Over 400 properties were mismanaged, leaving tenants and investors in limbo
A high-profile real estate bankruptcy involving more than 400 properties across northern Ontario is entering its final chapter, with the majority of the portfolio already sold and the remainder moving toward open-market liquidation.
According to KSV Restructuring, the court-appointed monitor overseeing the insolvency process under the Companies’ Creditors Arrangement Act (CCAA), 321 properties have been sold to date, and 12 more are under active bid as part of a second credit bid round. That leaves 74 properties still to be liquidated through open market sales in the coming months.
The case centres around a group of 11 interrelated companies that launched in January 2024 under the CCAA after defaulting on substantial debts tied to residential holdings in Timmins, Sault Ste. Marie, Sudbury, Kirkland Lake, and Temiskaming Shores.
The portfolio included 407 properties with 631 residential units, spanning everything from single-family homes to small apartment buildings, CCAA documents showed.
Inflated valuations
Initially, the companies behind the real estate venture claimed the properties were worth $140 million. But KSV’s investigation found that estimate to be grossly inflated and sourced from entities affiliated with the now-bankrupt firms. The inflated values were allegedly used to secure more investor financing.
The monitor uncovered serious financial mismanagement, including "a pervasive lack of proper record keeping, particularly for a business with assets and liabilities with a book value in the hundreds of millions of dollars,” and “a myriad of other deficient business practices.”
The companies had set up a separate corporation to oversee renovations and property management, but charged themselves excessive administration fees and failed to complete much of the promised work. Investigators also flagged questionable expenses, including extravagant travel, luxury purchases, and large dividend payouts, all while the businesses were failing to turn a profit.
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In several instances, the companies took out multiple mortgages on the same properties to maintain liquidity, further complicating the financial fallout.
Final sales
At present, 86 properties remain, with about half still occupied by tenants. Of the 12 properties currently under bid, seven are tenanted. KSV has begun listing the remaining 74 properties in small batches to avoid overwhelming the local real estate markets. So far, 26 of these have been listed, with bids received on four.
The revenue from ongoing sales is being used to repay a debtor-in-possession (DIP) lender, which provided funding to keep the companies operating during the CCAA process. The first DIP loan of $15 million has been repaid through earlier property sales. A second DIP loan with a $3.7 million balance remains outstanding.
KSV is seeking court approval on April 14 for a streamlined process that would allow it to sell the remaining assets more efficiently and with lower administrative costs. The current plan is to wrap up the liquidation and finalize the process by August 31, 2025.
Lawsuits against the individuals involved in the companies are on hold until the CCAA process is officially completed.
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