Court approves receiver’s plan to find counsel for Bridging investors

An Ontario court has approved plans to appoint legal counsel to represent retail investors in the ongoing proceedings involving troubled fund manager Bridging Finance Inc.

Following a hearing, Chief Justice Geoffrey Morawetz of Ontario’s Superior Court of Justice approved a motion from Bridging’s receiver, PricewaterhouseCoopers Inc. (PwC), endorsing the process to appoint lawyers who will represent investors in the Bridging funds.

The court appointed PwC as receiver for Bridging and its funds in April, in response to a motion from the Ontario Securities Commission (OSC). The regulator is investigating certain transactions involving the funds amid concerns about possible undisclosed conflicts of interest.

The OSC hasn’t brought any enforcement allegations in the case.

According to court filings, several law firms have expressed interest in being the investors’ counsel.

Lawyers are expected to represent investors in the recently launched process for selling some or all the assets of Bridging and its funds. Lawyers are also likely to assess possible disputes between the funds, in terms of allocating recovered assets, and represent investors in any legal proceedings that may arise.

The court approved PwC’s proposal for selecting counsel, with a caveat: rather than PwC recommending who should be appointed to represent investors, the court will name an independent third party to review the firms’ applications and make recommendations to the court.

The move is intended to ensure the independence of the investors’ legal counsel and remove any appearance of conflict involving the potential sale of Bridging’s assets.

The court ordered that the independent third party will make its recommendation within 10 days after the deadline for law firms to apply for the role, noting that “time is of the essence in these proceedings” as the process for selling Bridging’s assets is already underway.

PwC also sought an extension for the limited partner advisory committees (LPACs)  appointed to provide advice to PwC from the perspective of Bridging investors. The court also agreed to extend the appointment of investor advisory committees indefinitely. The LPACs were initially appointed for a 60-day term to advise PwC. That mandate has now been extended “until further order of the court.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.