The receiver in control of embattled Bay Street lender Bridging Finance Inc. has raised red flags over transactions involving the lender’s top client and said tens of thousands of company emails have been deleted, according to the latest report on its work.
The June 9 filing by PricewaterhouseCoopers paints the picture of an arduous task in getting to the bottom of what transpired at the lender and what the future holds for unitholders in its investment funds.
Here are some of the key takeaways from PwC’s report. None of the allegations or claims have been tested or proven in a court.
- According to PwC, an I.T. firm provided a service ticket dated Oct. 6, 2020 from an unidentified employee who requested that “all records of emails” be deleted based on certain search terms. That resulted in 34,200 emails being scrapped, according to logs reviewed by PwC.
- The employee was interviewed by PwC on June 7 and claimed that “on more than one occasion”, starting last year, they were asked by then-Chief Executive Officer David Sharpe and another senior executive to perform searches for emails to be deleted.
- PwC identified what it called “a number of issues of concern” relating to Bridging Finance’s relationship with Alaska-Alberta Railway Development Corp. (AARDC), which is the lender’s top client with $316.6 million in exposure as of March 31. A central figure in the relationship is a financier named Sean McCoshen, who co-founded the rail project.
- PwC said its legal counsel attempted to arrange a conversation with McCoshen about the role of some numbered companies he controls, but was informed by McCoshen’s counsel that he’s unable to respond “due to medical circumstances.”
- PwC said it has demanded repayment of $207.8 million outstanding under Bridging’s loan to AARDC.
- It also said it was informed late last month that AARDC’s legal counsel and some of its management team had resigned. As of Thursday morning, the only individual listed on AARDC’s online executive management profile is President Jean Paul (JP) Gladu.
- PwC said in its report that it’s planning to launch a “rigorous sales and investor solicitation process” in which some or all of Bridging’s loans and assets could be scooped up. The process is subject to court approval.
- PwC is also seeking court approval for funding to hang on to key talent. In the report, PwC said it has identified up 20 non-executive employees to whom it wants to offer retention bonuses that would amount to a maximum of $366,000. As of the time of the filing, PwC said it has thus far allocated $266,000 of that amount.