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Mutual Fund News

Norbourg founder seeks to protect funds, company from creditors

MONTREAL -- The founder and controlling shareholder of financially troubled Norbourg Asset Management Inc. moved yesterday to place the company and five related funds under bankruptcy protection from creditors.

The action threw into uncertainty a provincial regulator's liquidation attempts.

Vincent Lacroix said in a terse news release late yesterday that Norbourg and the funds "made an assignment of their assets today pursuant to the provisions of the Bankruptcy and Insolvency Act with the trustee firm RSM Richter Inc."

The news release said Mr. Lacroix "believes that this measure was necessary given the present circumstances and was the appropriate means of protecting the interests of the investors and other creditors of the Norbourg Group and constitutes the appropriate forum for the realization of the assets of the entities of the Norbourg Group."

The surprise action came a day before a court hearing into a request by Quebec's Autorité de marchés financiers (AMF) to wind up Norbourg.

A spokesman for Ernst & Young, the appointed administrator since Norbourg was shut down in August over allegations of fraud and embezzlement of company funds, said yesterday it was not clear whether the court hearing could go ahead as planned.

"We're in the realm now of legal tussling," said Roch Landriault, a spokesman for Ernst & Young.

A preliminary report by Ernst & Young released two weeks ago estimated that about $130-million is unaccounted for at Norbourg, a mutual fund and asset management company.

Investigations by the RCMP and the AMF continue.

André Hébert, a vice-president at RSM Richter, said yesterday it's too early to say what the implications of the bankruptcy protection are.

Mr. Lacroix had been trying to unlock $1.5-million of Norbourg funds he said were his, insisting he needed the money to provide for his family, but the AMF opposed the request.

© 2007 The Globe and Mail. All rights reserved.

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