Peguis faces lawsuit in wake of high-profile Ontario lender collapse

Peguis First Nation is being sued for nearly $170 million, related to loans it took out to build on-reserve housing and buy land in Winnipeg.

In a statement of claim filed Dec. 30 in Manitoba Court of King’s Bench, PricewaterhouseCooper Inc. says Peguis, its chief and council, and corporations created by the Manitoba First Nation — including Peguis Development Corp. and Chief Peguis Investment Corp. — are being sued for more than $113 million in principal and a further $56 million in interest.

PWC is making the claim in its role as court-appointed receiver and manager of lender Bridging Finance Inc., which collapsed in 2021, amid an Ontario Securities Commission investigation.

“Each of the defendants is jointly and severally liable for the amounts,” the court document says. “By failing to repay the credit facilities on the maturity date, the defendants have breached the term of the agreements governing the credit facilities and the security granted by BFI by the defendants.”

A lawyer for PWC said she could not comment Thursday, but had passed a message on to the company. No one from the company replied with comment by deadline.

Peguis Chief Glenn Hudson said the band has been in contact with the receiver — and already had some good news.

“They say they will write off the interest,” Hudson said. “At this point, we have gone from that very high amount — $169 million.

“This is something very complicated and complex, but we are working hard for the best interests of Peguis First Nation… we’re looking at working with a new lender. We have three interested parties.”

Hudson said former Supreme Court Justice Marshall Rothstein has been chosen by both the receiver and Peguis to help mediate a settlement.

The lawsuit was filed simply to protect the receiver’s interests, and such a court action needed to be submitted within two years of when the disputed business transactions occurred or risk losing its legal rights, the chief said.

Hudson said there is no danger in the band going bankrupt or losing any of its land or property.

Ontario-based BFI, which had about $2 billion in assets, specialized in private debt and managing investment funds. The private lender, one of the country’s largest, was put into receivership in 2021; the married couple who ran it, David (chief executive officer) and Natasha Sharpe (chief investment officer), were removed.

In November 2022, RCMP had reportedly launched a criminal investigation into BFI.

On Thursday, the OSC said it could not comment on the BFI-Peguis matter.

According to the Manitoba lawsuit, Peguis took out a $19-million loan in 2017 to build 50 new on-reserve houses and $3 million to fix existing homes. Interest was pegged at the Bank of Montreal’s prime rate plus 11 per cent per year, and the loan was later raised to $23 million.

Peguis also received another $6 million to build gas bars in Winnipeg and Selkirk, and a $40-million mortgage for what is now its development next to RCMP headquarters on Portage Avenue in Winnipeg.

Due to accrued interest and fees, the amount left on the housing loan has risen to roughly $79 million, the gas bar loan is roughly $14 million, and the mortgage is roughly $75 million, the receiver says.

The court documents say to get the funds in the first place, Peguis promised to use as security all of its existing and any newly acquired property.

Hudson said if the federal government provided more funding for housing in the community 190 kilometres north of Winnipeg, the band wouldn’t have had to borrow money to build it.

“We are in need of 800 homes for families,” he said. “The federal government, historically, has not provided enough.”

Any allegations against BFI came as a surprise to the band council, according to a statement this week issued to Peguis members.

“The representations and assurances Mr. Sharpe had made to the community were both significant and a large factor in our involvement with BFI,” it reads. “The fact that Mr. Sharpe appears to have not acted in the best interests of his investors, BFI or our community, was beyond anyone’s foresight.”

Peguis council is keeping the community abreast of what is happening and will give an update at the end of next month or when its audited financial statements are released, Hudson said.

None of the claims in the lawsuit have been proven in court and no statement of defence has yet been filed.

kevin.rollason@freepress.mb.ca