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The accountants and lawyers winding down Bridging Finance Inc., the private lender that collapsed in 2021, were paid $43-million for their first two years of work, money that has been used to fund everything from forensic analysis, to portfolio management, to litigation.

Because the work continues, the final tally for professional fees will likely grow. Bridging’s investors, meanwhile, remain in the dark on what will come of the money they put into the private lender. According to the last formal estimate, they are expected to lose 60 per cent of their funds, or $1.3-billion collectively.

Bridging was founded in 2013 and grew rapidly, raising $2.09-billion from 26,000 investors. It used this money to lend to small to mid-sized companies that could not obtain bank financing, and Bridging charged elevated interest rates.

In May, 2021, the Ontario Securities Commission shocked Bay Street with news that it had asked a judge to put Bridging under the control of a receiver, alleging the firm improperly used investor funds to benefit some of its founders and executives.

The request was approved, and PricewaterhouseCoopers LLP has been managing the lender since. To assist with its duties, PwC brought in two law firms as independent counsel: Thornton Grout Finnigan LLP and Voorheis and Co. LLP.

Over the receivership’s first two years, from April, 2021, to April, 2023, PwC earned the bulk of the fees – $23.3-million before taxes – while TGF made $10-million and Voorheis billed $2.8-million, both before taxes. PwC’s partners typically charged between $800 and $1,150 an hour, while the top lawyer fees often ranged from $1,110 to $1,300 per hour.

In an official report to Bridging’s investors, PwC said these professional fees “are comparable to the rates charged by other professional firms in the Toronto market for the provision of similar services in the context of complex commercial restructuring, litigation and accounting matters.” In late December, Geoffrey Morawetz, chief justice of Ontario’s Superior Court approved the fees.

Initially, PwC hoped to sell Bridging and use the proceeds to repay investors, but it could not find a buyer. Instead, PwC said it would manage the lender’s closure – a lengthy process that includes trying to collect on all the remaining loans, pursuing litigation and overseeing bankruptcy applications. As of December, the receiver was still overseeing 38 outstanding loans, and six of them were in active insolvency proceedings.

The receiver has also navigated multiple legal battles, which is costly. In one dispute, a group of Bridging’s unitholders tried to argue they should rank senior to all other unitholders when it comes time to be repaid. (A judge and an appeal judge both ruled against the minority group.)

PwC has also tried to recoup as much money as possible for investors. Bridging was run by David and Natasha Sharpe, a husband-and-wife-duo, and some of their personal assets have been pursued, including their home in Toronto’s tony Rosedale neighbourhood. Recently, PwC pursued the cash surrender value of an insurance policy held by a corporate entity related to Natasha Sharpe.

The spring will mark three years since Bridging was put into receivership, and many allegations have come to light since in court filings and through The Globe and Mail’s reporting. Hundreds of millions of dollars worth of Bridging’s struggling loans were allegedly never revalued downward. This boosted the Sharpes’ management fees, and PwC has alleged about $19.5-million in Bridging funds ended up in Mr. Sharpe’s personal bank account.

The OSC has brought charges against the Sharpes, as well as against former compliance officer Andrew Mushore, but the hearings have played out over many months and are expected to end in February. Six senior Bridging employees agreed to be witnesses for the OSC.

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