Bridging Finance: the $213 million guarantee claim stays disallowed

The One was to rise 85 storeys at the southwest corner of Yonge and Bloor, "where for generations the Stollery clothing store had stood," and to become "perhaps the tallest building in Toronto," in the Claims Officer's words. Its early construction was to be financed by a loan from CERIECO Canada Corp., wholly owned by China-East Resources Import and Export Company, itself wholly owned by a Chinese state-owned enterprise, per the Decision of the Claims Officer, Jan. 7, 2026, paras. 2, 15, 136. Between 2017 and 2021 CERIECO advanced more than $200 million to Mizrahi Commercial (The One) LP, and no repayments were made. The project was placed into receivership by other creditors, and the reasons released on October 6, 2026 say there is "no realistic prospect" that the borrower will ever repay CERIECO, per the Reasons of Justice Kimmel, Oct. 6, 2026, paras. 10–11.

What CERIECO held in the Bridging receivership was a guarantee. Under it, Bridging Income Fund LP (BIF), formerly the Sprott Bridging Income Fund, unconditionally guaranteed the borrower's indebtedness to CERIECO. The document is undated; the parties agree it was signed on or about August 24, 2017. The signature for the fund, in the name of its general partner, Sprott Genpar Ltd., was Natasha Sharpe's. She was the Chief Investment Officer and a principal of Bridging Finance Inc., the fund's sub-advisor, and had introduced herself to CERIECO as one of the borrower's principals, along with Sam Mizrahi and Jenny Coco. No title appeared under her name, only the statement "I have authority to bind the Corporation." At that time, Justice Kimmel's reasons record, she "was not an authorized signing officer of the general partner, Sprott Genpar," per the Reasons of Justice Kimmel, Oct. 6, 2026, paras. 2, 10, 12–16 and n. 1.

CERIECO claimed CAD $213,000,000, plus interest and out-of-pocket costs, against the fund. The Claims Officer, the Honourable J. Douglas Cunningham, K.C., upheld PwC's disallowance of it on January 7, 2026, and CERIECO appealed. Justice Kimmel of the Ontario Superior Court of Justice (Commercial List) heard the appeal on June 18 and 19 and dismissed it in reasons cited as 2026 ONSC 5607: "no palpable and overriding or other reviewable error has been identified in the Determination or Costs Decision of the Claims Officer that would permit this court to intervene," per the Reasons of Justice Kimmel, Oct. 6, 2026, p. 1 and paras. 2–4, 127.

A reserve sized to the claim

PricewaterhouseCoopers Inc. has been receiver and manager of Bridging Finance Inc., Bridging Income Fund LP and other Bridging funds and companies since April 30, 2021, appointed on the application of the Ontario Securities Commission under s. 129 of the Securities Act (Ontario), per the Twenty-Sixth Report of the Receiver, Dec. 8, 2025, para. 1. CERIECO delivered its proof of claim on September 16, 2022; on December 20, 2023 the receiver disallowed it in its entirety, advising that Ms. Sharpe had no authority to grant the guarantee for the fund, per the Decision of the Claims Officer, Jan. 7, 2026, paras. 5–6. Chief Justice Morawetz appointed the Claims Officer on January 26, 2024, and CERIECO and the receiver agreed he would decide one threshold question, whether the guarantee had been duly authorized and was valid, reserving their rights on other allegations and defences, per the Reasons of Justice Kimmel, Oct. 6, 2026, paras. 1, 21.

By then the claim had already shaped what unitholders received. At a hearing in February 2025, the receiver sought approval of an interim distribution that would treat CERIECO's claim pari passu with unitholder claims and reserve $49.2 million for it. It was common ground between the receiver and CERIECO that this would cut CERIECO's maximum entitlement, even if it won, to approximately 22% of its filed claim. CERIECO opposed that treatment, and Justice Osborne, while approving the distribution, required the reserve to be "maintained in an amount sufficient to satisfy the Cerieco Claim until it has been finally determined," per the Reasons of Justice Osborne, Feb. 24, 2025, p. 1 and paras. 2, 4, 116, 134. The receiver then reserved the principal CERIECO had advanced plus interest to the date of appointment, approximately $221 million, and the interim distribution came to $321 million, per the Twenty-Sixth Report of the Receiver, Dec. 8, 2025, paras. 22, 53.

"Not going to sign anything"

On September 20, 2017, a lawyer at Kelly Santini LLP asked Dentons, CERIECO's counsel, to arrange for Sprott Genpar's directors to sign a document related to the guarantee. Dentons passed the request to Ms. Sharpe, who replied on September 22 that the directors "are not required and are not going to sign anything, as everyone is aware." Three days later Kelly Santini, which represented that it acted for the fund and its general partner, delivered its opinion that the guarantee was a "legal, valid and binding obligation" of the fund, per the Reasons of Justice Kimmel, Oct. 6, 2026, paras. 18, 93.

The opinion said it rested on an officer's certificate of the general partner dated September 21, 2017, attaching a directors' resolution authorizing the guarantee, and it carried a qualification: "with your approval and without independent investigation, we have relied solely upon the officer's certificate referred to herein as to the matters certified therein." No resolution was attached, and none has been produced; the certificate was from Ms. Sharpe herself, per the Reasons of Justice Kimmel, Oct. 6, 2026, paras. 53, 68–69. CERIECO also received an opinion from Philip Rimer of Dentons Canada LLP, dated November 6, 2017, that relied on Kelly Santini's and confirmed the guarantee's validity. On June 7, 2019, by which time she was a signing officer of the general partner, Ms. Sharpe signed a Confirmation of Guarantee Agreement for the fund as President, per the Reasons of Justice Kimmel, Oct. 6, 2026, paras. 17, 19.

What the Claims Officer found

The fund's business, as its limited partnership agreement describes it, is "investing its funds in asset-based investments and factoring investments." Under his interpretation of that agreement, the Claims Officer found that the guarantee was outside the ordinary course of the fund's business and would have needed the approval of two-thirds of the limited partners, which was not obtained. Even if the general partner could have given it, he found, Ms. Sharpe was not then an officer or director of Sprott Genpar; her authority was limited to that of Bridging Finance as sub-advisor, and "The Guarantee was not an investment," in the reasons' summary of his finding, per the Reasons of Justice Kimmel, Oct. 6, 2026, paras. 23–24, 46. "The Guarantee, pure and simple, was the acceptance of risk - $200M worth of risk with no upside to the Partnership," he wrote. The receiver's position before him was that it "risked nearly 50% of BIF's assets with no return," against the agreement's limit of 30% of net assets in any one investment, per the Decision of the Claims Officer, Jan. 7, 2026, paras. 82, 97.

He found suspicious circumstances of which CERIECO and Dentons were or ought to have been aware, enough to put them "on enquiry." Among them were Ms. Sharpe's September 22 message, though she had purported to sign in the general partner's name; an opinion predicated on a certificate and resolution that were not provided to CERIECO and Dentons; a request that they keep the guarantors' identity confidential, "even if that request originated from the Coco Parties for their own, undisclosed reasons"; and, by the 2019 confirmation, the guarantee's absence from the fund's audited financial statements, per the Reasons of Justice Kimmel, Oct. 6, 2026, paras. 74–75. CERIECO's word for the arrangement was "confidentially." "The Receiver prefers the word 'secrecy' which I have concluded is more apt," the Claims Officer wrote, per the Decision of the Claims Officer, Jan. 7, 2026, para. 139.