A pair of institutional investors has been thwarted in their bid to get some more money out of the failed fund manager, Bridging Finance Inc.

Ontario’s Superior Court of Justice dismissed a motion from the investors — Blue Cross Life Insurance Company of Canada and Canassurance Hospital Service Association — for a second distribution from a Bridging fund that was created for them, known as SMA 2 LP.

The investors had earlier asked the court not to lump their fund together with the other Bridging funds (which were distributed more widely) as part of the ongoing receivership. They also asked to be allowed to recover the remaining uninvested cash from that fund ($62 million minus a reserve of $16.3 million).

Last year, the court approved an initial distribution of $46 million to the two investors. The pair had invested a total of $188 million into the SMA 2 vehicle before Bridging was placed into receivership at the request of the Ontario Securities Commission.

However, their latest motion seeking more money was opposed by the firm’s court-appointed receiver, PricewaterhouseCoopers LLP, and by the lawyers that were appointed by the court to represent the interests of retail investors in the receivership proceedings.

They argued, among other things, that it’s premature to declare that the SMA 2 fund shouldn’t be consolidated with the other Bridging funds, citing a variety of “distribution issues” that must be resolved before that decision can be made — including whether assets were commingled among funds and were transferred between funds improperly.

Ultimately, the court sided with PwC, noting that courts are expected to give “substantial deference” to receivers’ recommendations.

“The receiver has a unique role to play in this matter. The receiver has to consider the interests of all parties,” said Chief Justice Geoffrey Morawetz in his decision.

In this specific case, he said, the receiver has set out a list of 10 distribution issues that need to be addressed in order to determine the relative benefits and prejudice to the Bridging funds and their stakeholders. The receiver’s position is “within the bounds of reasonableness and further analysis is required in order to determine how the various funds were, in fact, operating.”

While Morawetz ultimately ruled against the two investors, he noted that they “have raised a number of legitimate arguments” and said that these issues “need to be addressed.”

To that end, he also ordered PwC to address the distribution issues it has cited, and to report back to the court on its progress in resolving those issues within 120 days.