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A screenshot for the website of LEAGUE Investment Services Inc. The B.C. Securities Commission is alleging misconduct with IGW REIT, which was promoted by LEAGUE.

The parent company of one of Canada's largest private real estate investment trusts has filed for bankruptcy protection, a move designed to give management time to restructure its operations.

The League Group, which owns IGW REIT, a private trust with 2,200 investors and $290-million worth of investments, filed a petition to the Supreme Court of British Columbia Friday requesting permission to restructure through the Companies' Creditors Arrangement Act.

The move comes just four months after IGW sought to go public by listing its shares on the Toronto Stock Exchange. At the time, management said it was pursuing the listing because too many investors were looking to redeem their funds. Had they stayed private, they said they would have had to sell assets at fire-sale prices to fund the redemptions.

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League also wanted to consolidate its operations, which are spread out over a number of subsidiaries, as it went public.

"Prior to seeking to restructure through the CCAA, management of the League Group was attempting to restructure through a reorganization of its business and public offering," League said in its CCAA filing. "Unfortunately, financial constraints have made this impossible without court assistance."

Elaborating on these constraints, League said that the 2008 credit crisis delayed many of its projects and limited its financing options, making it more expensive for management to borrow money. In the ensuing years , some of its bigger projects "suffered set-backs and required substantial injections of cash," particularly its big Colwood, B.C. development.

More recently, a number of investors asked to redeem their units, something League attributed to these individuals being "more interested in higher-risk investments with higher returns."

For all these reasons, League "has no further cash and has ceased meeting its obligations as they become due."

A request for comment was not immediately returned by the company.

The League Group was started by Emanuel Arruda and Adam Gant in 2005, with the intention of offering to individual investors the kind of large-scale real estate investments that are traditionally only available to institutional investors.

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In the years that followed, the company grew substantially in size. The bankruptcy filing said there are now 3,200 investors spread out across all the subsidiaries.

However, in 2012 investors grew wary that at least some of the subsidiaries were struggling after IGW REIT, the private trust with many retail investors, halted its distribution – perhaps the most valued aspect of investing in any REIT. At the time, the company said its cash flow suffered when it adopted international accounting standards.

A year after halting IGW's distribution, League seeked to go public, and filed a prospectus. But rather than raise money at the same time, the company simply pursued a public listing. The plan made some investors raise their eyebrows, because it was rare to see a REIT without a distribution attempt to go public.

Two months later, the British Columbia Securities Commission alleged misconduct involving the REIT, claiming that Mr. Gant and Mr. Arruda were marketing the trust from a separate company, without disclosing that they are also trustees on IGW REIT's board.

The two men reached a settlement with the BCSC earlier in October, agreeing to collectively pay $250,000.

Under the new restructuring effort, League hopes to simplify its corporate structure. In doing so, the company may divest some its projects, change the way some loans are repaid and also convert some of its debt and equity into shares or debt of the new entity. PricewaterhouseCoopers has been hired to help with the restructuring.

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