An Ontario court has authorized Bridging Finance Inc.’s receiver to reject the two final bids it received during an unsuccessful, five-month effort to sell the private lender.
Bridging Finance investors to lose $1.3-billion after sale process terminated because of unsatisfactory bids At the time, Bridging managed $2.09-billion on behalf of 26,000 investors, many of whom were retail buyers drawn to the company’s promise of higher yields than those on other investments in an era of ultralow interest rates. The scandal has implications for every major bank and independent brokerage in Canada, all of which sold Bridging’s private debt funds.
But PwC has alleged Bridging’s portfolio included many struggling loans backed by underperforming assets; that many borrowers were allowed to defer cash interest payments; and that Bridging executives had engaged in self-dealing. “It emerges that Bridging was very good at attracting capital, but highly ineffective at managing that capital,” John Finnigan, one of the lawyers for PwC, said at Friday’s hearing.
The expected $1.3-billion loss does not include any recoveries from litigation the receiver has said it is contemplating bringing against Bridging’s former officers and directors, and against the former auditor of the funds, KPMG LLP.