Ontario home developer agrees to place several GTA townhome projects into receivership
CBC
An embattled Greater Toronto Area home developer facing multi-million dollar allegations of financial wrongdoing has agreed to the appointment of a third-party receiver to manage the potential sale of several uncompleted townhome developments, throwing the future of hundreds of pre-sold homes into doubt.
More than a dozen lawyers representing the developer — Woodbridge, Ont.-based StateView Homes — attended a virtual hearing of the Superior Court of Justice of Ontario Tuesday, along with three of its lenders, the proposed receiver and other stakeholders.
The purpose was for the lenders to ask the court to appoint KSV Restructuring Inc. as receiver for six residential townhouse developments and other properties after they launched civil lawsuits demanding repayment of almost $200 million in loans.
A lawyer representing StateView and its affiliated companies told the hearing that the developer consented to the appointment.
"We view this as the best way forward to make sure that these projects have the best chance of succeeding and that the purchasers get the homes they've bought," lawyer James Renihan, representing StateView, told the court.
Last week, CBC Toronto reported that lenders Kingsett Mortgage Corporation, Dorr Capital Corporation and Atrium Mortgage Investment Corporation launched court actions after learning that TD Bank had accused StateView, 25 associated corporations, five directors and executives of perpetrating an alleged year-long "cheque-kiting" scheme that cost the bank $37 million.
StateView Homes blamed the alleged fraud, which TD alleged involved the cashing of thousands of bad cheques from both corporate and personal accounts at other banks, on its former chief financial officer.
Kingsett and Dorr alleged they weren't informed that StateView had entered into a settlement agreement with TD to immediately begin repaying the $37 million. The lenders also alleged that StateView had "effectively has no liquidity" and had missed monthly interest payments, among other financial issues.
"The StateView companies and their owners had no knowledge or involvement of the irregularities that led to these problems and are working hard to fix them, and we're working hard to do that through this receivership process," Renihan reiterated in court today.
Justice Jana Steele, who presided over the hearing, still has to sign off on the agreement to appoint a receiver.
A receivership is a way for secured creditors to recover debts they are owed by taking possession of assets or property and selling or liquidating them to repay the outstanding debt.
According to prior court filings, the three lenders were asking the court to appoint a receiver for six residential developments for which they lent money, some of which are already under construction and others that are in the pre-construction stage. In all, more than 700 homes are planned for the sites, many of which have been pre-sold.
The StateView developments include:
The lenders also asked in those filings to appoint a receiver for two properties in Kleinburg, Ont., that are owned by Highview Building Corp., a subsidiary of StateView Homes, and a commercial industrial property owned by TLSFD Taurasi Holdings.
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