Refinancing offers before the filing
Before the CCAA filing the companies had received refinancing term sheets of about $70M and about $89M, according to their sworn evidence.
A letter of about $89M equals about 99% of the secured mortgage debt. The term sheets themselves are not on the public record.
Source: Pre-Filing Report of the Proposed Monitor (Jan 2024), s.2.0 para 7, s.3.1.1 to 3.1.2 (first mortgages of about $81.5 million and second mortgages of about $8.6 million). Offer amounts, described as about $89M and about $70M: Affidavit of Robert Clark sworn Mar 27, 2024, para 14.
Secured mortgage debt at filing was about $90.1M: first mortgages of $81,455,930 and second mortgages of $8,642,697 as at December 31, 2023. Total debt including about $54.2M of unsecured notes was about $144.35M.
The companies' sworn evidence records refinancing term sheets of about $70M and about $89M before the filing.
The companies' March 2024 evidence states that completing the unrenovated properties was integral to their refinancing efforts, and that they expected refinancing equal to or above the pre-filing term sheets.
The 2024 sale process produced 12 letters of intent for third-party sales or refinancings. The Monitor reported that none provided value above the debt owed, and it determined not to pursue any of them.
Market context, 2022 to 2025
Monthly policy rate. The rate peaked at 5% from July 2023 to May 2024 and was 2.25% by October 2025. The Monitor's Fifteenth Report, dated July 21, 2026, shows the proceedings still open.
Source: Bank of Canada: target for the overnight rate, monthly (Valet data); filing: First Report of the Monitor (Jan 29, 2024); renovations: Fifth Report of the Monitor (Jun 17, 2024), Appendix D, note 4; credit bids: Eleventh Report of the Monitor (Feb 20, 2025), background para 2; Thirteenth Report of the Monitor (Jul 21, 2025); Fifteenth Report of the Monitor (Jul 21, 2026)
| Date | Bank of Canada policy rate | Source |
|---|---|---|
| Jul 12, 2023 | Raised to 5% | Bank of Canada rate announcement (Jul 12, 2023) |
| Dec 6, 2023 | Held at 5% | Bank of Canada rate announcement (Dec 6, 2023) |
| Jan 2024 (filing) | 5% | Bank of Canada rate announcement (Dec 6, 2023); Bank of Canada rate announcement (Jun 5, 2024) |
| Jun 5, 2024 | Cut to 4.75% | Bank of Canada rate announcement (Jun 5, 2024) |
| Jul 24, 2024 | Cut to 4.5% | Bank of Canada rate announcement (Jul 24, 2024) |
| Dec 11, 2024 | Cut to 3.25% | Bank of Canada rate announcement (Dec 11, 2024) |
From January 1, 2023 federal law has prohibited non-Canadians from purchasing residential property, directly or indirectly. In March 2023 the regulations were amended, including raising the control threshold for corporations from 3% to 10%. On February 4, 2024 the government extended the ban from January 1, 2025 to January 1, 2027.
DBRS Morningstar reported that the Canadian commercial mortgage-backed securities market closed only one transaction in 2021 and only one in 2022. A 2025 trade report, citing Commercial Mortgage Alert, put 2024 issuance at three deals totaling $990 million, with two more priced early in 2025. No 2023 count was found.
The companies' sworn evidence states that refinancing efforts resumed in August 2022, that the Bank of Canada's rate increases from March 2022 and falling home prices undermined a refinancing through a mortgage-backed security product with a major Canadian financial institution, and that more than 60 financial institutions were approached in 2023, none with a product suited to the business. It also records a $70 million letter of intent received on October 5, 2023.
The sale process produced 12 letters of intent. The Monitor said none would repay the DIP and the secured lenders in full, and the offers were conditional on a change of management. Their values are sealed. A credit bid by the secured lenders replaced the second phase of the process.
- The term sheets were received before the filing and are described only in the companies' own evidence.
- The comparison is to mortgage balances as at December 31, 2023.
- No letter of intent in the 2024 sale process offered enough to repay the DIP lender and the secured lenders in full. Seventh Report of the Monitor (Aug 23, 2024), s.3.0; Endorsement of Justice Osborne (Dec 6, 2024), para 9