Why Control of the SID Companies Passed to the Monitor
News reports in June and July 2024 said the landlords behind SID Developments were ordered to give up control of their companies, or handed it over. This page sets out how that happened, from the court record.
Control passed under an order made on consent on June 25, 2024. No court found wrongdoing. The day before, the court had held that the companies "are entitled to test the evidence put against them" by cross-examination. The motions were then resolved on consent without a contested hearing, and the court recorded that "no approval is sought at this time with respect to the Fourth Report or the activities summarized therein".
The two weeks before the order
The Monitor files its Fourth Report. The report states that the Monitor "has not audited, or otherwise attempted to verify" the financial information "in a manner that complies with Canadian Auditing Standards". Fourth Report of the Monitor, redacted (Jun 11, 2024), s.3.0 para 3
The secured lenders' motion to expand the Monitor's powers is scheduled, with the Fourth Report as "the principal evidentiary basis". Motion Record of the Applicants (Jun 20, 2024), including the affidavit of Robert Clark, Exhibit O, cover letter
The companies send the Monitor a letter identifying more than 30 issues with the report and ask for a revised report. Motion Record of the Applicants (Jun 20, 2024), including the affidavit of Robert Clark, Clark affidavit para 70, Exhibit O
The companies file sworn evidence in response. Motion Record of the Applicants (Jun 20, 2024), including the affidavit of Robert Clark, Clark affidavit para 72
The Monitor files a supplement. It records that a draft of the Fourth Report "was not provided to any party (including the Applicants) prior to it being filed with the Court", and says the companies' materials "do not change the principal conclusions" of the report. No revised report is issued. Supplement to the Fifth Report (Jun 23, 2024), s.2.0 paras 1 and 2
The court holds that the companies "are entitled to test the evidence put against them" by cross-examination. Endorsement of Justice Osborne (Jun 24, 2024), para 13
The motions are resolved on consent without a contested hearing. No approval of the Fourth Report is sought. The report is not tested in court. Endorsement of Justice Osborne (Jun 25, 2024), paras 2 and 8
What the order did
The order expanded the Monitor's powers so that it would "effectively have the powers which may be properly exercised by a Board of Directors or the officers of the Applicants". A companion order ended the companies' obligation to respond to investigation requests.
Thereafter the Monitor controlled the companies' bank accounts, carried out the sale process, arranged the transfer of property management to a replacement manager, and negotiated the terms of the replacement DIP loan.
How the Monitor's investigation began
The Monitor's investigation began four months earlier, with the companies' consent. In February 2024 the court recorded that the Monitor's investigation powers were "requested by the Secured Lenders and supported by all other parties".
The companies' sworn evidence is that they consented "in a good-faith effort to address the concerns raised by the Objecting Lenders with the impression that their value accretive renovation efforts could proceed as intended under the Monitor's oversight". Under the same order every payment by the companies required "the prior written consent of the Monitor". By June 20, 2024, $748,502.86 had been provided for renovations.
What the record shows about the five months before the order
The Monitor's reports show that tenanted units rose from 424 to 456 of 631 in the first five months of the proceeding, and that gross monthly rent rose from about $500,000 in January 2024 to about $564,000 in June 2024.
The companies' sworn evidence of June 20, 2024 is that they "did not have access to funds to commence their intended renovations until February 26, 2024", that "only approximately $748,502.86 of the DIP Facility has been provided to the Applicants for renovations", that "The remainder of the renovations have been funded by the Applicants' rental revenue", and that "the Applicants have renovated approximately 90 units to date".
The same sworn evidence states that the lender representatives "have opposed and frustrated various of the Applicants' proposed steps and good faith efforts to find constructive solutions in these CCAA proceedings, often with little to no explanation provided for the basis of their position".
After the order
The group's management company kept running the homes after the order. A month later the Monitor reported that SID Management "is currently the property manager of the Portfolio", and that during a transition expected to take 60 days SID Management and the incoming manager "will be co-acting as property manager to facilitate a smooth transition".
The Monitor's cash table shows $10.09 million of professional fees and $1.99 million of DIP lender interest and fees paid to July 2, 2026.
No court finding: the direct answer · The June 2024 report · The response, item by item · Cost of the CCAA · What was reported · Robby Clark and SID Developments
- The court referred to "the very serious nature of the allegations" and recorded that the stakeholders, including all of the secured and unsecured lenders, "have lost all confidence in management of the Applicants". Endorsement of Justice Osborne (Jun 24, 2024), para 14; Endorsement of Justice Osborne (Jun 25, 2024), para 5
- The motion to expand the Monitor's powers was brought by the secured lenders, and the companies consented to the order. Motion Record of the Applicants (Jun 20, 2024), including the affidavit of Robert Clark, Exhibit O, cover letter; Endorsement of Justice Osborne (Jun 25, 2024), paras 2 to 4
- The Monitor said the companies' response letter and motion record "do not change the principal conclusions reached in the Monitor's Fourth Report". Supplement to the Fifth Report (Jun 23, 2024), s.2.0 para 2