Where the Money Went: What the Court Record Shows
This page sets out where the SID companies' money went, using the Monitor's table of the companies' bank accounts and the companies' filed response. Each block says whose statement it is.
On the Monitor's table, the largest use of money leaving the companies was debt service: $24.69 million, about 43 per cent of all payments outside the eleven companies. The spending the Monitor's report says appears personal was "in excess of $1 million" over about five years. The report's conclusion states that the funds used to purchase and renovate the properties "do not appear to have been used for an improper purpose". No court has found that the companies or their principals misappropriated funds.
The Monitor's cash table, 2019 to January 2024
The Monitor "prepared a statement of receipts and disbursements based on the Applicants' bank statements for the period from 2019 through to the CCAA filing date (January 23, 2024)". The table is unaudited. It covers only what passed through the companies' bank accounts.
Transfers of $12.34 million between the eleven companies are excluded. Related party payments were $20.29 million gross, and $6.86 million came back from related parties, for a net of $13.43 million. The table is unaudited.
Source: Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.5 para 1 and Appendix 2
| Line in the Monitor's table | Amount | Share of payments outside the companies |
|---|---|---|
| Debt service | $24.69 million | 43.0 per cent |
| Related party | $20.29 million | 35.3 per cent |
| Utilities, renovations and repairs and maintenance | $3.62 million | 6.3 per cent |
| Credit Card payments | $3.48 million | 6.1 per cent |
| Other | $2.26 million | 3.9 per cent |
| Insurance | $1.62 million | 2.8 per cent |
| Professional Fees | $0.76 million | 1.3 per cent |
| Retail, Travel and Meals and Entertainment | $0.68 million | 1.2 per cent |
| Intercompany (money moved between the eleven companies) | $12.34 million | excluded |
| Total disbursements | $69.74 million |
Source: Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.5 para 1. The shares are this site's arithmetic: each line divided by the $57.39 million paid outside the eleven companies.
Receipts on the same table total $69.59 million: lender funding and proceeds from the Core sale $40.02 million, intercompany $12.36 million, rental income $8.20 million, related party $6.86 million and other $2.15 million.
The table does not include money that never reached the companies' bank accounts. The companies' filed response is that all or substantially all of the first mortgage proceeds, about $81.5 million, went to acquire the properties and "were never available for any other use", that about $16.8 million of promissory note proceeds went to closing costs and other payments, and that about $13.6 million was spent on renovations.
The 2022 sale of 223 homes
The Monitor's report puts the total disbursed from the 2022 sale "to the Applicants, Principals and non-Applicant related companies" at $22,682,895.92, of which $11,082,375.97 "appears to have been paid to the Applicants in the form of promissory notes". The report states that the Monitor "is unable to prepare" a proper accounting of the sale proceeds.
The companies' sworn evidence is that the $22,682,895.92 is the trust ledger's line for "Disbursements Before Promissory Notes", and that the $11,082,375.97 repaid promissory notes owed to unsecured lenders: "No such funds were paid to the Applicants or their principals in the form of promissory notes." After those repayments the vendors' counsel's trust ledger shows $11.6 million for the sellers.
The "millions" figure and the "in excess of $1 million" figure
- "Millions". Transfers to the principals or their companies "totalled millions of dollars and accelerated the Applicants' liquidity crisis that resulted in these CCAA proceedings". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.1 para 1
- "In excess of $1 million". The amount the report says was used "to directly pay for expenses that appear personal in nature". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.1 para 3
- $13.43 million net. The report's table of payments to all related people and companies: $20.29 million paid, $6.86 million received back. Fourth Report of the Monitor, redacted (Jun 11, 2024), Appendix 2
- "May be legitimate". Purchases at Home Depot and from contractors "may be legitimate business expenses". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.5.2 para 6
- "Appear to be business-related". On the one corporate credit card, "the majority of the expenses incurred appear to be business-related expenses", the Monitor adding "albeit potentially on behalf of non-Applicant companies". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.5.5 para 2
- "May have been justified". "The Monitor accepts that some payments to the Principals may have been justified as reimbursement for the Principals' use of personal credit cards to make bona fide business purchases for the Applicants." Fourth Report of the Monitor, redacted (Jun 11, 2024), s.7.0 para 3
The only figure the report itself describes as expenses that "appear personal in nature" is the "in excess of $1 million". The report treats the larger transfers as unjustified because, in its words, "there was little or, in some cases, no justification proffered".
The companies' filed response is that about $4.4 million of about $6 million paid to the principals reimbursed business expenses charged to personal cards, that card statements and a sample of receipts were delivered to the Monitor, and that management generally took no salary.
What the loan documents said
The companies' sworn evidence is that the promissory notes "do not contain any covenants, representations and/or warranties regarding the use of the funds". The two note terms the Monitor's report quotes deal with repayment and with registration on title.
Professional fees beside the $1 million
Over the five years on the Monitor's table, the companies paid $756,000 in professional fees.
In April and May 2024, the two months before the report was filed, the Monitor and its counsel billed $1.58 million before tax. Professional fees in the proceeding reached $10.09 million by July 2, 2026.
What the court has decided
On June 24, 2024 the court held that the companies "are entitled to test the evidence put against them" by cross-examination. The motions were resolved on consent the next day, and the court recorded that "no approval is sought at this time with respect to the Fourth Report or the activities summarized therein".
No court finding: the direct answer · The $1 million, in context · The Core Sale · The $144 million · Who raised the money · Cost of the CCAA · Robby Clark and SID Developments
- The Monitor's report alleges that significant funds were regularly diverted to the principals and their corporations, and its table puts net payments to related people and companies at $13,426,637. Fourth Report of the Monitor, redacted (Jun 11, 2024), s.7.0 para 2 and Appendix 2
- The report says the companies did not identify which notes were repaid on the 2022 sale or document a discharge of the debt. Fourth Report of the Monitor, redacted (Jun 11, 2024), s.4.5 paras 5, 6 and 9
- The Monitor's Fourth Report describes the companies' books and records as incomplete and says many transactions could not be traced. Fourth Report of the Monitor, redacted (Jun 11, 2024), s.2.3
- The $81.5 million, $16.8 million and $13.6 million figures are the companies' filed position. The Monitor's table does not show them. Motion Record of the Applicants (Jun 20, 2024), including the affidavit of Robert Clark, Exhibit O, item A.1