Vancouver-based Matrix Asset Management Inc. (TSX:MTA) says it had no prior notice of plans by GrowthWorks Canadian Fund Ltd. to obtain an order for creditor protection and terminate a management agreement with Matrix subsidiary GrowthWorks WV Management Ltd. (GWWV).
On Tuesday, the fund filed for creditor protection, and terminated its management agreement with GWWV, effective immediately. (See Investment Executive, GrowthWorks Canadian Fund files for creditor protection, October 1, 2013).
Matrix says it and GWWV strongly disagree with the fund’s position. “The termination of the management agreement would have a material adverse effect on Matrix’s operating revenues and results of operations,” it says.
Moreover, Matrix says that the order may limit GWWV’s ability to pursue binding arbitration over the termination of the management agreement and any other matters in dispute.
Matrix also says that the fund has reserved the right to claim damages for any breaches of the management agreement by GWWV.
“There can be no assurance as to the outcome of claims made by Canadian Fund with respect to such breaches, if any, or by GWWV with respect to what Matrix believes is a wrongful termination of the management agreement,” it says. And, it notes that there’s also no certainty as to the outcome of the bankruptcy creditor protection proceedings, its impact on the management agreement, and any litigation that may ensue.
Matrix also announced that it has secured loan financing of up to $5 million with an independent Canadian lender that replaces the loan facility it announced on August 8. The new arrangement will see subsidiary GrowthWorks Capital Ltd. receive the funding in tranches of $4 million and $1 million, as opposed the original arrangement for tranches of $1 million, $2 million, and $2 million.