Balboa Inc. and its associated entities, engaged in the acquisition, renovation, and leasing of distressed residential properties across Ontario, declared they obtained CCAA protection on January 23. The companies own 405 residential properties and a non-operating golf course, with an estimated total value of $173 million. Originally financed by mortgage loans and unsecured promissory notes from numerous real estate investors, the companies have faced challenges in generating enough free cash flow to meet their payment obligations, resulting in liabilities exceeding $100 million.

Despite efforts in early 2022 to refinance or sell the properties, no comprehensive solution was found, leading to a severe liquidity crisis. With less than $100,000 in cash and facing over 50 demand letters and about 32 legal claims in the Ontario Superior Court of Justice, the companies struggled to fulfill their financial duties.

The CCAA proceedings aim to stabilize the business environment, allowing the companies to continue renovations, seek refinancing or restructuring solutions, and formulate a consensual plan of compromise while maintaining normal operations. KSV has been appointed as the monitor, with Howards Capital Corp. as the proposed financial advisor. Legal representation includes Bennett Jones for the companies, Cassels for the monitor, Blakes for the financial advisor, and Chaitons representing the investors.