$58.7 million Somex residential development placed into receivership

9452-4618 Québec Inc., the developer of the 223-unit Somex residential rental project in Lévis, Québec, was placed into receivership on October 13, 2026, on application by Caisse Desjardins de Québec, after prolonged construction delays, financing defaults and mounting concerns over the condition and management of the partially occupied building. Desjardins was owed approximately $58.7 million as of September 11, 2026.

The company, whose directors are Hugo Kirallah and André Trudel, began developing the 13-storey Somex project at 710 route des Rivières in June 2022, with completion originally scheduled for June 2024. Desjardins provided a $57.8 million construction loan and a $1.5 million revolving credit facility in 2023. According to the lender's application, the project encountered substantial cost overruns and construction delays, prompting repeated notices of default beginning in February 2025. An April 2025 construction consultant's report found that only 71 of the 223 apartments were ready for occupancy, despite the project having incurred 93% of its revised direct construction budget. The developer was subsequently required to inject approximately $9.6 million in additional equity to complete the project, but failed to do so.

By July 2026, construction had made little progress since September 2024. Approximately 90 apartments were complete, including units awaiting provisional acceptance, while only 60 of the 223 apartments were leased. Direct construction expenditures had reached 97% of the revised budget. Desjardins also reported construction liens totalling more than $15 million as of March 2026, although some claims were subsequently settled. The lender alleged that the developer repeatedly failed to meet agreed construction milestones, provide financial information and remedy its defaults, despite several extensions and forbearance arrangements.

The receivership application also detailed deteriorating conditions for existing tenants. According to reports prepared by Gestion Supra (1998) Inc., which Desjardins retained to collect rents, unfinished amenities included an indoor swimming pool, rooftop pool and terrace, common areas and indoor golf facilities. Tenants complained of malfunctioning ventilation, insect infestations, inadequate cleaning, security concerns, water leaks and unresponsive property management. Some residents had been temporarily relocated to completed floors because their leased apartments remained unfinished. Desjardins further alleged that Groupe Mahlex, a property manager retained by the developer, failed to cooperate with its rent collection agent, withheld access to certain apartments and directed at least one tenant to pay rent to Mahlex rather than the lender's designated manager.

Desjardins said it had attempted to resolve the situation through multiple default notices and forbearance agreements, including a final arrangement in August 2026 requiring the resumption of construction, payment of outstanding arrears and confirmation that Mahlex's management contract had been terminated. The lender alleged that none of those conditions had been satisfied. It sought the appointment of a receiver to restore control over the property, address urgent maintenance and safety concerns, assess the funding required to complete construction and determine an appropriate realization strategy.

EY was appointed receiver. Counsel includes Norton Rose Fulbright for Desjardins, Davies for the receiver, Lacoursière Avocats for André Trudel et al. and BMA Avocats for Coffrages LD inc. and Moore électrique.