Case Background:

• Loan Details:

  • A $39 million loan granted in 2023, secured by a first mortgage of $42.9 million on the "Hinton Properties" (apartment complexes and commercial rental units) and a general security agreement.
  • The loan matured on June 1, 2024, and remains unpaid, with $2 million in accrued interest.

• Financial Issues:

  • The defendants, Ecre Smart Living Hinton Inc., Smart Living Management Inc., Ecre Hinton Limited Partnership, SLH Hinton LP., have defaulted. Rent collections from the properties fall short of the monthly interest owed.
  • $500,000 in unpaid municipal taxes further complicates the matter, undermining confidence in the defendants' management.

Legal Framework:

• Application: Under subsection 243(1) of the Bankruptcy and Insolvency Act and section 101 of the Courts of Justice Act for the appointment of a receiver.
• Key Test: The court must determine whether it is "just or convenient" to appoint a receiver, considering factors like asset protection, risk to creditors, and contractual rights.

Court Decision:

• Factors Considered:
  • There is a contractual right for receivership upon default.
  • Ongoing defaults and financial mismanagement justify the need for external oversight.
  • The conditional and uncertain nature of a potential property sale adds to the urgency.
• Outcome: BDO Canada was appointed as the receiver to manage the assets, with the goal of maximizing returns and safeguarding the properties.

Next Steps:

• Parties to agree on the order's details. If unresolved, the court will intervene.
• Cost submissions (if needed) to be filed within 30 days.
• No monetary award was specified in the decision.