Crocus Receiver Ignoring Demands for Shareholders' Meeting

—Darlene Dziewit, MFL President

After months of effort by the MFL, as well as the request of over 3,900 shareholders, to have a Crocus shareholders meeting called to vote on the GrowthWorks offer to buy Crocus' assets, the receiver is still refusing such a meeting. I am frustrated and more than a little puzzled at the incredible stubbornness of this receiver. His position defies logic.

Several months ago, when the MFL originally asked for a shareholders meeting, the receiver pointed out, and the court agreed, that a sale of Crocus' assets was not possible, mainly because of the pending class action law suit by the Crocus Investor Association (CIA). This lawsuit, it was argued, created a "contingent liability" to the Fund.

In other words, how can you sell the assets of the Fund when those same assets may be up for grabs by the lawsuit? Never mind that those same participants in the lawsuit are the shareholders. In this case, reasoned the court, the shareholders should have no say in the disposition of Crocus.

Since the decision of the court in the matter of a shareholders meeting, GrowthWorks has achieved an agreement with the CIA to "save harmless" the Fund, in the event that a judgment is ultimately made against the Fund. This agreement is critical, in that it removes the "contingent liability" that was so problematic in the mind of the receiver and the court. In simple terms, the law suit folks have agreed that they will not collect back against the Fund, even if they win such a right in court.

When I learned about the "save harmless" agreement between GrowthWorks and the CIA, I felt that at last there was some light at the end of the tunnel. The biggest hurdle of the lawsuit against Crocus had been overcome.

Since all of us, including the receiver, agreed that the Fund was solvent and not bankrupt, we were surely on our way to a shareholders' meeting. Finally, the Crocus shareholders would get to decide on the fate of the Fund. After all, it is their money.

Upon announcement of the agreement between GrowthWorks and the CIA, the MFL's lawyer once again asked the receiver to call a meeting of the shareholders. The answer back was the same as it has always been – no, no and no. The receiver’s rationale was, in essence, "I don’t have to call a meeting, so I won't call one."

Now, in addition to being frustrated, I was truly puzzled. Why is the receiver taking this position? What is now standing in the way of the shareholders determining the fate of their own investments? And are the rumours of the imminent sell off of some of the top performers in the Crocus portfolio true? I cannot answer these questions, and it appears that the receiver will not answer them.

It is becoming apparent that the receiver is stonewalling our attempts to have the Crocus Fund shareholders determine the fate of their Fund. We will, in all likelihood, have to go through the expensive and time consuming exercise of going back to court to have the matter decided. I wish this process weren't so difficult, but then, when has anything about securing the rights of the Crocus Fund shareholders ever been easy?

There is only one thing in the whole Crocus saga that I know for certain, and that is that we will not give up. Nor will we go away, despite the wishes of many of the other players in this drama. So, stay tuned.