The Monitor, in Its Own Words
Every statement on this page was written or said by the Monitor, KSV Restructuring, or by its counsel, and each is quoted from a document the Monitor itself filed with the court. They are set side by side without comment. The reader can compare them.
| Subject | What the Monitor said | What the Monitor also said |
|---|---|---|
| The companies' conduct | April 2024: "the Applicants are acting in good faith and with due diligence to advance these CCAA proceedings". Third Report of the Monitor (Apr 2024), s.7.0 para 2(a) | June 11, 2024: the transactions "form a pattern of unjustifiable defalcation of funds lent to the Applicants by Investors". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.1 para 2 |
| Whether the numbers were checked | June 11, 2024: the Monitor "has not audited, or otherwise attempted to verify" the financial information, and parts of the report "could be subject to revision". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.3.0 paras 3 and 8 | The same report: funds appear to have been "diverted, misused or misappropriated". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.4 para 6 |
| Where the $11.08 million went | May 8, 2024, the Monitor's counsel, summarizing the broker's evidence back to her: "proceeds of the sale get paid to Lion's Share. Some of these are retained by Lion's Share to discharge Lion's Share's loans and the other stream is then disbursed by Lion's Share to the individual lenders". Monitor's Document Brief to the Fourth Report, Vol. 5 (Jul 5, 2024), including the interview transcript of Claire Drage (May 8, 2024), Drage transcript, following q. 173 | June 11, 2024: the $11,082,375.97 "appears to have been paid to the Applicants in the form of promissory notes". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.4.5 para 5 |
| What the homes were worth | January 2024: the properties have "an estimated aggregate appraised value of approximately $173 million", based on appraisals of about 30 per cent of them. Pre-Filing Report of the Proposed Monitor (Jan 2024), s.2.0 para 4 | December 2024: the court recorded the Monitor's conclusion that a $140 million valuation put forward by the principals was "not credible". Endorsement of Justice Osborne (Dec 6, 2024), paras 10 to 11 |
| Finishing the vacant units | January 2024: the DIP loan "provides immediate capital to renovate 98 properties, which is expected to result in additional annual operating cash flow of approximately $5 million, which will make a refinancing of the whole portfolio significantly more viable". First Report of the Monitor (Jan 29, 2024), s.5.2 | June 2024: "The Monitor does not intend approving any additional renovation costs." By then $748,502.86 of a renovation budget of about $4.1 million had been provided. Fifth Report of the Monitor (Jun 17, 2024), Appendix D, note 4; Motion Record of the Applicants (Jun 20, 2024), including the affidavit of Robert Clark, Clark affidavit para 33 |
| How much was owed on the notes | At filing: $54.2 million of promissory notes, the figure the $144 million headline debt was built on. Third Report of the Monitor (Apr 2024), s.2.0 | Later: the $54.2 million is "the amount initially provided by Ms. Drage", and a reconciliation "has not been completed". The broker admitted to fraud in December 2025. Eleventh Report of the Monitor (Feb 20, 2025), s.2; OSC Settlement Agreement, Claire Drage et al. (Dec 16, 2025), para 52 |
| Money to related companies | June 11, 2024: "One of the most significant findings of the Investigation was the large amount of net disbursements to related parties." Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.5 para 2 | The same report lists five related companies whose dealings "resulted in net funds being paid to the Applicants", about $478,000 in total. Fourth Report of the Monitor, redacted (Jun 11, 2024), s.5.3.4 para 3 |
| The money for buying and renovating the homes | June 11, 2024: the transactions "form a pattern of unjustifiable defalcation of funds lent to the Applicants by Investors". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.1 para 2 | The same report, in its conclusion: "The funds that were used to purchase and renovate the Applicants' properties do not appear to have been used for an improper purpose." The same paragraph goes on to allege that significant funds were regularly diverted to the principals and their corporations. Fourth Report of the Monitor, redacted (Jun 11, 2024), s.7.0 para 2 |
| The spending called personal | June 11, 2024: "In excess of $1 million" was used for expenses that "appear personal in nature". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.1 para 3 | The same report: purchases at Home Depot and from contractors "may be legitimate business expenses". Its only private jet figure is $42,174.66, described as "a private jet rental". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.5.2 para 6 and s.5.3.5 para 2 |
Context a fair reader should have
- The statement about good faith was made in support of a stay extension and before the Monitor's interviews of the principals, which took place in late April and May 2024.
- The $173 million was an estimate extrapolated from 2023 appraisals of about 30 per cent of the homes. Before filing, the companies had received refinancing term sheets of about $70 million and about $89 million. Pre-Filing Report of the Proposed Monitor (Jan 2024), s.2.0 para 4; Affidavit of Robert Clark sworn Mar 27, 2024, para 14
- The court referred to "the very serious nature of the allegations" in the Fourth Report, and held that the companies were entitled to test the report by cross-examination. Endorsement of Justice Osborne (Jun 24, 2024), paras 13 and 14