The out-of-town landlords behind nearly a dozen corporations that racked up $144 million in debt buying up hundreds of rental properties across Ontario will continue to have court-ordered protection from their creditors until the end of October.
Court filings from the group’s insolvency show that KSV Restructuring Inc. — in its role as court-appointed monitor overseeing the Companies' Creditors Arrangement Act (CCAA) proceedings — required more time to finalize terms of the restructuring, with the goal of exiting the insolvency process before creditor protection expires Oct. 31.
A document outlining the terms and conditions for the sale and liquidation of real estate assets, known as a restructuring term sheet, has also been approved in Ontario Superior Court.
The term sheet allows for both first and second mortgagees to place credit bids, using their secured debts, in order to take ownership of their respective properties. It replaces the initial Sales and Investment Solicitation Process (SISP), which faltered after KSV Restructuring determined that none of the 464 letters of intent received provided “sufficient proceeds” to repay both secured lenders and a $12-million debtor-in-possession (DIP) credit facility in full.
The deadlines for first and second mortgagees to submit credit bids on properties is Sept. 20 and Sept. 30, respectively. Properties that are not subject to credit bids, meanwhile, will be held in a portfolio that will be maintained by a property manager and governed by a CEO in order to “maximize value for the portfolio over an orderly liquidation process to be undertaken following these CCAA proceedings,” according to recent court filings.
The imminent liquidation of properties brings an end to a real estate empire that boasted more than 600 rental properties in Ontario, all of them acquired through 11 corporations closely linked to SID Developments and its founder, former YTV child actor Robby Clark. Collectively, the group owns 200 units in Sault Ste. Marie, 65 of which remain vacant.
The group of companies — helmed by landlords Dylan Suitor, Ryan Molony and Clark’s wife, Aruba Butt — was granted court-ordered protection from numerous lenders in January, claiming more than $100 million in debt and less than $100,000 in cash on hand. The creditor protection also extends to more than 30 civil lawsuits filed against the group.
An investigation by KSV conducted earlier this year found the landlords “diverted, misused or misappropriated funds” borrowed from lenders — with some of it covering a number of extravagant purchases such as private jets, luxury hotels and a $5,000 tab at a Miami strip club — all while struggling to pay municipal taxes, utility bills and contractors.
The monitor was granted expanded powers in court this summer, giving KSV complete control over all business and financial aspects of the SID-affiliated companies after lenders reportedly “lost all confidence” in the management practices of the landlords, according to court documents.
A recent invoice from KSV shows that it’s been communicating extensively with the City of Sault Ste. Marie with respect to a fire that took place at a vacant Albert Street East home owned by the group in June, in addition to a court order related to the demolition of a multi-residential home on Wallace Terrace.
In order to facilitate the conclusion of the insolvency process, the $12-million DIP facility has been increased to $15 million in order to fund the costs of the CCAA proceedings until the end of next month.