Toronto gas station placed into receivership amid $1.3 million cheque-kiting allegations and mortgage security dispute

17447124 Canada Inc., Eglinton Fuels Inc. and 17919310 Canada Inc., entities associated with a now-closed Ultramar gas station and convenience store in Toronto, were placed into receivership by the Ontario Superior Court of Justice on October 20, 2026, on application by Bank of Montreal, owed approximately $5.6 million. Justice Sean Dunphy appointed BDO Canada Limited as receiver following allegations that the companies and their principal participated in an approximately $1.32 million cheque-kiting scheme, alongside concerns that the gas station had ceased operating and the lender's collateral had been abandoned.

The proceedings concern a property at 2610 Eglinton Avenue East in Toronto, where 17447124 Canada Inc. operated the gas station and Eglinton Fuels Inc. held registered title to the real estate. The principal of the companies arranged to acquire the shares of Eglinton Fuels through 17447124 Canada Inc. in late 2025, with BMO providing financing to support the acquisition. The bank extended credit facilities totalling $4.687 million under a December 18, 2025 agreement, consisting of a $4.517 million real estate acquisition loan, a $40,000 corporate Mastercard facility and a $130,000 overdraft facility. The principal personally guaranteed the indebtedness.

The financing contemplated a corporate amalgamation that would consolidate the operating company and property owner into a single borrowing entity. Eglinton Fuels was to continue federally as 17919310 Canada Inc., which would then amalgamate with 17447124 Canada Inc. However, the continuance documents incorrectly identified the company as "Eglington Fuels Inc.", adding an extra "g" to its name. A request for correction was filed with Corporations Canada, but the issue remained unresolved when BMO commenced the receivership proceedings.

The error introduced uncertainty concerning the lender's security over the property. Although BMO registered a mortgage in February 2026, the defective amalgamation raised questions about whether its security was properly constituted against the real estate.

The immediate financial crisis arose in late August 2026. According to BMO, approximately $1.32 million in cheques were deposited into accounts belonging to the debtors and related companies between August 28 and September 1, primarily from a Scotiabank account held by another company controlled by the principal. The cheques were subsequently returned for insufficient funds, but the amounts provisionally credited to the accounts had already been transferred or spent through credit card payments, Interac e-Transfers, consumer purchases and transfers between related corporate accounts.

BMO commenced a separate action on September 28, 2026, seeking approximately $1.04 million in damages arising from the alleged scheme. On October 2, Justice Cavanagh granted a Mareva injunction freezing assets associated with the defendants, which was continued until trial following a hearing on October 13.

BMO had meanwhile demanded full repayment of its credit facilities on September 16, 2026, together with a demand against the principal under his personal guarantee. The lender reported approximately $5.6 million outstanding, including accrued interest and fees, and received no repayment or satisfactory proposal to resolve the indebtedness.

The lender's concerns intensified after an October 6 visit to the gas station revealed that the premises were closed, the lights were off, shelves were partially empty and notices on the fuel pumps indicated that card readers were not functioning. BMO argued that the apparent abandonment placed its collateral at risk and warranted a court-supervised process to preserve and realize on the assets.

In granting the receivership, Justice Dunphy described BMO's case as strong but identified unresolved questions requiring further scrutiny, particularly the defective amalgamation and its implications for the bank's security. He found that the evidence established the loan, substantial advances, contractual enforcement rights, defaults and proper repayment demands. He also acknowledged the serious allegations of fraudulent conduct, emphasizing that they had not yet been proved.

Justice Dunphy declined to resolve the mortgage-security questions at the appointment stage, finding that the validity and priority of BMO's security could be examined when assets were sold and proceeds became available for distribution. He also declined to delay the receivership to allow the judge overseeing the Mareva injunction to be notified.

BDO subsequently reported that the gas station was no longer operating and that all inventory had been removed before the receiver took possession. The receiver also disclosed that the companies' director had not provided the requested books and records, leaving limited financial information available to assess the businesses and their assets. BDO indicated that it would not reopen the gas station and instead intended to conduct a sales process.

BDO is the receiver. Counsel includes Miller Thomson for BMO.