Court File and Parties

2020 ONSC 3659

Court File No.: CV-20-00637301-00CL (Clover/Halo) Court File No.: CV-20-00637297-00CL (Yorkville) Date: 2020-06-15 Superior Court of Justice - Ontario

Re: BCIMC CONSTRUCTION FUND CORPORATION and BCIMC SPECIALTY FUND CORPORATION, Applicants And: THE CLOVER ON YONGE INC., THE CLOVER ON YONGE LIMITED PARTNERSHIP, 480 YONGE STREET INC. and 480 YONGE STREET LIMITED PARTNERSHIP, Respondents

And Between

Re: BCIMC CONSTRUCTION FUND CORPORATION and OTERA CAPITAL INC., Applicants And: 33 YORKVILLE RESIDENCES INC. and 33 YORKVILLE RESIDENCES LIMITED PARTNERSHIP, Respondents

Before: Koehnen, J.

Counsel: Geoff R. Hall, Heather Meredith and Alexander Steele for the Receiver, PricewaterhouseCoopers Inc. David Bish, Adam M. Slavens, Jeremy Opolsky, for the Applicants, BCMIC Virginie Gauthier, for the Applicant Otera Capital Inc. David Gruber for Concord Land Developments Limited Steven Graff, Ian Aversa, Jeremy Nemers, for the Respondents Jonathan Rosenstein for Aviva Insurance Company of Canada and Westmount Guarantee Services Inc. Kenneth Kraft for certain Clover Purchasers Dominique Michaud for a Group of Halo Unit Purchasers Fred Tayar, Colby Linthwaite for OTB Capital Inc. Ryan Hanna for 2379646 Ontario Inc. Maria Konyukhova for PJD Developments Christopher J. Henderson for City of Toronto Haddon Murray for Tarion Warranty Corporation Shara Roy, Sahar Talibi for Homelife New World Realty Inc., Paul Lam, Homelife Landmark Realty Inc., TradeWorld Realty Inc., Landpower Real Estate Ltd., Master's Choice Realty Inc., formerly known as Re/Max Master's Choice Realty Inc. and Michael Chen Patricia Joseph for GFL Infrastructure Group Inc. Ben Goodis for Quality Sterling Group Rob Moubarak, Jonathan Frustaglio, Marissa Rebane for Strada Aggregates Paul Guaragna for Global Precast Inc. and Affinity Aluminum Systems Ltd. Nick Stanoulis for Stancorp Properties Inc.

Heard: June 4, 2020

Endorsement

[1] At the request of BCIMC Construction Fund Corporation and BCIMC Specialty Fund Corporation (collectively “BCIMC” or the “Applicants”) I assigned three large condominium construction projects in Toronto into receivership at the end of March 2020, the reasons for which are indexed at 2020 ONSC 1953. More precisely put, each project is owned by a single purpose, project specific general partner on behalf of a limited partnership. The general partner and the limited partnership of each of the three projects were assigned into receivership.

[2] The Receiver of those projects now brings a motion to approve a Sale and Investor Solicitation Process (“SISP”) for each of the projects. For the reasons set out below, I grant the SISP for the Yorkville project as requested, decline to approve the SISP for the Clover project and approve the SISP for the Halo project as amended.

[3] I heard the motions on Thursday June 4, 2020, and released a dispositive order on Sunday June 7 with reasons to follow. I set out my reasons below.

The Yorkville Project

[4] The Yorkville project is located at 33 Yorkville Ave between Bay and Yonge Streets in Toronto. It was envisaged as two condominium towers, one 43 storeys, the other 69 storeys with 1,079 residential units. Excavation is well underway but no construction of the towers has begun.

[5] As of March 2, 2020, BCIMC had advanced $122,432,764.85 to the Yorkville Project under various loan facilities as well as $79,592,744.24 in letters of credit. In addition, a co-applicant in respect of Yorkville, Otera Capital, had also advanced funds to Yorkville.

[6] There are 918 purchasers of units in Yorkville who have paid a total of approximately $160 million in deposits.

[7] BCIMC has first ranking security. There are three other major secured creditors on the project. Aviva Insurance Company of Canada has second and fourth priority mortgages. KingSett Capital Inc. has third ranking mortgages. Construction liens have also been registered against the properties.

[8] Aviva, KingSett and a lawyer for a group of unitholders appeared on the motion. None opposed the relief sought. The debtor and titleholder of the Yorkville Project did not oppose the relief sought either. As a result, I granted the relief on June 4.

The Clover Project

[9] The relief sought with respect to Clover is more controversial.

[10] The Clover project is located at 595 Yonge St., north of Wellesley St. in Toronto. It comprises two towers; one 44 storeys, the other 18 storeys containing a total of 522 residential units. Clover is the most advanced of the three projects. Building is well underway with the higher floors now under construction.

[11] As of March 2, 2020, BCIMC had advanced over $143,000,000 on various loan facilities plus approximately $3,000,000 in letters of credit on Clover. In addition, BCIMC has advanced funding during the course of the receivership.

[12] BCIMC has both first and third ranking security against the Clover project.

[13] There are 499 purchasers of units in Clover who have paid a total of approximately $49 million in deposits.

[14] The proposed SISP in respect of Clover includes a stalking horse bid by a BCIMC fund other than the ones that have advanced money to date. The stalking horse bid includes a break fee of 1% and would take out all secured debt except that held by OTB Capital. The OTB Capital debt reflects a mortgage originally held by the developer, Cresford Group which it assigned to OTB after Clover was placed into receivership. The stalking horse bid does not address other debts such as those of suppliers to the project.

[15] The Receiver’s SISP proposal is supported by BCIMC, counsel for the unitholders and counsel for one potential bidder apart from the stalking horse bidder.

[16] The Receiver’s proposal is opposed by Cresford, Concord Land Developments, OTB capital and at least one unsecured creditor. Opposition to the SISP is based on a proposal by Concord to pay out immediately the BCIMC debt, all of its costs and all of the receivership costs.

[17] The Receiver and those who support the SISP object to the Concord proposal on three grounds: (i) Concord has no standing; (ii) the proposal is too unclear; and (iii) the proposal improperly interferes with the receivership process.

(i) Concord’s Standing

[18] Proponents of the SISP submit that Concord has no standing to pay out the BCIMC debt because it is a stranger to the receivership. If Concord wants to acquire Clover, it should participate in the SISP like any other potential bidder.

[19] While it was referred to as the “Concord Proposal” during the hearing, it is more properly the debtor’s proposal. Concord is proposing to lend money to the debtor to enable the debtor to pay out BCIMC. It matters little whether the funds are coming from the debtor directly or from a party financing the debtor, like a bank or Concord. The point is that the debtor, through whatever means, is ready willing and able to pay out the entirety of the BCIMC debt.

[20] Before the hearing, Concord had sent me banking information that demonstrated its ability to pay out the debt immediately.

[21] During the course of the initial receivership application in March, I was advised that Concord and Cresford were about to enter into a transaction at any moment that would see Concord assume ownership of all of the shares of the Clover debtor. At that time, there was, however, no consummated transaction nor was Concord then prepared to pay out the BCIMC debt.

[22] To the extent Concord’s status is an issue, it changed approximately 10 minutes into the hearing when I was advised that Concord had completed a transaction pursuant to which it had become the sole shareholder of Clover.

(ii) Lack of Clarity in the Concord Proposal

[23] The Receiver opposes the Concord proposal because it is not sufficiently clear.

[24] Concord says that after paying off the BCIMC debt, it would move to convert the receivership into a CCAA proceeding. In the course of the CCAA proceeding, Concord would want to disclaim the unit purchasers’ agreements and negotiate new agreements. Unit holders who did not want to renegotiate would recover their deposits in full.

[25] While a CCAA proceeding does pose some lack of clarity for the purchasers, any bidder in the SISP would also be looking to disclaim and renegotiate the unit purchase agreements. The Receiver submits that the SISP is likely to produce a better result for unit purchasers because it entails a competitive bidding process at the end of which the Receiver will select qualified bidders to participate in a further auction for the project. The Receiver says that the competitive nature of the bidding and auction process is likely to produce a better result for unit purchasers than would a two-party negotiation in a CCAA proceeding.

[26] Mr. Kraft acts for approximately 200 unit purchasers. He submits that the unitholders want to: have certainty, move forward and avoid further delay. In his view, the SISP currently offers more certainty than does a CCAA proceeding because the SISP is associated with tighter timelines. Mr. Kraft volunteers, however, that this might not be the case in a week from now if Concord is permitted to convert the receivership into a CCAA proceeding and moves promptly to renegotiate.

[27] The fact that the unitholders might obtain a better result in a competitive bidding and auction process is a fair one. There are however competing considerations to balance that potential benefit. By way of example, the bidding and auction process is likely to involve many moving parts. One readily foreseeable scenario is that the bids are relatively complex and that the process will not necessarily focus solely on the renegotiation of unitholder agreements. There are a significant number of other creditors involved who will need to be dealt with in the SISP. That would make choosing between bids potentially complex and would reduce the unitholders ability to negotiate. As noted, Concord envisages paying all creditors in full which may make renegotiation of purchase contracts a more central feature of the CCAA than it would be in the receivership.

[28] The unitholders have also expressed an interest in speed and certainty. The stalking horse bid would give the stalking horse bidder two years to decide whether it will complete the project as a condominium. If so, the stalking horse bidder will offer purchasers a discount of $100 per square foot from the market price at the time the units are resold as condominiums. While I appreciate that the stalking horse bid may not succeed (and indeed, if it works properly will not be the successful bid), the two years it contemplates nevertheless offers neither speed nor certainty. Having Concord assume carriage of the project can occur as soon Concord pays out the debt. A successful bidder under the SISP is not likely to assume carriage of the project before the middle or end of September at the earliest.

[29] Concord is one of Canada’s largest and most experienced condominium developers and builders. It has developed over 150 condominium towers with over 39,000 units in Canada. It currently has more than 50 development projects at various stages of planning and development in Canada, the United States and the United Kingdom. If Concord is allowed to assume carriage of the project it will likely want to complete construction and sale of units as quickly as possible to avoid the cost of having large amounts of financing or capital locked up in the project.

[30] The duration of the CCAA proceeding is one over which the court has some influence. The court can also assist in ensuring a level playing field for the renegotiation of purchase agreements. By way of example, counsel for the unit purchasers has asked the Receiver to produce information it has about costs of construction. The Receiver has declined to produce that information because of confidentiality concerns. That makes good sense in the context of a bidding process. If there is no bidding process for Clover, the Receiver may be more willing to share its cost information with counsel for the unit holders or it may be more appropriate to order that it be shared. I underscore, however, that I have made no decision on that issue and have not even heard argument on it. The possibility of sharing that information does, however, offer an opportunity to create a more level playing field in the renegotiation of the purchase contracts.

[31] Mr. Hanna appeared for an unsecured creditor owed approximately $3.5 million. He supports the Concord proposal because Concord intends to pay all construction suppliers fully in the course of completing Clover. Other bids may not necessarily do that. The stalking horse bid does not.

(iii) Interference with the Receivership Process

[32] The Receiver submits that it would create a dangerous precedent to give a debtor a preferential right to redeem property well into a receivership. Mr. Hall submits that the purpose of a receivership is to have the Receiver take control of the entire process and that it would be inappropriate to permit others to do an “end run around” the receivership.

[33] The Receiver’s submission is in part, reflected in a standard provision in receivership orders which is found in paragraph 11 of the Clover order. It provides:

11. THIS COURT ORDERS that all rights and remedies against the Debtors, or any of them, the Receiver, or affecting the Property, including, without limitation, licences and permits, are hereby stayed and suspended except with the written consent of the Receiver or leave of this Court, … (Emphasis added)

[34] On its face, the bolded language in paragraph 11 would appear to preclude the debtor’s right to exercise its equity of redemption without leave of the court.

[35] The Receiver points to B&M Handelman Investments Limited v. Mass Properties Inc., 2009 ONSC 37930, where Pepall J. (as she then was) dealt with language similar to paragraph 11 and held:

In the face of these provisions, Ms. Singh does not have an automatic right to redeem. A mockery would be made of the practice and procedures relating to receivership sales if redemption were permitted at this stage of the proceedings. A Receiver would spend time and money securing an agreement of purchase and sale that was, as is common place, subject to Court approval, and for the benefit of all stakeholders, only for there to be a redemption by a mortgagee at the last minute. This could act as a potential chill on securing the best offer and be to the overall detriment of stakeholders.

BDC v. Marlwood Golf & Country Club, 2015 ONSC 3909 and Home Trust Company v. 2122775 Ontario Inc., 2014 ONSC 1039 are to similar effect.

[36] The Receiver fairly volunteers that the issue arose in Handelman and the cases that follow it at a much later stage than it does with respect to Clover. In Handelman, the Receiver had already run a bid process, had selected a purchaser and was moving to approve the purchase. Different considerations arise at that late a stage. Allowing debtors to redeem property on the sale approval motion would discourage potential purchasers from submitting bids in the first place and threaten the utility of the receivership process more generally. Here the debtor is seeking to redeem before a SISP is approved.

[37] A competing consideration to the concerns raised in Handelman, is the debtor’s right to exercise its equity of redemption, that is to say to pay out the debt and retain its property.

[38] Numerous courts have commented on the importance of the equity of redemption. The contemporary starting point of the analysis is the Supreme Court of Canada’s decision in Petranik v. Dale, [1977] 2 S.C.R. 959 where Chief Justice Laskin held at p. 969:

What emerges from the DeBeck case is a reassertion of the well-established proposition that the equitable right to redeem is more than a mere equity but is, indeed, an interest in the mortgaged land which is not lightly to be put aside and which is enforceable by courts of equity: see Falconbridge, Law of Mortgages (3rd. ed. 1942), pp. 50-53. I question, therefore, whether it can be put aside by a rule of practice that would preclude a Court from considering all the circumstances that may support a discretion to allow redemption, albeit on terms.

[39] Dickson J. (as he then was) echoed similar sentiments at page 995:

I conclude by reiterating that an equity of redemption is an interest in land, which the mortgagor can convey, devise, settle, lease or mortgage like any other interest in land (Megarry and Wade, The Law of Real Property (3rd ed.) at p. 885, and Cheshire’s Modern Real Property (10th ed.) at p. 568) and that equity has always jealously guarded the mortgagor’s right to redeem.

[40] An owner’s right to redeem remains a core principle of real estate law. See for example: 30724453 Nova Scotia Company v. 1623242 Ontario Inc., 2015 ONSC 2105, paras. 75, 98 – 100; Textron Financial Canada Limited v. Chetwynd Motels Ltd., 2010 BCSC 477, paras. 58 – 74.

[41] How then should I balance these competing interests in this case and determine whether I should grant leave under paragraph 11 of the receivership order to allow the debtor to exercise its equity of redemption?

[42] Supporters of the Receiver’s motion point to my findings about the debtor’s misconduct in my reasons assigning the projects into receivership. They submit that a debtor who has misled its mortgagee should not be entitled to redeem.

[43] While I did make adverse findings against the debtor’s conduct in those reasons, misconduct by a debtor gives rise to that degree of remedy necessary to correct the harm done by the misconduct. It does not necessarily mean that the debtor will be deprived of its property.

[44] While courts should be mindful of the clean hands principle when considering requests by the debtor in these circumstances, they should be equally mindful of a potentially underlying commercial reality: the possibility that the creditor may have an interest in structuring a receivership to allow it to acquire the property at an attractive price which would enable the creditor to make considerably more money by depriving the debtor of its property than the creditor would ever earn by way of interest under a mortgage.

[45] While I am not saying that this is occurring here, there are circumstances that give rise to the potential for it to occur. By way of example, although BCIMC stated on the receivership motion at it wanted nothing further to do with the project and just wanted its money back, it has put in a stalking horse bid on the Clover and Halo projects which would see it paid a break fee. The Receiver has acknowledged that the properties are well known to the most logical potential purchasers and that there is considerable interest in them. If there is considerable interest, one might ask whether a stalking horse bid is truly necessary. At the same time, the timelines in the SISP, 60 days to gather bids and conduct an auction, are those that one would see in usual times. These are not, however, usual times. The SISP arises in the midst of a worldwide pandemic which has seen many businesses, and particularly financial institutions, operating virtually. Most bank offices remain closed. Operating virtually makes it more time-consuming to conduct due diligence and obtain financing, especially given that financing for a project like this would likely be syndicated. BCIMC is unlikely, however, to require the same sort of time to conduct due diligence because it is already familiar with the project as its long-term financer. In addition, BCIMC, is a large government pension fund that does not require syndicated financing. It already has large pools of capital available for investment. These factors give BCIMC advantages over other bidders that translate into the potential to acquire the property in a receivership at an attractive price.

[46] In considering these factors, I am not saying that they are present here nor am I suggesting that it would be improper for BCIMC to try to acquire the property at an attractive price in the receivership. Those are commercial opportunities that BCIMC is fully entitled to pursue. I am simply saying that these factors are part of the equities to consider before depriving a debtor of title to its property in circumstances where it is ready willing and able to pay out the creditor entirely.

[47] The history of the proceedings and prejudice to different stakeholders are two further factors to consider when determining whether the debtor should have the right to redeem.

[48] With respect to the history of the proceedings, on the initial receivership application, the debtor proposed a CCAA proceeding. BCIMC opposed because it would end up remaining in the project longer than it wanted to. At the time, BCIMC indicated that it simply wanted its money back and wanted nothing more to do with the project: see the receivership reasons 2020 ONSC 1953 at para. 56. The debtor now proposes to give BCIMC its money back pretty much immediately.

[49] My reasons for assigning the project into receivership were driven in large part by the right of BCIMC to be repaid, the absence of any concrete proposal to do so and the unfairness of tying BCIMC to a debtor in whom it no longer had confidence: see for example paras. 64 – 69, 89, 91. The thrust of my reasons, and in particular of the paragraphs just referred, to was to leave open the possibility of the debtor resuming carriage of the projects by paying out BCIMC. The debtor is now able to do so unconditionally with respect to Clover.

[50] Has anything occurred since assigning Clover into receivership on March 27, 2020 that would make it unfair to any other stakeholder to permit the debtor to exercise its equity of redemption?

[51] BCIMC submits that it has funded the receivership and has spent time, money and energy into submitting a stalking horse bid.

[52] In the circumstances of this case, those factors do not outweigh the debtor’s equity of redemption. In addition to paying out the original BCIMC debt, the debtor has offered to pay out the entire receivership debt, interest on the receivership debt, the costs of the receivership and the costs of BCIMC. This includes reasonable costs that BCIMC has incurred to prepare the stalking horse bid. I have made myself available for a speedy determination of what those costs should be in the event the parties disagree.

[53] Ms. Konyakhova appeared on behalf of PJD Developments, a potential bidder. She submits that Concord should not be given any privileges over other bidders who have waited patiently for the bidding process to occur. She underscores forcefully that bidding is the way to obtain the best offer.

[54] The concern that Concord receive no privileges over other bidders misconceives Concord’s role. As noted earlier, Concord is not a bidder, it is the debtor’s source of financing and is now the debtor’s sole shareholder. While I can understand a potential bidder’s frustration at being deprived of the opportunity to bid on a project, that is not enough to quash a debtor’s right to redeem. There is no evidence before me that it would be prejudicial to receivership processes at large to allow the Clover debtor to redeem. I appreciate that the possibility of a pay out arose at the last moment but no one sought an adjournment to file evidence to respond to the proposed redemption.

[55] PJD had hoped to be able to bid on the property and has been denied that chance. That puts PJD and other potential bidders into a significantly less prejudicial position than if they had spent the time and money to submit a compliant bid only to lose out to another bidder in the competitive process.

[56] The parties most likely to suffer prejudice by allowing the debtor to redeem are the unit purchasers. They believe they can achieve a better result in the competitive bidding process of a SISP than they can in a CCAA proceeding. To my mind that, however, is not, the real question.

[57] There is no doubt that the debtor would have had the right to pay out BCIMC on the initial receivership application. Had it done so, the debtor would have had relatively free rein to bring a CCAA proceeding. In those circumstances it is unlikely that unit purchasers could have prevented a CCAA process by arguing that a receivership sale was preferable to CCAA. The unit purchasers have suffered no change of position since March 27 that would make the analysis any different today. To the extent they have, they can still raise those arguments if the debtor moves to convert the receivership into a CCAA proceeding.

[58] As a result of the foregoing, I decline to approve the SISP for Clover and order that the debtor should have the opportunity to pay out the BCIMC debt, the receivership debt, and interest on both within 72 hours of receiving a pay out statement in respect of those debts.

Halo Project

[59] The Halo project is located at 480 Yonge St. south of Wellesley St. in Toronto. Its plans call for a 39-storey tower with 413 residential units. Halo is in early stages of construction.

[60] As of March 2, 2020, BCIMC had advanced approximately $73,000,000 in financing and $1,500,000 in letters of credit to the Halo project.

[61] BCIMC has first and third-ranking charges/mortgages in respect of real property.

[62] There are 388 purchasers of units in Halo who have paid a total of approximately $43 million in deposits.

[63] The Receiver proposes a SISP for Halo that mirrors the proposal for Clover. Mr. Michaud appeared to make submissions on behalf of the 140 purchasers of Halo units who have retained him. They support the SISP.

[64] The debtor seeks a four-week adjournment of the Halo SISP motion to allow it to finalize financing. During the hearing, Concord offered to finance the receivership during the adjournment period if BCIMC declined to do so. Concord’s financing would be on the same terms as that of BCIMC. If the debtor does not come up with financing during the four week adjournment, Concord and the debtor agree that the SISP should proceed as presented.

[65] I declined to grant the adjournment and authorized the SISP to proceed in respect of Halo.

[66] The distinguishing feature between Halo and Clover is that the debtor and Concord are not presently prepared to or able to pay out the BCIMC debt on Halo.

[67] The animating principle behind my reasons for assigning the projects into receivership was that BCIMC had advanced money, had been misled about the risk profile of the projects, had been misled, in part, about the use of funds, and, having been misled, should have the right to take control of the projects to protect its interests. That was subject to the debtor’s right to pay out BCIMC in full if it were able to do so before any other party had relied on the receivership to an extent that would make it inequitable for the debtor to end the receivership by paying out BCIMC’s debt.

[68] The debtor is still not in a position to pay out the debt on Halo. Concord clearly has the financial resources to do so but has chosen not to. This means that, for whatever reason, Concord prefers not to expose itself to the risk of the Halo in the present circumstances. Concord is fully entitled to make that choice. Concord is entirely at liberty to use or not use its assets for whatever purpose it wants.

[69] However, in the absence of assuming any of the risk, Concord is not in a position to direct the terms that govern the administration of Halo either through receivership or otherwise. Given that BCIMC continues to bear the risk of Halo, the process that it has chosen to manage that risk, the Receivership, should continue to govern.

[70] Nothing in the equities between the parties has changed with respect to the Halo project since it was assigned into receivership on March 27, 2020. BCIMC continues to hold a significant debt, indeed the debt is larger now than it was on March 27. For all the reasons that I articulated in my judgment with respect to the receivership order, BCIMC continues to have the right to enforce its debt as it sees fit. It has chosen to do so by way of receivership. Nothing has changed to make that inappropriate.

[71] The SISP does not preclude the debtor or Concord from participating in the project going forward. It can participate as a bidder as can any other party.

[72] The Clover and Halo bids were initially accompanied by a stalking horse bid by BCIMC with a break fee of 1%. During argument, the Receiver and BCIMC indicated that the stalking horse bid was a package deal, that is to say it was a bid on both projects or none. As counsel for BCIMC put it, Clover was the more desirable asset. If BCIMC could not maintain the stalking horse bid on Clover, it had no interest in continuing a standalone stalking horse bid on Halo. Given that the SISP on Clover will not proceed, the stalking horse bid on Halo has disappeared as a result of which I need not address the objections that certain parties raised about the break fee.

Communications

[73] The Receiver seeks to include a provision in the Halo order that precludes communications between bidders and other stakeholders without the Receiver’s consent. I have declined to include such a provision in the Halo SISP.

[74] The unit purchasers represented at the hearing oppose the provision as do Concord and the debtor. They submit that a key component of any workout is the ability of stakeholders to reach agreements with each other. That is best achieved with unfettered communication.

[75] The Receiver justifies the request by submitting that it is important that the Receiver have visibility into conversations between stakeholders and that it is problematic if the Receiver is not aware of the contents of those communications. The Receiver provided no detail about why it was problematic for discussions to occur without the Receiver knowing about the contents or the fact of those discussions. The Receiver offered no authority in support of its position apart from stating that a similar provision had been included in an order of this court in another proceeding. In the absence of reasons for that order I cannot determine whether it was on consent, unopposed or whether the circumstances in that case made the order otherwise appropriate.

[76] Although the Yorkville order contains a restriction on communication, that provision was unopposed, including by counsel for the purchasers of Yorkville units.

Disposition

[77] For the reasons set out above, I dispose of the motions as follows:

(a) With respect to Yorkville, the SISP order is approved as requested.

(b) With respect to Clover: (i) The debtor or anyone acting on its behalf shall have the right within 72 hours of receiving a statement of the amount owing, pay-out the BCIMC, debt, including receivership lending plus interest. (I have been advised that the debtor paid out the debt in full since the hearing but before these reasons were issued.) (ii) In addition, the debtor will be liable for the applicants’ costs including receivership costs. I assume it may take more than 72 hours for BCIMC and the receiver to present their costs breakdown to the debtor, as a result of which the costs need not be paid within 72 hours of receiving the statement of the amount owing on the debt. If there is a dispute about costs, I will resolve the dispute and determine the amount of costs payable. The debtor shall pay the applicants’ costs within 72 hours of my determining the amount payable. (iii) If the debtor pays the amounts set out in sub-paragraph (i) within 72 hours then the debtor may move to dissolve the receivership or for any other relief it seeks with respect to Clover.

(c) With respect to Halo: (i) The SISP is approved but, given that BCIMC has advised that there will be no stalking horse bid on Halo if the debtor pays out the Clover debt, the Halo SISP will proceed without the stalking horse bid. (ii) Communication amongst bidders and stakeholders (including unit purchasers) will not require the consent of or notice to the Receiver. (iii) The disposition in the preceding paragraph may raise privacy or fairness issues with respect to communications with unit holders. By way of example, it might not be appropriate to allow bidders to contact unrepresented unitholders without having unitholders provide consent in advance. Similarly, it might not be fair to the bidding process to allow the debtor, who presumably has contact information for unitholders, to contact them while other bidders without contact information have no ability to contact unit holders. If there are concerns about the logistics of such communication, I will make myself available to resolve those during a case conference.

Koehnen, J. Date: June 15, 2020