Crocus Investment Fund final wind-down plan approved by Manitoba court

The end is nigh for one of the most explosive political scandals in Manitoba history.

The road map for winding down the government-sponsored Crocus Investment Fund — which collapsed terrifically in 2004 — was recently approved by Manitoba’s Court of Queen’s Bench. 

Justice David Kroft signed off Jan. 17 on the receiver’s plan for a fourth and final distribution of recovered funds to Manitobans who invested in the ill-fated fund two decades earlier.

After spending more than 34,000 hours working at liquidating and recovering assets held by the fund, Deloitte — the court-appointed receiver since 2005 — estimates $5.2 million will be left to distribute to shareholders. The accounting firm plans to keep $650,000 to cover costs related to administering the wind-down.

On the eve of the collapse in 2004, the share value was $10.45. Today, shares are valued at only $0.36.

Notices were published on Jan. 22, in both the Winnipeg Free Press and the Globe and Mail. In its most recent report, Deloitte says that if no objections are raised by Feb. 25 as a result of the public notices, it will “immediately commence the distribution.” Shareholders will then have six months or until Sept. 30 (whichever date is latest) to claim their entitlement.

All funds that go unclaimed — in addition to nearly $2 million in unclaimed funds from previous payouts — will be forwarded to the minister of finance and rolled into provincial coffers.

Crocus Fund history

The labour-sponsored Crocus Fund — designed to raise capital to support Manitoba companies — stopped trading in 2004, after nearly 12 years of activity, over serious concerns about share valuation practices.

About 34,000 shareholders invested more than $150 million in the fund before Crocus stopped trading. Investigations by the auditor general and RCMP followed, eventually leading to a successful class-action lawsuit against the province.

The collapse of the fund led the courts to appoint Deloitte as the receiver in 2005.

The accounting firm was charged with recovering and distributing what was left of the fund back to investors — at the time, about $64 million invested across 46 companies.

A lengthy legal stalemate with the hotel chain Canad Inns was finally resolved in 2019, which paved the way for the final payout.

As of Dec 31, the receiver resolved its operations related to all 46 of the original companies in which the fund held assets. In total, $65.7 million was recovered by the receiver.

Timeline of key events

July 1991

The Crocus Investment Fund is established with the adoption of the the Manitoba Employee Ownership Fund Corporation and Consequential Amendments Act.

January 1993

The fund first sells common shares to the public.

December 2004

Trading is halted over concerns about the valuation of its shares, trading at $10.45 per share at the time. More than 30,000 Manitobans are invested in the fund at this point.

April 2005

The fund drops the value of its shares to just below $7, almost a third less than their value when trading was halted. The devaluation amounts to a $46-million decrease in the fund’s net asset value.

May 2005

Manitoba’s auditor general releases a scathing report, accusing senior managers of the fund of mismanagement and misrepresentations.

June 2005

Deloitte becomes the court-appointed receiver charged with salvaging whatever value is left in the portfolio. RCMP launch an investigation into the events that led to the collapse.

July 2005

A group of Crocus investors file a $200-million lawsuit, citing the auditor general’s report as the basis for the statement of claim.

July 2008

RCMP say there was no evidence the collapse of the fund was caused by criminal misconduct. No charges are laid.

September 2009

The receiver makes a first distribution of recovered funds to shareholders worth $54.7 million. Shareholders receive another $6.8 million payout as a result of a class-action settlement.

December 2011

The receiver makes a second distribution of recovered funds to shareholders worth $9 million. 

November 2014

The receiver takes Canad Inns to court, in hopes of dissolving and liquidating the hotel chain’s parent company to recover its investment.

December 2014

The receiver makes a third distribution to shareholders of recovered funds worth $8.6 million. Shareholders also receive a $700,000 payout as a result of another class-action settlement.

November 2019

The lengthy court battle with Canad Inns comes to an end. The courts compelled the hotel franchise to buy back its shares in the fund for $4 million, less than the original principal investment.

January 2022

The courts approve a final wind-down plan, with an anticipated $5.2 million final payout to shareholders.

September 2022

The proposed deadline for shareholders to claim their entitlement in the fund. Once complete, the receiver will be discharged of its duties and the Crocus Investment Fund will cease to exist.