On April 30, 2021, an application was brought before the Commercial List of the Ontario Superior Court of Justice by the Ontario Securities Commission in respect of each Bridging Finance Inc., Bridging Income Fund LP, Bridging Mid-Market Debt Fund LP, SB Fund GP Inc., Bridging Finance GP Inc., Bridging Income RSP Fund, Bridging Mid-Market Debt RSP Fund, Bridging Private Debt Institutional LP, Bridging Real Estate Lending Fund LP, Bridging SMA 1 LP, Bridging Infrastructure Fund LP, Bridging MJ GP Inc., Bridging Indigenous Impact Fund, and Bridging Fern Alternative Credit Fund (collectively, “Bridging Finance”) pursuant to section 129 of the Securities Act (Ontario), R.S.O. 1990, c. S. 5, as amended. 

The Honourable Justice Hainey granted an Order and appointed PricewaterhouseCoopers Inc., LIT (“PwC”) as receiver and manager (the “Receiver”), without security, of all of the assets, undertaking and properties of Bridging Finance. Further information on the Receiver’s activities can be found in its reports published here. 

See the documents available (in English only) from PwC’s website, in relation to Bridging Financing here. 

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On July 7, 2022, the Receiver filed an application entitled “Claims and Unitholdings Identification Order” (the “Application“), which was presented to the Honorable Geoffrey B. Morawetz, Chief Justice of the Superior Court of Ontario, on July 19th, 2022, at 9:00 a.m.

The Application aimed to establish a process for (1) filing a proof of claim and (2) confirming ownership of Units. You can read the Application (in English only) here.
On July 26, the court order granting the conclusions of the Application was communicated to the parties. You can read the court order (in English only) here.

This is a process initiated and managed entirely by the Receiver. Woods, as Quebec Representative, does not represent unitholders located in Quebec for the purposes of this process.

We bring to your attention that potential claims for misrepresentation and potential claims for unfulfilled redemption requests are excluded from the process to file a proof of claim.

Further, pursuant to the process to confirm ownership of units, the Receiver will send each unitholder a correspondence by mail regarding your unit ownership.You do not need to take any action, unless you believe that the information held by the Receiver is incorrect and/or incomplete. In that case, you must respond within the time limit provided by sending the form entitled “Amendment Request” (the “Amendment Request“) to correct the information. Otherwise, the information regarding your ownership, as set forth in the Receiver’s correspondence, will be deemed to be correct with your ownership and confirmed by you.

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On October 6, 2022, Justice Morawetz presided a case management hearing during which the Court scheduled the hearing of the Unitholder Priority Motion for November 16 and 17, 2002 and approved the following timetable for the delivery of materials:

The Court also approved, at the request of the parties, amendments to the terms of the Order appointing representatives to clarify the scope of their mandate, as well as amendments to the Tolling Order to clarify its scope. The Amended and Restated Representative Counsel Appointment Order is available here. The Amended and Restated Tolling Order is available here.

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On April 12, 2023, Chief Justice Morawetz of the Ontario Superior Court rendered his decision on the Unitholder Priority Motion heard on November 16 and 17, 2022 (the “Decision”, available here).

At issue was whether the Potential Redemption Claims and/or Potential Statutory Claims have any priority over the claims of Unitholders who do not have such claims.

With regards to the Potential Redemption Claims of Unitholders resident of Quebec, the Court held that no priority existed because the redemption requests had not been completed at the time of the Appointment Order (April 30, 2021). The Court found that there are no circumstances under the applicable contractual documents in which the Manager is required to accept redemption request – therefore he maintained discretion until the request was accepted.

With regards to the Potential Statutory Rescission Claims of Unitholders resident of Quebec, the Court held that a priority existed over the Unitholders without a similar claim. The Court held that the Statutory Rescission Claimants have a statutory remedy, and in some provinces a contractual right, which is non-discretionary. The nature of such remedy creates a de facto priority. The quantum of a Statutory Rescission Claims is the amount of the investments less amounts distributed and received.

The individual claims will be determined by way of a claims process to be managed by the Receiver. An update will follow once further information is available.

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On May 11, 2023, Chief Justice Morawetz decision was appealed by the General Unitholder Representative Counsel, the Redemption Representative Counsel and us.

The General Unitholder Representative Counsel appeal seeks, amongst other things, to overturn the trial judge’s conclusion that the Potential Statutory Rescission Claims of Unitholders residents of Quebec are beneficiaries of a priority over Unitholders without a similar claim. Their Notice of appeal is available here.

The Redemption Representative Counsel appeal pertains to the conclusion that Potential Redemption Claims of Unitholders residents outside of Quebec do not benefit from a priority over Unitholders without a similar claim. Their Notice of appeal is available here.

As Quebec Representative Counsel, we appealed the conclusion that Potential Redemption Claims of Unitholders residents of Quebec do not benefit from a priority over Unitholders without a similar claim. Our Notice of appeal is available here.

At the parties’ request, the Court of Appeal has designated the Honorable J. Michael Fairburn, Associate Chief Justice, to coordinate the appeal process. A first case management is scheduled for June 1^st. 

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The appeals were heard on October 18th, 2023, and the Court of Appeal of Ontario took the issue under advisement. Once issued, the decision will be circulated and posted on this website.

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On November 17, 2023, the Ontario Court of Appeal rendered its decision on the issues raised by the appeals from the decision rendered by the Chief Justice of the Ontario Superior Court on April 12, 2023 (the “Decision” here).

As you will remember, at issue was whether the Potential Redemption Claims and/or Potential Statutory Claims have any priority over the claims of Unitholders who do not have such claims.

With regards to the Potential Redemption Claims of Unitholders residents of Quebec, the Superior Court held that no priority existed because the redemption requests had not been completed at the time of the Appointment Order (April 30, 2021). Justice Morawetz found that there are no circumstances under the applicable contractual documents in which the Manager is required to accept redemption request – therefore he maintained discretion until the request was accepted. The Court of appeal maintained this conclusion.

With regards to the Potential Statutory Rescission Claims of Unitholders residents of Quebec, the Superior Court held that a priority existed over the Unitholders without a similar claim. Justice Morawetz held that the Statutory Rescission Claimants have a statutory remedy, and in some provinces a contractual right, which is non-discretionary. The nature of such remedy creates a de facto priority. This conclusion was overturned by the Court of Appeal, which held that the nature of a recourse cannot, on its own, create a priority. Since no priority is conferred by law, unitholders residing in Quebec with a Potential Statutory Rescission Claim do not benefit from any priority over other unitholders.

The purpose of this communication is to solicit your comments on the opportunity to appeal the Decision rendered by the Court of Appeal of Ontario. Please note that leave to appeal the Decision to the Supreme Court is required. We assess that the chances of (1) obtaining the required leave and (2) succeeding on the merits are low. In addition to the low chances of success of an appeal, the proceedings before the Supreme Court will inevitably delay any future distribution of the assets. Indeed, the Receiver advised us that any proceedings before the Supreme Court will limit their ability to make an interim distribution in 2024.

We invite you to contact Me Émilie St-Pierre, before December 22, 2023, to discuss the above and provide us with your comments on the opportunity of appealing the Decision before the Supreme Court.

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Having determined that a further appeal would not be a worthwhile strategy to maximize recovery for Quebec Claimants, our mandate to independently represent the interests of Quebec Claimants through the Unitholder Priority Motion and all appeals has come to an end. Consequently, we sought our discharge from our mandate, which was granted by Justice Osborne on January 8, 2024 (order available here).

For further enquiry or concerns about the receivership proceedings, please contact Bennett Jones LLP, who is Representative Counsel for all Unitholders generally, at bridginginfo@bennettjones.com.