A mixed-use developmet proposed for Moss Park is in jeopardy after a popular Toronto events company entered into receivership.
According to court documents, Berkeley Events has been in default of its obligations to TD Bank since October 2022, and owes over $10M, not including legal fees and interest. On July 31, msi Spergel Inc. was appointed receiver of Berkeley Events, which operates the Berkeley Church at 315-317 Queen Street East, a well as the Berkeley Fieldhouse at 311 Queen Street East and La Maquette at 111 King Street East.
Berkeley Events is comprised of five companies, including 1871 Berkeley Events Inc. and 111 King Street East Inc., all owned by Douglas Wheler.
In March, in response to a submission from TD that the Superior Court of Justice appoint a receiver, Wheler wrote that such action was not “necessary or appropriate,” in part because the immediate sale of Berkeley Church would be “highly prejudicial” to an adjacent property that is slated for redevelopment.
The property in question — 301-311 Queen Street East — is zoned for a 19-storey mixed-use tower which includes 144 new condo units. Based on the development, the land has been appraised at $36M.
The development application was initially submitted to the City of Toronto in 2016, and the Ontario Land Tribunal granted zoning approval in August 2022. BDP Quadrangle has signed on as the architect for the project, while Harvey Kalles Real Estate and Colliers are acting as real estate agents and advisors.
In order for the development to proceed as approved and as appraised, it requires use of the courtyard adjacent to the Berkeley Church, as the proposed tower overhangs the space. In other words, the courtyard needs to be severed from the church property and transferred to any potential purchaser of the project.
If a receiver were to be appointed, Wheler argued, the Berkeley Church would likely be sold on an “as is” basis, without the courtyard being severed. This would have “highly irrational and prejudicial consequences to a host of third parties.”
The years-long development process would be wasted, and the market value of the lands would be “severely impaired.” Such a scenario would be harmful to Equitable Bank, which holds a mortgage on the development site for $20.2M, as the appraised value is based on the viability of the development. As well, the 144 new homes included in the project would be eliminated in the midst of Toronto’s housing supply crisis.
According to the documents, a “temporary bottleneck in the progress of the project” has arisen which has thus far prevented the severance of the courtyard.
One of Wheler’s companies owes the Canada Revenue Agency (CRA) $252,937.69. This indebtedness to the CRA is in first position on the Berkeley Church.
In order for the courtyard to be severed and the development project sold, Wheler must first enter into a Section 37 agreement with the City of Toronto, as instructed in the OLT’s decision. But, the City requires that a Section 37 agreement be registered in first position on the lands.
Wheler has attempted to pay the CRA using funds on deposit at TD, but the bank has “refused to cooperate,” on the grounds that Wheler’s indebted company is in default of a loan with TD itself.
“TD’s refusal to pay off the CRA indebtedness has also prevented the Developers from obtaining a severance of the courtyard because this cannot occur until the section 37 agreement has been registered,” the document reads. “In turn, therefore, neither the property nor the development site can be sold until the severance has been completed.”
Wheler said that instead of appointing a receiver, it would be “most appropriate” that additional time be allowed to either sever the courtyard and sell the Berkeley Church, or sell the church together with the development site.
The receivership order was issued on July 7, but held in abeyance until July 31 to allow Berkeley Events to pay their debts to TD Bank by July 28. The company failed to pay, and the receivership became effective on Monday. When contacted by STOREYS on Thursday, Wheler declined to comment.
After reviewing Berkeley Event’s financial situation, msi Spergel Inc. determined the company “had no cash resources to operate.” In addition to jeopardizing the development, the insolvency has resulted in dozens of cancelled weddings and events at Berkeley Church, Berkeley Fieldhouse, and La Maquette.
The development site is currently listed for sale with the aforementioned $36M price tag. The Berkeley Church — without the courtyard — is for sale for $22.5M.
