One of the highest profile insolvency cases in Metro Vancouver has reached a relatively tidy conclusion, with the Supreme Court of British Columbia approving the sale of the property last week.
The property at hand is 1045 Haro Street and 830-846 Thurlow Street, where developers were planning 55- and 15-storey towers with a total of 516 units, along with retail space, a childcare facility, and a new public plaza.
The legal owner of the property is Harlow Holdings Ltd. and the project was being undertaken by Haro-Thurlow Street Project Limited Partnership (HTLP), which consists of three parties with varying interest stakes: 11044227 BC Ltd. (45%), Forseed Haro Holdings Ltd. (45%), and Terrapoint Developments Ltd. (10%).
11044227 BC Ltd. is beneficially owned by Kang Yu Canning Zou, while other entities controlled by Zou, along with Forseed and Terrapoint, were guarantors of the debt owed to the first-ranking secured lender syndicate comprised of the Bank of Montreal, Canadian Western Bank, and Meridian Credit Union.
As first reported by STOREYS, the project was placed under receivership on January 11, after not being able to get off the ground for over five years. An attempt was made to sell the property last year, but a proposed transaction fell through, and the owners defaulted on their interest payment in July 2023, leading to the receivership.
The Sale
An image from CBRE's sales brochure showing 1045 Haro Street and 830-846 Thurlow Street.(CBRE)
The 1045 Haro Street property was listed for sale in late-March by Tony Quattrin, Jim Szabo, and Carter Kerzner from CBRE Vancouver's National Investment Team, after a selection process that saw seven brokerages enter their names into the ring. CBRE's listing agreement granted them a commission rate of 0.60% on the gross selling price.
After sending out two waves of emails to over 1,600 prospective buyers, a total of nine interested buyers progressed to the stage of signing a confidentiality agreement, with four ultimately submitting bids. A summary of the bids was submitted to the court, but is under seal.
In May, the Receiver met with the two parties that submitted the highest bids, ultimately entering into a purchase and sale agreement with Chard Development on June 28.
The purchase price is also under seal, but court documents note that Chard previously submitted a bid of $93 million during the previous attempt to sell the property in 2023 — also led by CBRE. As another comparison point, BC Assessment also values the property at $98,077,000. Additionally, Haro-Thurlow Street Project Limited Partnership originally acquired the property for around $173 million and the outstanding debt is at $86.7 million as of July 26, according to the Receiver.
After reaching the purchase and sale agreement in late-June, the Receiver and Chard Development subsequently renegotiated the deal to use a reverse vesting order, rather than the traditional approval and vesting order commonly seen in insolvency proceedings.
In traditional vesting orders, the desired assets of an insolvent company are transferred — "vested" — to the buyer. However, with reverse vesting orders, the undesired components of the insolvent company are transferred to a third company specifically incorporated to hold them, then assigned into bankruptcy, while the buyer instead purchases the shares of the insolvent company that retains the desired assets.
The result is a change in control rather than a transfer of assets, and the mechanism is likely to grow in popularity in insolvency proceedings after a recent precedent-setting ruling by the Court of Appeal for British Columbia, which recognized reverse vesting orders as a way of improving recovery for creditors, as the mechanism creates a transaction that isn't subject to the property transfer tax. The ruling came from an appeal stemming from the receivership proceedings of the Southview Gardens property formerly owned by Coromandel Properties.
The Supreme Court approved the sale of 1045 Haro Street via a reverse vesting order on Friday, August 23.
1045 Haro Street
The apartment building that currently occupies 1045 Haro Street in Vancouver.(CBRE)
What happens next depends on what Chard Development plans to do with the site, which is currently occupied by a seven-storey rental building constructed in 1980 with 160 units along with a three-storey commercial building at the intersection of Haro Street and Thurlow Street.
STOREYS reached out to Chard Development, who declined to comment on whether the company's intention is to carry on with the 55- and 15-storey towers planned by the previous developer (and designed by Patkau Architects), pursue a development along the lines of the twin 21-storey towers that was suggested as a possibility by CBRE in its sales brochure, or explore an entirely new form.
However, President & CEO Byron Chard provided the following statement to STOREYS: "We look forward to working with the local neighbourhood, the business community, and existing tenants to understand the needs of the existing building, neighbourhood and support our mission of expanding Vancouver's housing continuum."
According to City of Vancouver records, there hasn't been a new rezoning application submitted for the site to date.
