Portus Asset Management receiver asking court OK to seek bankruptcy order

Date: Thursday, April 7, 2005
Author: Canadian Press

TORONTO (Canadian Press) - The court-appointed receiver in the case of the Portus hedge fund group intends to ask for judicial authorization Friday to seek a bankruptcy order. KPMG Inc. says in a notice of motion dated Tuesday that it will also ask Ontario Superior Court Justice Colin Campbell for an order establishing a hardship committee to assist hard-pressed investors in Portus.
KPMG said it "is not yet in a position to determine with certainty the total amount of assets and liabilities of the Portus Group, but it does appear likely that the investors will receive a distribution on account of their claims."
About 26,000 investors put some $730 million into funds operated by Toronto-based Portus Alternative Asset Management Inc., which was shut down in February as securities regulators launched an investigation into its sales and investment practices. KPMG observed in its notice of motion that "certain investors may be experiencing severe hardship due to their inability to redeem their investments with the Portus Group," and said it is recommending that they be allowed to seek interim distributions through a committee to be established by the receiver.
Of the 26,000 investors, 6,300 did business with Portus through advisers working for Manulife Financial Corp., which has promised that they will get all of their money back. KPMG has previously stated that attempts were made to destroy Portus corporate records and that $246 million was transferred to accounts in the Cayman Islands.
Portus was placed in receivership March 4 under a court order obtained by the Ontario Securities Commission, which said the firm was no longer operating "in any meaningful way."
The company, headed by 20-something financier Boaz Manor, was said to be pulling in $20 million a week in new investor money before it was shut down.