Barakaa Developer Inc., Lerrato Inc. and 2145499 Ontario Inc., Receivership

Barakaa Developer Inc., Lerrato Inc. and 2145499 Ontario Inc., Ontario-based real estate development companies, were placed in receivership on October 21 on application by Foremost Financial, owed approximately $13.4 million.

In 2022, Foremost Financial loaned funds to the companies and took security over certain properties owned by the companies. The secured properties comprise two fully-constructed single-family dwellings located in Richmond Hill (the “Madison Dwellings”); six parcels of land located in Ajax, five of which are the site of five fully constructed residential freehold townhomes (the “Porte Dwellings”); and ten separate fully constructed residential freehold townhomes located in Ajax which are not yet connected to the electricity grid and have not been severed into individual units (the “Doric Dwellings”).

The companies have defaulted on the loans by failing to repay them on maturity. In addition, mortgages in favour of a third party have been registered against title to the properties. The companies claim these mortgages, which are the subject of ongoing litigation, were inappropriately registered.

The companies have entered into contracts for the sale of one of the Madison Dwellings, two of the Doric Dwellings and all five of the Porte Dwellings to third parties. The receiver intends to review the proposed transactions to determine whether they should go ahead, or if some or all of the properties should be remarketed for sale.

KSV is the receiver.

Counsel is Paliare Roland for Foremost Financial, DLA Piper for the receiver and Chaitons for the companies.