Converting a real estate receivership into a CCAA proceeding?

Fiera Canadian Real Estate Debt Fund GP Inc. et al v. Oxford Road Developments 4 Inc. et al.
What is the test for converting receivership proceedings into a CCAA proceeding?

Summary: In this case, the Court considered whether to convert existing receivership proceedings into one consolidated CCAA proceeding. At the time the receivership applications were brought, the debtors—real estate development companies—had indicated an intention to seek protection under the CCAA. The receivership orders were made on consent, without prejudice to the debtors’ right to commence a CCAA application to bring the respective projects into CCAA protection, and provided that the properties would not be publicly marketed before July 15, 2025. The debtors did not advance their CCAA application by that date. The issue came before the Court again about a month later, and the question was whether the CCAA application should still be allowed to proceed. The Court found that it should not. The CCAA proposal provided by the debtors was unsatisfactory for a number of reasons, including that the DIP funding remained subject to certain conditions, and the cash flow ignored significant amounts owing to various creditors including CRA and Tarion. In any event, various factors tended to support receivership as the vehicle of choice for these single-purpose real estate developments. Given the extent of work that had been done in the receiverships, and given that the CCAA proposal still had deficits, it would not be fair to the lender to be put to the time and expense of answering a proposed competing CCAA application at this stage.

The borrowers, real estate development companies, had been in default of their obligations to their lender, Fiera, since the fall of 2024. In January 2025, the borrowers entered into forbearance agreements with Fiera with respect to the loans for the two developments at issue (the “Woodstock property” and the “Sheppard property”). The borrowers then defaulted on their obligations under the forbearance agreements.

Within the underlying loan documents and in the forbearance agreements, the borrowers expressly agreed to the appointment of a receiver in each project in the event of default. The borrowers’ repeated defaults, including under the forbearance agreements, led to Fiera bringing its two receivership applications for each of the Woodstock property and the Sheppard property, scheduled for June 2, 2025. On May 30, 2025, the parties appeared before the Court to address the borrowers’ request for time to prepare and file an application under the Companies’ Creditors Arrangement Act. At that time, the borrowers advised the Court that they expected to have the CCAA application ready by June 20, 2025.

The parties ultimately agreed that the appointment of the two receivers would be on consent, and the receivership orders would carve out a restriction that the properties would not be publicly marketed before July 15, 2025. Finally, the receivership orders were without prejudice to the borrowers’ right to commence a CCAA application to bring the respective projects into CCAA protection and to bring a motion to terminate the respective receiverships.

The borrowers failed to be ready to advance their CCAA application by July 15, 2025. The issue came before the Court again at a case conference on August 14, 2025, when the Court was asked to determine whether the CCAA application should still be allowed to proceed. Fiera argued that there would be substantial prejudice to it as lender if the application were heard well after the July 15^th date, as the receiverships had advanced considerably. The receivers had already engaged in construction and sales processes that could not be paused and restarted without additional cost. Fiera also argued that to pull the rug out from under the ongoing receiverships at this stage would create uncertainty in the market, undermine the credibility of the sale process, risk diminishing the properties’ market value and result in lower recovery.

The Court found that the CCAA proposal provided by the borrowers remained speculative, in part. The DIP funding remained subject to certain conditions and the borrowers had not provided evidence that all such conditions had been met. In the case of the Woodstock project, there was not yet a restructuring plan that contemplated repayment of the debts owed to Fiera. The revised cash flow analysis also excluded major creditors such as CRA (ignoring the statutory super-priority attached to those obligations) and did not account for an additional $600,000 owing to Tarion in additional deposits. With respect to the Sheppard property, the revised cashflow similarly ignored amounts owing to CRA, amounts owing to the City of Toronto for unpaid taxes, and wage arrears in the amount of $170,000. As well, required zoning applications had yet to be submitted such that zoning approvals were likely many months away.

Even if the borrowers were in a position to advance the CCAA application, various factors tended to support receivership as the vehicle of choice for these single-purpose real estate developments. Among other things, the borrowers had essentially run roughshod over Fiera’s contractual rights. Given the extent of work that had been done in the receiverships, and given that the CCAA proposals still had deficits, it would not be fair to Fiera to be put to the time and expense of answering a proposed competing CCAA application at this stage.

The Court declined to allow the borrowers’ proposed application to proceed.

Judge: Justice W.D. Black

Professionals involved:

• Dom Michaud and Anisha Samat of Robins Appleby for Fiera

• Ran He of THC Lawyers for the debtors

• Arif Dhanani, Tanveel Irshad and Bryan Tannenbaum of TDB Restructuring, the receiver