Bridging Finance receiver faces opposition to liquidation plan from unknown group of investors

Bridging Finance receiver faces opposition to liquidation plan from unknown group of investors

David and Natasha Sharpe of Bridging Finance Inc. at the company’s office in downtown Toronto on April 11, 2019.Fred Lum/The Globe and Mail

A mysterious and anonymous group claiming to be investors in Bridging Finance Inc. has threatened to derail a proposal by the troubled lender’s court-appointed receiver to end its operations.

The unnamed group, which refers to itself in legal documents as “Certain Holders of Transitional Units,” will ask a judge at a hearing on Friday to reject a recommendation made by receiver PricewaterhouseCoopers LLP (PwC), which seeks the permission to formally end its failed, five-month effort to sell Bridging’s loan portfolio.

Instead, PwC has offered to oversee Bridging’s outstanding loans and possibly dissolve the company – a move it says will bring Bridging investors better and more immediate returns than offers received during the process. invitation to tender. A legal team from Bennett Jones LLP, which was appointed by the court to defend the interests of investors, fully supports PwC’s proposal.

But that is not acceptable to “Certain Bridging Unitholders”, who are calling for more investor education and urged them in a press release to consider an alternative plan offered by BlackRock Financial Management Inc., the new- Yorkers of asset management. which is also a significant creditor of Bridging.

BlackRock said in a Feb. 24 letter sent by one of its attorneys to PwC that it could oversee the winding down of Bridging’s portfolio at a lower cost than the fee PwC expects to charge.

Legal skirmishes over proposed receiverships are nothing new, but what’s new about this one is the hiding of the identities of the people behind “Certain Bridging Unitholders.” Although it has devoted significant resources to a sophisticated public relations campaign – launching a website, hiring an Ottawa-based advertising agency and retaining a Bay Street law firm – the group did not offer any Bridging investors, identified by name, to answer questions about their problems with the PwC plan.

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The mystery surrounding the group is just another bizarre twist on what has been a harrowing journey for Bridging’s 26,000 investors, who were told last month they should expect losses of approximately $1.3 billion, or 62% of the $2.09 billion Bridging had under management. when it goes into receivership in 2021.

At that time, the Ontario Securities Commission alleged that it uncovered evidence of fraud and mismanagement by Bridging’s management team, which then included chief executive David Sharpe and his wife. , Natasha Sharpe, then chief investment officer.

Just over a month after the receivership was granted, the first iteration of the influencer campaign was launched, with someone issuing a press release on behalf of “concerned unitholders of Bridging Finance Inc. .” unidentified. The June 7, 2021 release said the receivership hurt value for investors. Whoever was behind the post said he was aware of “several credible expressions of interest” in a quick sale of the Bridging wallet. The release did not include any contact information.

Another flurry of anonymous press releases began again in February, after PwC detailed how badly its sale process had gone. On February 14, “Affected Unitholders of Bridging Finance Inc.” decried PwC’s recommendation that the sale process should be halted and that PwC should oversee Bridging’s liquidation.

This time, however, their press release included only one contact information – a ProtonMail address – but still no individual names associated with the group.

On February 22, the same group announced, in a press release, that it had hired a lawyer, Domenico Magisano of Lerners LLP, to reject PwC’s proposal at a hearing on February 25. The statement urged other Bridging investors to contact Mr Magisano and called the receivership an “abuse of power”.

From there, things got even murkier.

Shortly after publishing the release, Canada Newswire pulled it. The reason? Mr. Magisano and Lerners denied being held by “affected unitholders of Bridging Finance Inc.” and issued a statement saying they disagreed with the suggestion that the process had been abusive.

What was true, however, was that Mr Magisano had indeed been retained by a Bridging investor – but one who wanted anonymity and had other concerns about PwC’s approach.

In an email, Mr Magisano said he did not know who was behind the flawed press release and declined to answer questions about how another anonymous group of investors turned out mistakenly believed that he had retained it.

In his email statement to The Globe and Mail this week, Mr Magisano said that at the time of the February 22 press release, his client was a Bridging investor who wished to remain anonymous because he was a current member of the “The Canadian army of a certain notoriety.

“Their decision to remain anonymous was to ensure that the argument in court did not revolve around their identity or the fact that Canadian servicemen (or ex-servicemen) were losing money,” Magisano said. .

Since then, Mr. Magisano said in his email, things have changed again and he now represents a Bridging investor who is willing to identify himself: Michael White, a former member of the Canadian military, who has chosen to be the public representative of the group.

However, when The Globe attempted to arrange an interview with Mr White this week via an email address listed on the band’s website, www.bridginginvestors.casomeone, who did not identify himself by name, said Mr. White was unavailable to answer questions.

The next day, The Globe received an unsolicited email from spark*advocacy, the Ottawa public relations firm founded, in part, by prominent opinion pollster Bruce Anderson.

Spark*advocacy employee Dustin Fitzpatrick said the anonymous group of investors was unable to provide Mr White, or anyone with grievances against PwC, who agreed to be named.

Mr Fitzpatrick declined to identify, by name, the people or companies paying spark*advocacy for his work, but said the group had no “connections to major creditors or former directors of Bridging Finance”.

He provided another statement, which he said could be attributed to unnamed “bridge investors”. This statement called their campaign “grassroots”.

Bennett Jones, in his court submissions, highlighted the mystery surrounding who is fighting this legal fight. Bennett Jones was appointed attorney representing Bridging Investors by an Ontario judge in October.

“The failure or refusal of unidentified unitholders to self-identify and provide evidence of the amount of their holdings should weigh heavily against giving weight to concerns expressed on their behalf,” said Bennett Jones in court filings.

Bennett Jones offered several online investor briefings to explain the various offerings and their components. A survey she conducted shows that among investors who attended these sessions, a majority, or 65%, prefer PwC’s plan. Bennett Jones estimates that the number of investors and investment advisers she has been able to contact about the briefings own about 80% of the Bridging funds.

Although the anonymous group of investors has urged fellow Bridging unitholders to back a BlackRock proposal, the New York-based company says it has nothing to do with the group. In an emailed statement, a BlackRock spokesperson said the company had “no affiliation” with the Anonymous Investors.

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