Crocus receiver vs Winnipeg mayor

In December 2006, Holmes filed a statement of claim against the Winnipeg Goldeyes, an independent AA baseball team that plays in the Northern Baseball League. In the claim, Holmes sought more than $300,000 in interest on debentures Crocus provided to the team in 1999 and 2000.

But what began as a simple statement of claim has mushroomed into a public battle between Katz, the majority owner of the Goldeyes, and Holmes, who has to date maintained a very low profile while selling off the fund’s investments.

Katz responded to the receiver’s suit in mid-October, claiming that Crocus provided the debentures to the baseball team at no interest in order to gain an equity ownership stake alongside existing shareholders, all of whom had provided significant loans to purchase the franchise and build a state-of-the-art baseball park in downtown Winnipeg.

Katz has insisted, through his lawyer, that the team is declining in value despite its reputation as a model franchise with the highest attendance in the league — in large part because the league, one of the oldest professional baseball leagues in North America, is shrinking and its future is uncertain. In 1999, when the Goldeyes’ current park opened, there were 16 teams in the league; next season, only six franchises will suit up.

In court documents, Katz says, at no time were the Goldeyes approached by Crocus to pay down any interest.

“As I understand it, until such time as the Goldeyes can have a financially viable season and can pay the interest on the Crocus debentures, it is not required to pay any interest to Crocus or, at this stage, to its receiver, Deloitte & Touche,” he says in an affidavit. “The Goldeyes simply cannot afford to do this at this time.”

The Goldeyes dispute is the latest in a long line of bad news for Crocus, according to Bernie Bellan, an outspoken shareholder who is pursuing a $200-million class-action lawsuit against the fund.

Even though Crocus’s investment in the Goldeyes was considerably smaller than those in other investee companies, such as Maple Leaf Distillers, the failed producer and bottler of spirits and coolers, Bellan is just as angry.

“The shareholders are confused and frustrated,” he says.

They are particularly incensed that more than $55 million of their money is currently sitting in a bank account, ready to be distributed to the almost 34,000 investors in the fund, but the funds have yet to be released by a Manitoba judge.

Holmes has been liquidating Crocus holdings — in many cases, by selling the fund’s stake back to the investee companies. In the case of the Winnipeg Goldeyes, however, Holmes has apparently not made an overture on cashing out the fund’s stake in the baseball team. The fund has slightly less than $1 million in debt and equity in the Goldeyes still on its books.

Katz says his lawyers and accountants have attempted to engage Holmes in negotiating an exit for Crocus, but the receiver has not yet responded. IE