The sale process was initiated by Bridging’s court-appointed receiver, PricewaterhouseCoopers LLP, in August, 2021. After engaging with more than 200 potential bidders and then narrowing the formal offers down to two, PwC determined the final bids were unsatisfactory.
The scandal has implications for every major bank and independent brokerage in Canada, all of whom sold Bridging’s private debt funds. In total, the private lender has 26,000 investors – the vast majority of them retail buyers. As recently as November, when final bids for Bridging’s loan portfolio were being put together, estimates of investors’ losses totalled $800-million to $1-billion, The Globe and Mail reported, based on expectations from people familiar with the sale process. Ultimately, though, Bridging’s numerous deficiencies deterred bidders.
In its latest report, PwC said Bridging had fairly solid practices for reviewing and underwriting loans, but trouble often arose after its loans were advanced. The way in which Bridging’s loans were recorded on its books “often did not reflect subsequent risks or changes in the borrower’s financial position,” PwC wrote.
Although many loans struggled, PwC could find only one significant writedown by management between Jan. 1, 2017, and the time of the receivership. PwC has previously alleged this practice likely boosted management fees Bridging’s owners earned because the fees were calculated as a percentage of the loan portfolio’s net asset value.