Portus should be declared bankrupt, receiver urges

Toronto- based Portus Alternative Asset Management Inc. should be declared bankrupt to speed up the return of money to investors who put more than $700 million into the troubled hedge fund, a report from its court- appointed receiver urged yesterday.

But, a source close to receiver KPMG LLP, said it could take years for investors to receive any money.

“ The objective of distributing maximum value to the investors can be achieved most effectively and practically through a bankruptcy,” KPMG noted in its ninth and latest report to Ontario Superior Court on the Portus scandal. To date, about $ 662.15 million ( Canadian) and about $ 37.2 million ( U. S.) have been found and secured in 130 Portus bank and investment accounts in Canada, the Turks and Caicos and the Cayman Islands. The receiver recommends a single bankruptcy proceeding for Portus and all money received should be paid out proportionately to the amounts originally invested. The report also recognizes that some stakeholders believe there should be two or three separate bankruptcies and that money should be allocated based on the type of investment structure invested in. But the report rejected that option, calling the tracing of individual investor funds “ not practicable from either a cost or timing perspective due to the complexity of the structures and the domestic and offshore cash flows . . . and the receiver’s lack of access to ( co- founder Boaz Manor).” The alternative of paying investors back based on their specific investment would be problematic, the source said. One investor would benefit at another