to investors.

Last week, Chief Justice Geoffrey Morawetz of Ontario’s Superior Court of Justice ruled that it was premature to appoint counsel to represent retail investors in the Bridging receivership, as PwC (which was appointed receiver of the firm and its funds on April 30) has not yet been able to provide a full accounting of the funds’ portfolios.

The judge indicated the decision could be reviewed in 60 days, after PwC has had more time to fully assess the funds’ finances.

A new report to the Bridging funds’ unitholders indicates that $1.43 billion worth of fund loans remains under review by PwC and requires “further analysis” before they can be properly classified by the receiver.

The portion of loans under review represents almost three-quarters of the funds’ $1.95 billion in total assets, as of April 30.

In addition to the loans under review, the report indicated that the funds had $270 million in cash and $163.3 million in loans that are involved in an ongoing insolvency proceeding or other litigation. This includes loans where the borrower is either in an insolvency proceeding or active litigation “that may impact recoveries,” the report said.

The funds also had $77.5 million worth of loans maturing shortly (within three months of April 30).

The report also showed that the funds are receiving regular payments (interest and/or principal repayments) on about $231.5 million worth of their loans, while $1.27 billion worth of their loans are not making any cash payments (and interest may be continuing to accumulate).

Of the funds’ remaining assets, $104.7 million worth of loans are “making ad hoc payments”; $78.8 million are maturing in the short term or are equity positions; and, again, there’s $270 million in cash.

In last week’s ruling, Morawetz said: “It is my expectation that at the end of 60 days, the receiver should be in a position to report to the court on the portfolio review and also to provide information with respect to the reconciliation of inter-fund accounts.”

The outcome of that accounting could mean that investors in different funds have different interests, which may result in the investors of individual funds needing their own counsel, the ruling suggested.