In a seismic shift for Canada’s private lending landscape, regulators have moved to force the bankruptcy of Bridging Finance’s founding couple, David and Natasha Sharpe, marking one of the most significant collapses in the nation’s alternative lending sector.
The Ontario Securities Commission filed an application last week seeking to push the husband-and-wife team into bankruptcy proceedings, escalating a financial drama that has been unfolding since 2021. The regulatory action aims to recover approximately $229 million that investors reportedly lost when the private credit firm imploded amid allegations of mismanagement and conflicts of interest.
“This represents an unprecedented regulatory intervention in Canada’s private lending space,” said Margaret Wilson, financial markets analyst at Toronto-Dominion Bank. “The case highlights the growing scrutiny of alternative lenders who operate with less transparency than traditional financial institutions.”
Bridging Finance, once a rising star in Canada’s private lending universe with over $2 billion under management, specialized in providing loans to mid-sized companies unable to secure traditional bank financing. The firm attracted significant institutional investment before regulators seized control of its operations in 2021 after identifying what they described as “serious concerns” regarding loan practices and disclosure failures.
According to court documents obtained by CO24 News, the OSC alleges the Sharpes diverted investor funds for personal benefit and failed to disclose significant conflicts of interest in several high-profile transactions. The couple has consistently denied any wrongdoing through their legal representatives.
The collapse has sent ripples through Canada’s financial sector, raising questions about oversight in the rapidly growing private credit market. Industry experts note that private lending in Canada had expanded by approximately 27% annually in the five years preceding the Bridging collapse, filling gaps left by traditional banks’ increasingly conservative lending practices.
“Private credit serves a vital function in our economy by providing capital to businesses that might otherwise struggle to grow,” explained Robert Sanchez, professor of finance at the University of Toronto. “However, the Bridging case demonstrates the potential risks when these relatively lightly regulated vehicles operate without sufficient guardrails.”
The bankruptcy push comes at a particularly challenging moment for Canada’s alternative lending sector, which has faced mounting pressure from rising interest rates and economic uncertainty. According to data from the Bank of Canada, private credit defaults increased by 18% in the first quarter of 2025 compared to the previous year.
For investors caught in the Bridging Finance collapse, recovery prospects remain uncertain. PricewaterhouseCoopers, appointed as receiver in 2021, has managed to recover only about 63 cents on the dollar through asset sales and litigation, according to their most recent report to the business community.
“The regulatory action against the Sharpes represents the final chapter in what has been a painful lesson for Canadian investors,” noted Emily Chang, senior financial writer at Morningstar Canada. “Many institutional clients, including pension funds and family offices, had viewed Bridging as a relatively safe way to diversify beyond traditional fixed income investments.”
The case has prompted calls for regulatory reform in Canada’s financial markets, with advocacy groups demanding greater transparency requirements for private lenders who increasingly function as shadow banks in the broader financial ecosystem.
As this financial drama continues to unfold in Canadian courts, the fundamental question remains: will the Bridging Finance collapse lead to meaningful reform of private lending practices, or will it merely represent a temporary setback in the inexorable growth of alternative finance in Canada’s increasingly complex capital markets?
