MarshallZehr puts Lake Simcoe housing project into CCAA

2055226 Ontario Inc., Alliance (Sutton) Inc., Berkstar Development Inc. and Rose Operating I GP Inc. obtained CCAA protection on August 24, 2026, on application by senior secured lender MarshallZehr Group Inc., owed approximately $42.9 million, after construction delays, rising costs, slower home sales and more than $5.7 million of liens left their Lake Simcoe residential development short of liquidity and largely dormant.

The proceeding centres on the Hedge Road Project in Georgina, Ontario. 205 Ontario holds legal title as bare trustee for Alliance, Berkstar and Rose Sutton Limited Partnership, whose general partner is Rose GP. The three-phase development comprises 92.7 acres, including 53.4 developable acres. Phase 1 was planned for 144 cottage-style bungalow homes, while Phases 2 and 3 remain largely undeveloped. By the comeback hearing, 76 Phase 1 homes had been completed and sold and 21 remained under construction, 20 of them subject to agreements of purchase and sale. Alliance Homes Ltd. acts as construction manager.

MarshallZehr financed the project through two secured facilities, which had principal commitments of $48.553 million and $16.05 million and matured on January 1 and March 1, 2026, respectively, without being repaid. MarshallZehr demanded payment on May 22. Construction had substantially ceased by April as liquidity tightened and liens accumulated. Trade debt stood at approximately $10.4 million, including the liens, and there is approximately $950,000 in HST arrears.

The restructuring is initially focused on restarting construction and closing partially completed Phase 1 homes. Ten units have been identified for near-term sales and and are forecast to result in approximately $7.2 million in receipts. Longer term, the proceeding is expected to prepare the balance of the Hedge Road development for a sale, although a recapitalization remains possible. MarshallZehr is providing a DIP loan.

BDO is the monitor with enhanced powers. Counsel includes Miller Thomson for MarshallZehr, Norton Rose Fulbright for the monitor, Reconstruct for Alliance and Alliance Homes, TGF for Samuel Reisman, Fasken for Ducimus Capital, and Torys for Tarion Warranty Corporation.