2423402 Ontario Inc., a special purpose entity wholly owned by Bondfield Construction, was placed in receivership on December 6 on application by BMO, as administrative agent for a syndicate of lenders owed approximately $122.2MM. The company has no significant assets other than the contracts for the development, construction and completion of the Cambridge Memorial Hospital, a $187.0MM, fixed price project. The debtor does not perform the construction itself but rather contracts the work back to Bondfield. The project is currently two years behind schedule and is effectively stalled. In August 2018, the hospital delivered a default notice that triggered a 120 day period, expiring December 11, after which the project could be terminated. BMO has been attempting to work consensually with Zurich Insurance, the project's surety, to restart the project but has been advised by Zurich that BMO cannot make a demand on the performance bond unless it first "steps-in" to the project, a step which may create additional liability for the lenders. Alvarez & Marsal was appointed receiver and will immediately make a demand under the performance bond. The receivership is also intended to stay the ability of the hospital to terminate the project. Counsel is McCarthy for the applicant, Miller Thomson for the hospital, Cassels Brock for Infrastructure Ontario, Osler for the debtor and Bondfield and GSNH for Zurich Insurance. EllisDon is prepared to serve as the replacement contractor to complete the project.
2556733 Ontario, which owns real property located at 68 Tycos Drive, Toronto, Ontario, was placed in receivership on December 6 on application by RBC, owed approximately $4.4MM in connection with a mortgage loan. The primary tenant is Benelife, which carries on a gym business on the lower level of the property. After the company was in arrears of the mortgage loan, RBC made written demand on the company in April 2018 for payment of its indebtedness. Following this demand, RBC entered into an accommodation with the company which provided time to the company to bring the mortgage loan into good standing. Under this accommodation letter, the company was required to fully pay the property tax and utility tax arrears by September 2018, which the company failed to d0. Despite RBC granting a significant amount of time to the company, it has yet to repay in full the indebtedness owing to RBC. Spergel (ICIN) was appointed receiver. Minden Gross is counsel to RBC.
68 Belgrave Avenue, a property in Toronto, Ontario on which a single-family dwelling is being built, was placed in receivership on December 4 on application by Owemanco, a mortgage broker based in Toronto. Ontario Wealth Management Corporation ("OWMC"), a related entity to Owemanco had agreed to fund a $1.1MM construction loan to the property's owner, Mr. De Silva. The initial advance of funds occurred in August 2017, while the balance of the loan was to be advanced in stages to complete the construction project. However, after Owemanco's inspections in late 2017 revealed that little progress was being made on the construction of the house, it advised Mr. De Silva that no further advances would be made. After Mr. De Silva defaulted on the Owemanco mortgage in September 2018, Owemanco took possession of the property a month later, retaining a property manager and setting up hydro and gas accounts for the property. Currently, Mr. De Silva does not appear to have the equity or other financial means to advance construction of the house beyond its current state, which is about 80% complete. Because he is no longer in possession of the property, there is no construction occurring nor is the house listed for sale. The unfinished state of the house significantly reduces the pool of buyers available, further reducing the likelihood that Mr. De Silva will be able to sell the property in a timely manner. In addition to the Owemanco mortgage, there is a second mortgage and two certificates of pending litigation registered on title to the property. Owemanco is only prepared to proceed through a court-appointed receiver, as a receivership would permit clear title as well as simplify and unify in one proceeding the competing claims of subsequent encumbrancers relating to the property. Further, a receiver, as an officer of the court, is better positioned than the debtor, or Owemanco under a power of sale, to consider and make recommendations as to the disposition of any surplus proceeds. Rosen Goldberg was appointed receiver and will consider either expediting the sale of the property as is, or completing the construction of the property and selling it afterwards. Counsel is Andrew Pigott Professional Corporation for the applicant and GSNH for the receiver.
Atlas Healthcare (Richmond Hill), a group of entities working to develop a six-story medical office building in Richmond Hill, Ontario, was placed in receivership on December 3 on application by Romspen, owed approximately $81.0MM. The project is behind schedule and over budget by approximately $39.0MM. The debtors' attempt to obtain creditor protection under the CCAA was denied in favour of the receivership. EY was appointed receiver. Counsel is Dickinson Wright for Romspen and Blaney for the receiver.
R.I.I. North America, a Calgary, Alberta-based upstream oil company that owns the North American intellectual property rights for a patented enhanced oil recovery technology, had certain of its assets placed in receivership on November 29 on application by Espresso Capital. The company, which had filed an NOI in October 2018, was later deemed to have filed for bankruptcy in November after it did not file a proposal within its granted 30-day stay of proceedings. MNP was the proposal trustee. In these proceedings, Hardie & Kelly was appointed receiver over select assets of the company, including the accounts receivable and the intellectual property and patents. BLG is counsel to the applicant.
2508342 Ontario, owner of real property located at 57 Matthew Street in Marmora, Ontario that consists of an Ultramar branded gas station and Square Boy Pizza franchise, was placed in receivership on November 28 on application by BMO, owed approximately $1.9MM. In June 2017, BMO was advised by the company's VP, Roopinder Bahl, and director, Jannette Saberon, that they had experienced a marital breakdown and separated. This discord allegedly impacted the business relationship between Mr. Bahl and the company's secretary, Varun Sharma, leading him to exit the active operation of the business. Ms. Saberon eventually took over operation of the gas station and pizza restaurant, but since she did not want to continue the business long-term, she put the property and business up for sale in early 2018. Compounding these issues is the opening of a new Esso gas station a kilometer away from the company's property. Given that Marmora is a small town and the Ultramar station is dependent on drive-by business, it is expected that the Esso station will negatively impact the company's earnings. msi Spergel was appointed receiver. Chaitons is counsel to BMO.
Diversified Metal Engineering (DME), a Charlottetown, Prince Edward Island-based fabricator of stainless steel products, including brewing systems for the craft beer industry, was placed in receivership on November 26 on application by RBC, owed approximately $18.1MM. Based on the company's projections, approximately $5.0MM of new capital is required to operate and effect a long term turnaround, which neither RBC nor its primary investor, Clearspring Capital Partners, nor any other party appear willing to provide in the current circumstances. Alvarez & Marsal was appointed receiver. Counsel is Aird & Berlis and MLT Aikins for the applicant and Cox & Palmer for the receiver.
Arte Group, a Calgary, Alberta-based company that specializes in designing, fabricating and installing various building envelope products and systems, was placed in receivership on November 23 on application by Canadian Western Bank, owed approximately $4.6MM. Hardie & Kelly was appointed receiver. Counsel is Cassels Brock is for the company and DLA Piper for the applicant.
Red Eagle Mining (TSX:R), a Vancouver, British Columbia-based gold exploration and development corporation with a mine-development team, was placed in receivership on November 21 on application by Orion Fund JV, in its capacity as collateral agent, and Liberty Metals & Mining Holdings, owed approximately $60.0MM (USD). The corporation had been focusing on building shareholder value through discovering and developing gold projects with low costs and low technical risks in Colombia. FTI Consulting was appointed receiver. Counsel is Lawson Lundell for Orion Fund JV and Miller Thomson for the receiver.
Forma-Con, a Concord, Ontario-based affiliate of Bondfield, a major Ontario-based construction company, was placed in receivership on November 19 on application by Bridging Finance as agent for 2665405 Ontario. Certain specific, non-core assets of Bondfield, as well as the real property known municipally as 131 Saramia Crescent in Vaughan, Ontario are also subject to the receivership order. Bondfield continues to operate in the normal course and is not subject to the receivership order. KSV was appointed receiver. FAAN Advisors is a financial advisor to Bondfield. Counsel is Goodmans for the applicant, Torys for the receiver, BTZ for the directors and officers of Bondfield, Osler for Bondfield, BLG for Zurich Insurance Company, McCarthy Tétrault for BMO and TD, each as agent, Chaitons for BMO, as agent, Koskie Minsky for LIUNA Local 506 and IUOE Local 793 and Cassels Brock for Infrastructure Ontario. The receivership application materials are sealed.