Diam Danforth Property Inc., a real estate development company and the registered owner of 2359 Danforth Avenue, Toronto, Ontario (the "Property"), was placed in receivership on May 4 on application by Melvyn Eisen, a secured creditor that advanced $11.5 million to the company pursuant to a commitment letter. The Property is a parcel of vacant land on which the company intended to construct a condo project. However, the project has been stalled since January 2019. In addition to the company's defaults on the commitment letter, the project site is also currently subject to an Order to Remedy Unsafe Building. Rosen Goldberg was appointed receiver. Counsel is Goldman Sloan Nash & Haber for the applicant, Laishley Reed for the company, and Blaney McMurtry for the receiver.
33 Yorkville Residences ("33 Yorkville"), The Clover on Yonge ("Clover"), and 480 Yonge Street ("Halo") - three large downtown Toronto, Ontario luxury condo projects by the Cresford Group - were placed in receivership on March 27. Investors bcIMC Construction Fund and Otéra Capital, owed approximately $163.2 million, filed the receivership application for 33 Yorkville, while bcIMC Construction Fund and bcIMC Specialty Fund, owed approximately $214.9 million, filed the application for Clover and Halo. After the applicants became aware of allegations of financial mismanagement and accounting irregularities at the Cresford Group, including an allegation that the developer kept separate ledgers where one set was shown to lenders and another set included additional costs, they retained PwC to review the 33 Yorkville project. PwC later advised that it had uncovered evidence of inappropriate project contracting and accounting, transfer of costs between condo projects as cost overruns began to occur, and unusual credits on condo sales. As a result of this review and the fact that the Clover and Halo projects ran significantly over their approved budgets, the applicants concluded that Clover and Halo had defaulted on their obligations under the construction financing. PwC was appointed receiver. Counsel is Torys for bcIMC Construction Fund and bcIMC Specialty Fund, Norton Rose Fulbright for Otéra Capital, McCarthy Tétrault for the receiver and Aird & Berlis for the companies.
Penady (Barrie) Ltd ("PBL"), a Toronto, Ontario-based subsidiary of PenEquity Realty, a real estate investment advisor, and PRC Barrie were placed in receivership on March 25 on application by Choice Properties Limited Partnership ("CHP"), the beneficial owner of certain lands abutting real property owned by the companies (the "Barrie Property"). The Barrie Property is approximately 97% occupied, with tenants including Cineplex, Tim Hortons, and McDonald's. PBL, which has $68.2 million in liabilities, previously entered into a secured credit agreement with CHP to assist it with the development of the Barrie Property. During the course of this agreement, PBL defaulted on several occasions, including by missing payments. Although the agreement matured in January 2020, to date, all principal, interest, and other obligations under the agreement remain outstanding. The current monthly rent collected by PBL is insufficient to service its indebtedness and PBL has tried unsuccessfully to sell the Barrie Property for approximately 18 months. RSM was appointed receiver. Counsel is Osler for the applicant, Gardiner Roberts for the companies and Blaney for the receiver.
2607380 Ontario, which is in the business of developing and operating a multi-purpose commercial building located at Burlington, Ontario (the "Nuvo Building"), obtained protection under the CCAA on February 26, listing approximately $27.6 million in liabilities, including $17.3 million to Meridian Credit Union and $4.5 million to Crossroads Christian Communications ("CCCI"). In November 2017, the company entered into an agreement with the general contractor, Maple Reinders, to renovate the Nuvo Building. However, in 2019, the renovation schedule began to incur significant delays when Meridian refused to fund the promised additional $2.0 million required to complete renovations. Consequently, the company was unable to pay Maple Reinders, who in turn could not make payments to its subcontractors. As of September 2019, all work at the Nuvo Building has ceased. The company currently requires the flexibility and breathing room provided by the CCAA process to pursue additional renovation financing and restructuring options that would allow for the completion of renovations to the Nuvo Building. Maynbridge Capital will be providing DIP financing during the CCAA proceedings. Richter was appointed monitor. Counsel is Stikeman Elliott for the company, Bennett Jones for the monitor, Gowling for Meridian, McCarthy Tétrault for Maynbridge Capital, and Weirfoulds for CCCI
Fernwood Developments, a Guelph, Ontario-based developer of a stacked townhouse condominium complex located in Barrie, Ontario (the "Development"), was placed in receivership on February 12 on application by MarshallZehr Group, owed approximately $24.0 million. The Development is to be comprised of 94 residential condominium units in six buildings, to be completed in three phases. While construction on Phase 1 and 2 is finished, the units in Phase 3 are in various stages of construction and have yet to be sold. The developer has been unable to sell 26 units in Phases 1 and 2 of the Development during the last two years. As a result, the developer has fully drawn on the funds available under its commitment letter with MarshallZher and cannot raise additional financing to complete construction of Phase 3, which will cost around $1.6 million. Furthermore, it is alleged that Pensio Property Management Group, which acts as a property administrator for the Development collecting rents and managing units, has collected but failed to remit rental income to the developer over the last two years. RSM was appointed receiver. Chaitons is counsel to the applicant.
1034179 B.C. Ltd., a British Columbia-based developer of a 66-unit rental property in Maple Ridge, British Columbia, obtained protection under the CCAA on February 4, listing approximately $22.0 million in liabilities, including $6.3 million to Canadian Western Bank. In April 2017, the company purchased the Maple Ridge property and began development with $3.8 million of purchase financing from its subordinate lenders. It was contemplated that construction would finish at the end of June 2018. By the fall of 2017, however, the company realized that construction was taking longer and costing more than initially anticipated. In the beginning of 2018, the company managed to secure an additional loan from its subordinate lenders as well as from CWB in order to complete construction of the property. Shortly after these financings, it became clear that the company could not complete construction or meet the monthly interest payments under its loan agreement with the subordinate lenders. In September 2019, CWB ceased to advance funds to the company and demanded payment for $6.3 million. The company proposed to CWB that it would seek relief under the CCAA so that interim financing could be obtained to complete construction of the development for the benefit of all stakeholders. The Bowra Group was appointed monitor. Fasken is counsel to the company.
AAA Windows and AAA Holdings, two related Calgary, Alberta-based corporations, were placed in receivership on January 27 on application by Canadian Western Bank ("CWB"), owed approximately $4.7 million. While AAA Holdings effectively operates as a real estate holding company with title to a building located in Calgary (the "Property"), AAA Windows operates from leased space on the Property as a supplier, manufacturer, and installer of windows and doors. The overall downturn in Calgary's economy during the last several years has negatively impacted AAA Windows' business and cash flow. The court granted CWB's application for a pre-pack sale of both companies' assets. Hardie & Kelly was appointed receiver. Counsel is Burnet, Duckworth & Palmer for the applicant and Parlee McLaws for the receiver.
Gestion Knighstbridge, a Montreal, Quebec-based residential real estate developer, was deemed bankrupt on January 9, listing $2.9 million in liabilities, including $373.6 thousand to RBC. The company had previously filed an NOI on November 15. The company attributes its financial difficulties to numerous factors that negatively impacted its cash flow, including delays in obtaining approvals from municipal authorities which postponed the launch of ongoing projects; an increase in construction costs and shortage of skilled labour; and cost overruns on certain projects. Richter is the bankruptcy trustee.
IEC Ltd., Audeamus Capital Corp. and certain other entities related to the Strategic Group, one of Calgary, Alberta's largest real estate companies, had their properties placed in interim receivership on application by a group of the companies' lenders. The companies obtained protection under the CCAA on December 10, attributing their financial difficulties to the extended slump in the Canadian energy market and its effect on the Calgary real estate market. The companies' request to be granted creditor protection past the initial 10-day stay was opposed by the applicants in part on the basis that they no longer had confidence in the management of the companies and wanted a receiver appointed to safely manage and preserve the properties, ensure rents are collected and not co-mingled amongst the various companies and ensure operational expenses are paid by the appropriate companies. Alvarez & Marsal was appointed interim receiver. Counsel is McCarthy Tétrault for the company, Dentons for the interim receiver, Norton Rose Fulbright for the CCAA monitor Hardie & Kelly, BLG for BMO and certain other lenders, Blakes for Sun Life, Cassels for MCAP and BDC, McMillan for RBC, McLennan Ross for CWB, Brownlee for Canada ICI and SBI Canada Bank, Lawson Lundell for Vancity Community Investment Bank and Centurion Mortgage Capital Corporation, Fasken for Fiera, Torys for Connect First Credit Union, Gowling WLG for CIBC, Stikeman Elliott for IMC and Computershare, Osler for TELUS Pension Master Trust, Bennett Jones for Trez Capital and Parlee McLaws for Equitable Life.
IEC Ltd., Audeamus Capital Corp. and certain other entities related to the Strategic Group, one of Calgary, Alberta's largest real estate companies, obtained protection under the CCAA on December 10. The company has attributed its financial difficulties to the extended slump in the Canadian energy market. Vacancy rates in commercial office space in Calgary have soared since 2015 due to companies ceasing operations, engaging in headcount reductions and undertaking cost cutting measures. These vacancies have been compounded in the last two years by a large amount of new office space being added to the Calgary market, as well as increases in the property taxes being charged by the city. To put things in perspective, Calgary's downtown office vacancy rate is estimated to be 24.6% vs. Toronto's 2.2%. These changing market conditions have reduced the company's revenues and materially reduced the market value of many of its rental assets. Believing that there is no macro-economic turnaround on the horizon, the company sought creditor protection and intends to restructure its rental portfolio. Hardie & Kelly is the monitor. Neil Narfason was appointed CRO. Counsel is McCarthy Tétrault for the company and Norton Rose Fulbright for the monitor.