Mortgage holder plans to purchase bankrupt Towns of Thornbury property

A deal has been reached to sell the Towns of Thornbury development to its largest creditor.

On August 15, 2024, KSV Restructuring Inc., which has been acting as the receivers for the Towns of Thornbury development property, made an application to the Ontario Superior Court of Justice to approve a sale agreement for the property.

The deal would see the unfinished 23-unit subdivision located next to the Foodland property in Thornbury, sold to an affiliate company of Foremost Mortgage Holding Company in a credit bid.

Foremost was owed approximately $8.8 million by the previous owners of the Towns of Thornbury property. The company is essentially exchanging the outstanding debt it is owed for ownership of the property and the unfinished development. The agreement requires court approval.

In February 2024 after the development went into receivership, KSV initiated the sale process of the property with Slavens and Associates Real Estate Inc. brought on board to navigate the real estate aspects of the sale. 

Although there was strong interest in the Towns of Thornbury property – court documents reveal 47 parties signed non-disclosure agreements to take a look at the overall state of the development – just six offers emerged during the sale process. The offers ranged from a low of $2 million to a high of $6 million. Well below what Foremost was owed on the outstanding mortgage.

“Following the offer deadline, it became evident that any transaction that maximizes recoveries for Foremost would require Foremost to have a continuing involvement in the project,” KSV stated in its report to the court filed on August 8, 2024. “Accordingly, after engaging with several parties, Foremost determined that its best course of recovery on the project would be to: (i) acquire the Purchased Assets by way of credit bid through the Purchaser, a Foremost affiliate; and (ii) retain Dunn Capital Corporation as a construction partner to complete the project.”

In the report, KSV stated both they and Slavens don’t believe a better offer for the property will be forthcoming.

“In Slavens’ view, it is unlikely that continuing to market the real property will result in a superior transaction,” said in the report. “The receiver and Slavens are of the view that the transaction provides for the best recovery available in the circumstances.”

The deal also sets aside $66,713 to address three construction liens registered against the property by Cooper Equipment Rentals Limited, Weatherall Enterprises Ltd. and KFA Architects and Planners Inc. The $66,713 is 10 per cent of the total value (just over $667,131) of the three liens.

The Towns of Thornbury property went into receivership in February 2024. The property was fenced off and shortly after there was some construction activity on the site to weather-proof the units.

At the time court documents revealed:

• Significant water penetration, foundation, mould and fire separation issues.
• The registration of several construction liens on title to the property.
• Stop work orders, orders to comply and orders to uncover made by the Town of The Blue Mountains (where the property is located) in connection with the project.
• The documents also said that 21 units had been pre-sold with $1.64 million being collected in deposits, all but $53,000 of that amount was spent on construction costs.