Judge Reserves Decision on Crocus Meeting

After hearing the parties involved in the dispute over the Crocus Fund present their cases at a court hearing on September 5, Justice Deborah McCawley said she would reserve her decision until a later date. She gave no indication of when that might be.

The MFL and Crocus shareholder representatives argued that a shareholders' meeting should be held so the fund's 34,000 investors can vote on an offer from GrowthWorks, another labour sponsored fund. In the event that the Court is unwilling to order the receiver to call a shareholders meeting, the MFL has requested that the receiver be ordered by the court to provide the list of shareholders to the MFL, so that the MFL may call such a meeting.

In the words of MFL President Darlene Dziewit, "Shareholders should be able to determine what to do with Crocus assets. It's their money."

To date, the MFL has been unable to call a shareholders meeting because the receiver has refused to provide the MFL with the shareholders' list, citing confidentiality concerns. At the same time, and in what appears to be a contradiction, the receiver has indicated that the shareholder list is an asset of the Fund, and that it might be sold to a third party.

Also contained in the MFL Notice of Motion is a request that the receiver not be allowed to sell off any assets of Crocus in excess of $1 million without court approval. This request is in response to the receiver's stated goal of selling off 70 per cent of the Fund by this fall, most likely by allowing the investee companies to buy back Crocus' investment, without any scrutiny before the potential sales.

There is currently no way of knowing whether the receiver will get good value for the shareholders, or not. This is even more uncertain, given that the receiver has stated his opposition to having new valuations performed on the major investee companies in the Fund, due, he says, to cost.

The MFL is concerned, because the only valuations available right now are close to two years old, and a number of the best performing companies have been doing very well recently. Their value may have changed over the last two years.