Sale of First Leaside assets nets $125-million

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Officials overseeing the unwinding of First Leaside Wealth Management Inc. say they have raised $125-million so far in deals to sell substantially all of the failed investment firm's assets.

The monitor overseeing the firm's receivership has filed new documents in court updating the sales of various real estate holdings, and says only five small properties remain unsold while the vast bulk of other properties have been sold or have sales agreements in place awaiting approval.

Most of the money raised to date has been used to pay off mortgage holders of the properties.

First Leaside, based in Uxbridge, Ont., filed for bankruptcy protection in February, leaving 1,200 investors in the lurch. Many had purchased units in limited partnerships that invested in various real estate assets.

The firm managed 2,200 residential rental units in Canada and the United States and at its peak had about $370-million in assets under management. It owned retirement homes, raw land, four small independent accounting firms, a cidery and brewery in Ontario and stakes in high-tech startup companies.

Chief restructuring officer Greg MacLeod, who is overseeing liquidation of the assets, said in a court filing that First Leaside might be wound down under bankruptcy or receivership instead of remaining under court protection known as the Companies Creditors Arrangement Act (CCAA), which is intended to be used to restructure companies.

He said "it is entirely possible" that First Leaside will not seek any further extensions of its CCAA status after the current period expires on Dec. 11.

The Ontario Securities Commission has alleged First Leaside founder David Phillips and senior salesperson John Wilson committed fraud in raising $19-million in new funds from investors last fall without telling them about the company's financial problems.

Canada's brokerage industry regulator, The Investment Industry Regulatory Organization of Canada, has also launched a case against Mr. Phillips and Mr. Wilson.

The company also filed a lawsuit in August against Mr. Phillips and his wife, alleging they diverted company assets to finance an extravagant personal lifestyle.

Mr. Phillips has strongly denied all the allegations.