The start of May brought yet another instance of a housing provider filing for creditor’s protection, recent court documents show. This is emerging as something of a trend not only in Ontario, but across Canada as well, as businesses struggle to stay afloat in these economically uncertain times.
According to an initial order filed with the Ontario courts on May 3, 2024, Clarkson Road Developments Ltd and Eleven 11 LP — owners of a residential development project located at 111 Clarkson Road in Mississauga — have obtained protection under the Companies' Creditors Arrangement Act (CCAA), which essentially means that PwC Canada will be closely monitoring the financials of the company from here on out.
According to the May 3, 2024 order, Clarkson was afforded “stay protection period” for a 10-day period, limited court-ordered charges, and $100,000 “to provide sufficient financing for necessary expenses and necessary relief during the initial stay period to pave the way for a sale process.”
However, a May 10, 2024, document then says that, although a sales proceeding was started, a “viable” sale of the property wasn’t secured, and, as a result, the aforementioned stay protection period has since been extended to August 4, 2024, “to allow for a sales and investment solicitation process (SISP) to be run to find a new owner or investor in the project,” according to information supplied to STOREYS by PwC.
The SISP is being run by Taylor Clements and Casey Gallagher, who are both members of CBRE’s National Investment Team.
'Applicants Are Insolvent'
Back-tracking a bit, the May 2, 2024 ‘factum of the applicants’ explain that the property at 111 Clarkson Road in Mississauga comprises of a residential development that was slated to include townhouse units, as well as a commercial component and underground parking.
“As a result of a dispute with the general contractor [Kenaidan], construction on the site is on hold,” the factum says. “At this stage, approximately 60% of the parking structure is at grade level, with the remainder below grade and not fully covered or sealed.”
That court document also notes that, “given the current status of the project, it is critical that certain work continue to preserve and protect the site, including fencing on the site protecting below-grade portions of the underground structure, dewatering, and daily safety and structuring monitoring.”
“While such expenditures are critical, due to a variety of factors, including increased cost and the dispute with the construction manager, the applicant entities are unable to satisfy their obligations as they become due and are insolvent.”
The project has accrued construction liens in the approximate total of $27M, and that sum is due to a secured lender known as CS Capital Limited. CS Capital is not a “traditional mortgage lender” the court documents say. Rather, they are the "‘successor in interest to the original vendor, which is QRC Limited Partnership.
“QRC provided a vendor take-back mortgage in the principal amount of $20M when Eleven purchased shares and limited partnership units of the entities that own 111 Clarkson,” the court documents say, later adding that that vendor take-back mortgage is currently in default.
The terms of these filings: the debtor must secure interim financing to “preserve and enhance” the project. As well, they have to develop and implement a plan to “realize the value” of 111 Clarkson “in a quick and efficient manner.”
During the CCAA process, the project “will continue to have access to management employees to assist during the sale and investor solicitation process, and in any transition that may be required as part of the sale.”
