EY has issued its first report in its capacity as inspector of Epic Alliance Inc. and certain related entities (the “EA Group”), a Saskatoon, Saskatchewan-based group of companies that facilitated the buying, selling, renting, subletting, and renovating of residential real estate. EY was appointed on February 25 on application by various investors to investigate what happened to the $211.9 million in investor funds raised by the EA Group. Based on the information currently available (which is unaudited and incomplete), the inspector reported that, among other things, the group frequently experienced cash shortfalls on its Hassle-Free-Landlord Program properties due primarily to low occupancy rates and high repairs and maintenance costs. The company was planning to expand its program into the United States, but these plans appear not to have materialized, with EY reporting that the $3.8 million raised for the expansion appearing to have been used to fund losses in the Canadian corporations. The inspector also confirmed that the EA Group raised $370,000 from four investors in contravention of a cease trade order in 2021. Counsel is MLT Aikins for the inspector. By Dina Milivojevic
Trinity Ravine Community Inc., a registered charitable organization whose primary business is the development of a real estate project known as Trinity Ravine Community in Scarborough, Ontario, obtained CCAA protection on February 23. The purpose of the project is to provide a community for senior citizen residents, with accessibility features and specialized amenities to enable its residents to “age in place”. There are a total of 439 purchasers in the project, and a total of approximately $27.6 million in deposits has been paid to the organization. Due to factors which include skyrocketing construction costs, delays and uncertainty caused by the COVID-19 pandemic, the project’s financial model is no longer viable. The company commenced CCAA proceedings to obtain the necessary breathing room to implement a dual track sales process and develop a plan to be put to creditors. Deloitte was appointed monitor. Counsel is Miller Thomson for the company, Cassels for the monitor and Dentons for Nahid Corp. By Dina Milivojevic
1143924 B.C. Ltd., Buffalo-Gentai (St. Johns) Investment Limited Partnership and Buffalo-Gentai Development Ltd., the owners of certain lands in Port Moody, British Columbia, had a receiver appointed on January 27, on application by Prospera Credit Union, which provided mortgage financing in connection with the purchase of the lands. The companies have committed various events of default under the Prospera loan agreement, including by seeking a windup and dissolution of Buffalo-Gentai (St. Johns) Investment Limited Partnership, one of the debtors. The Bowra Group was appointed receiver. Counsel is Owen Bird Law Corporation for Prospera. By Dina Milivojevic
Ideal (WC) Developments Inc., a single purpose company incorporated for a planned residential real estate development located at 6532 and 6544 Winston Churchill Boulevard, Mississauga, Ontario, was placed in receivership on January 11, on application by Empirical Capital Corp., owed over $6 million. The loan was to be fully repaid in March 2020, but the company and Empirical entered into subsequent forbearance agreements, the last of which expired on November 15, 2021. During the forbearance period, the company indicated that it had entered into an agreement of purchase and sale with respect to the properties. However, the company failed to complete the sale transaction on the scheduled closing date of November 15, 2021. RSM was appointed receiver. Counsel is Garfinkle Biderman for Empirical. By Dina Milivojevic
Ideal (BC) Developments Inc., the owner of certain vacant properties in Richmond Hill, Ontario, was placed in receivership on December 17, on application by C&K Mortgage Services Inc. and Canadian Western Trust Company, owed approximately $15.5 million. The properties are an assembly of development land which the company has been developing for construction of a residential community, consisting of 23 stacked townhomes and 49 freehold townhomes, although construction has not yet begun. The applicants' loan to the company matured on November 1 and has not been repaid. Alvarez & Marsal was appointed receiver. Counsel is Chaitons for the receiver, Dickinson Wright for the applicants and Friedman Law Corporation for the company.
Go-To Developments Holdings Inc. ("GTDH") and various related entities (collectively, the "Go-To Group") were placed in receivership on December 10, on application by the Ontario Securities Commission ("OSC"). Between 2016 and 2020, GTDH and Oscar Furtado, the founder and directing mind of the Go-To Group, raised almost $80 million from Ontario investors for nine Go-To real estate projects by selling limited partnership units in the respondents. The projects are not complete, and the investors’ funds remain outstanding. On December 6, the OSC issued two freeze directions which require Furtado to maintain and refrain from imperilling assets derived from investor funds and require RBC Direct Investing to maintain the assets in Furtado’s RBC Direct Account. The freeze directions were continued and KSV was appointed receiver over the Go-To Group on December 10. Counsel is Aird & Berlis for the receiver and Torkin Manes and Miller Thomson for certain of the respondents.
Boreal Capital Partners Ltd. and certain related entities, an Oakville, Ontario-based group of companies in the business of developing residential and commercial real estate projects, including multifamily residential condominium projects, obtained protection under the CCAA on November 25, listing almost $45 million in liabilities to Halmont Properties Corporation, their principal secured creditor. The companies currently have five projects underway, one of which is at an advanced stage of construction. However, they are facing pressing liquidity concerns as a result of severe alleged mismanagement, including a failure to provide the required reporting, the co-mingling of various funds and accounts, and various unauthorized payments and transfers. The purpose of the CCAA proceedings is to provide the companies with the breathing space to stabilize operations, continue the development of the active projects and develop a restructuring plan. EY was appointed monitor. Kesmark Estates was appointed as CRO. Halmont is providing DIP financing. Counsel is TGF for the companies, Lenczner Slaght for the monitor, Wildeboer Dellelce for Halmont and BLG for Trisura Guarantee Insurance Company.
1725859 Ontario Inc., 1941275 Ontario Ltd., and 1941276 Ontario Inc., which own a condominium unit in Toronto, a residential property in Brampton and a commercial property in Brampton, respectively, had a receiver appointed on November 1, on application by DUCA Financial Services Credit Union Ltd. DUCA brought the receivership application as a result of various defaults in the companies' obligations to DUCA, including that the companies have granted subsequent charges over the properties without the knowledge or consent of DUCA, and another creditor has commenced enforcement proceedings in relation to one of the properties. Spergel (GRIP) was appointed receiver. Counsel is Harrison Pensa for the applicant and Aird & Berlis for the receiver.
Axess Pickering Ltd., the owner of real property located at 1525 Pickering Parkway in Pickering, Ontario (the "Property"), had a receiver appointed over all of its assets on October 12, on application by C & K Mortgage Services Inc. (carrying on business as Rescom) and 975393 Ontario Inc., the company's senior secured creditors. The Property is a vacant 1.273 acre parcel which is being developed for construction of 336 units, in two residential condominium towers and approximately 26,000 square feet of office/restaurant space. On September 1, there was a default in the payment of interest under the charge on the Property, and no payments have been received since that date. Alvarez & Marsal was appointed receiver. Counsel is Dickinson Wright for the applicants.
Mohawk Trail Properties Inc., 2317159 Ontario Inc., and Mohawk Inn & Suites Management Inc., a related group of primarily land holding companies based in Toronto and Milton, Ontario, had a receiver appointed over their assets on August 3, on application by Cortland Credit Lending Corporation as agent for certain lenders. Mohawk Trail Properties Inc. was the borrower under the loan agreement, while 2317159 Ontario Inc. and Mohawk Inn & Suites Management Inc. provided guarantees. Starting in June 2019, as a result of certain material breaches and defaults (including monetary defaults) under the loan agreement, the parties entered into a series of forbearance agreements. However, the companies have been unable to repay the loan and, as of July 23, 2021, owed approximately $17 million to the lenders. A sale process for the companies' assets was approved on the same day that the companies were placed in receivership. PwC was appointed receiver. Counsel is Dentons for Cortland Credit Lending Corporation and Stikeman Elliott for the companies.