The Clover on Yonge Inc. and The Clover on Yonge Limited Partnership

CCAA

Page last updated: September 06, 2020

This page is for information purposes only and you should consult your professional adviser if you have any questions or are uncertain as to your rights or obligations.


On June 22, 2020 (the “Filing Date”), The Clover on Yonge Inc. and The Clover on Yonge Limited Partnership, (the “Companies” or the “Applicants”) applied for and received an order (the “Initial Order”) for protection pursuant to the Companies’ Creditors Arrangement Act R.S.C.1985, c.C-36, as amended (“CCAA Proceedings”) from the Ontario Superior Court of Justice Commercial List (the “Court”), authorizing the Applicants’ current restructuring proceedings (the “Receivership Proceedings”) commenced under section 243(1) of the Bankruptcy and Insolvency Act to be transitioned to the CCAA Proceedings (the “Transition”). The Initial Order was amended on June 26, 2020 (the “Amended and Restated Initial Order”). The Amended and Restated Initial Order was further amended on July 22, 2020 (the “Further Amended and Restated Initial Order”) and includes among other things, a stay of proceedings against the Companies, and the appointment of PricewaterhouseCoopers Inc., LIT as monitor of the Applicants (“PwC” or the “Monitor”).

The Further Amended and Restated Initial Order, among other things:

  1. Approved a stay of proceedings up to and including October 2, 2020 (“Stay Period”), which applies against the Applicants, their Property and Business (as defined in the Initial Order) and the Monitor;
  2. Authorized the Applicants to obtain and borrow pursuant to a term sheet substantially in the form attached as Exhibit “C” to the affidavit of Clifford McCracken sworn on July 8, 2020 (the “First DIP Facility”) up to a maximum of $128,500,000 from a syndicate of financial institution lenders (the “First DIP Lender”);
  3. Authorized the Applicants to obtain and borrow under the debtor-in-possession Commitment Letter, dated as of June 24, 2020 (the “Second DIP Facility”) up to a maximum of $35,000,000 from 1252707 B.C. Ltd. (the “Second DIP Lender”);
  4. Granted a first ranking charge, which charge shall rank pari passu with the Clover Receiver’s Charge (as defined in the Initial Order), in the amount of $1,000,000 (the “Administration Charge”), over the Property of the Applicants, as security for fees and disbursements of the Monitor, the Monitor’s counsel and the Applicants’ counsel;
  5. Granted a second ranking charge, in the amount of $43,300,000 plus interest (the “Clover Receiver’s Borrowing Charge”), which charge represents a portion of the Receiver’s Borrowings Charge (as defined in the Receivership Order, dated March 27, 2020 and that is available on the Receiver’s website at www.pwc.com/ca/haloclover) that is attributable to the Applicants in the CCAA Proceedings;
  6. Granted a third ranking charge, in the amount of $128,500,000 in favour of the First DIP Lender (the “First DIP Lender Charge”) as security for the First DIP Facility;
  7. Granted a fourth ranking charge, in the amount of $35,000,000 in favour of the Second DIP Lender (the “DIP Lender Charge”) as security for the Second DIP Facility;
  8. Granted a fifth ranking charge, in the amount of $100,000 (the “Directors’ Charge”), on the Property of the Companies, as security for the indemnity granted to the Applicants’ directors and officers; and
  9. Approved the Transition to occur effective June 30, 2020.

In accordance with section 23 (1)(ii)(b) of the CCAA and the Initial Order, a notice was sent to all of the Applicants’ creditors who are owed $1,000 or more.


Status of File as of September 4, 2020 

On August 30, 2020, a case conference occurred with Justice Koehnen among certain parties to this proceeding. On September 2, 2020, Justice Koehnen advised the Monitor that as a result of information he received during the case conference, he was concerned that a conflict may have arisen that would make it preferable for the Cresford matters to proceed before another judge. Justice Hainey will now assume carriage of these matters. 

Justice Hainey has directed that the outstanding motions will proceed on the following schedule: 

  1. The CCAA Applicants wish to bring an urgent motion to extend the DIP. Justice Hainey will hear that motion on Tuesday, September 8, 2020 at 2:30 pm. 
  2.  The disclaimer motion argued before Justice Koehnen on August 20, 2020 will be reargued before Justice Hainey. The creditor classification motion scheduled before Justice Koehnen for August 31, 2020 and adjourned will be argued before Justice Hainey. Both motions will proceed before Justice Hainey on September 30, 2020. 

The Creditors’ Meeting previously scheduled for September 21, 2020 has been postponed to a later date to be confirmed.

Status of File as of September 3, 2020

The hearing scheduled for September 4, 2020 in respect of an order to disclaim the condominium unit purchase agreements has been adjourned at the request of the Court.

Status of File as of September 1, 2020

On September 1, 2020, the Monitor filed its Seventh Report (the “Seventh Report”) with the Court to provide the Court with information concerning:

  1. The status of the two interim financing facilities previously approved by the Court; and
  2. The status of negotiations between the Applicants and certain groups of Pre-Sale Purchasers (as defined in the Seventh Report).

Status of File as of August 30, 2020

On August 28, 2020, the Monitor filed its Sixth Report (the “Sixth Report”) with the Court to provide the Court with:

  1. An update with respect to the review of the security of the Applicants’ pre-filing secured creditors undertaken by the Monitor’s independent legal counsel, McCarthy Tétrault LLP (“McCarthys”);
  2. An update on the status of the Claims Procedure as approved by the Claims Procedure Order; and
  3. The Monitor’s views with respect to the classification of creditors as reflected in the proposed Plan.

The motion for the classification of the creditors scheduled for August 31, 2020 has been adjourned.

Status of File as of August 23, 2020

On August 20, 2020 the Court issued an order (the “Initial Meeting Order”) which approved the calling of the Creditors’ Meeting on September 21, 2020 to vote on the Plan, subject to any rulings of the Court at the further hearing on August 31, 2020 with respect to the classification of the creditors.

The hearing for an order (the “Disclaimer Order”) to disclaim the condominium unit purchase agreements between the Clover Pre-Sale Purchasers (as defined in the Factum of the Applicants dated August 13, 2020) and the Applicants has been adjourned to September 4, 2020.

Status of File as of August 19, 2020

On August 18, 2020, the Monitor filed its Fifth Report (the “Fifth Report”) to provide the Monitor’s views on the motion of the Applicants for the Meeting Order to, inter alia, approve the filing of the proposed Plan and the convening of a meeting of creditors (the “Creditors’ Meeting”) to consider the Plan.

The motion will be heard on August 20, 2020.

Status of File as of August 16, 2020

On August 15, 2020, the Monitor filed its Fourth Report (the “Fourth Report’) with the Court to provide the Court with the information in connection with:

  1. The Applicants’ motion to disclaim the existing contracts (each a “Pre-Sale Contract”) of pre-construction condominium unit purchasers (the “Pre-Sale Purchasers”) in the Clover Project; and
  2. The two expert reports of Pelican Woodcliff Inc. (“Pelican”), dated July 31, 2020 (the “Original Pelican Report”) and August 9, 2020 (the “Second Pelican Report”), concerning their review of the Appraisal Report and the Updated Construction Budget prepared by Altus (each defined in the Fourth Report).

The motion will be heard on August 20, 2020.

Status of File as of July 23, 2020

On July 22, 2020, the Court issued the Claims Procedure Order which, among other things, approving the Claims Procedure for the determination and resolution of claims filed against the Applicants.

On the same date, the Court issued the Further Amended and Restated Initial Order which, among other things,

  1. Approved the First DIP Facility in the amount of $128,000,000 and granted a third ranking charge on the Property of the Applicants to secure the repayment of the amounts borrowed; and
  2. Sealed the unredacted copy of the First DIP Term Sheet.

Status of File as of July 22, 2020

On July 21, 2020, the Monitor filed its Third Report (the “Third Report”) with the Court which has been prepared in connection with a motion made by representatives of a group of preconstruction condominium unit purchasers (the “Pre-Sale Purchasers”) for an order compelling the disclosure of the Appraisal Report, as defined and discussed in the Third Report, which motion is to be heard on July 22, 2020. The Third Report also provides a brief update in respect of the DIP Facility.

Status of File as of July 16, 2020

The Claims Procedure Motion that was scheduled to proceed on July 17, 2020 has been adjourned by the Applicants for a short time.  Counsel has asked the Court to use the July 17th date for a case conference in respect of the motion.  Further information in respect of the application will be posted to this website following the case conference.

Status of File as of July 15, 2020

On July 15, 2020, the Applicants filed a motion (the “Claims Procedure Motion”) for an order (the “Claims Procedure Order”) approving the claims procedure (the “Claims Procedure”) to be conducted in the CCAA proceedings for the determination and resolution of claims against the Applicants.

The Claims Procedure Motion will be heard on July 17, 2020.

Status of File as of July 9, 2020

On July 8, 2020, the Applicants filed a motion with the Court for

  1.   an order (the “Further Amended and Restated Initial Order”) to, among other things:

a. Approve a debtor-in-possession financing facility with a syndicate of financial institutions (the “First DIP Facility”) for $128,500,000 and granting a priority charge (the “First DIP Charge”) over the Property of the Applicants to secure the repayment of the amounts borrowed;

b. Seal the unredacted term sheet reflecting the commercially-sensitive terms of the First DIP Facility (the “First DIP Term Sheet”); and

2. An order (the “Meeting Order”) to, among other things:

a. Accept the filing by the Applicants of the plan of compromise and arrangement (the “Plan”);

b. Authorize the establishing of one voting class of creditors, being the General Unsecured Creditors Class (as defined in the Plan);

c. Authorize the Applicants to hold a meeting of the General Unsecured Class to consider and vote on the Plan (the “Meeting”);

d.  Approve the notice of the Meeting;

e. Approve procedures at the Meeting;

f. Set the date for the Court hearing to seek sanctioning of the Plan; and

g. Approve the disclaimer of the Applicants’ existing condominium unit purchase agreements.

The motion will be heard on July 17, 2020.

Status of File as of June 26, 2020

On June 26, 2020, the Court issued the Amended and Restated Initial Order which among other things:

  1. Extended the Stay Period to and including October 2, 2020,
  2. Approved the DIP Facility in the principal amount of $35 million; and
  3. Granted a charge in favour of the DIP Lender to secure the repayment of amounts borrowed under the DIP Facility.

On June 25, 2020, the Monitor filed its First Report (the “First Report”) with the Court to provide the Court with its view with regards to the Applicants’ motion for the Amended and Restated Initial Order.

The motion will be heard on June 26, 2020.

Updates on the Receivership Proceedings are posted here

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Natalia Chtcherbakova

Consulting & Deals, PwC Canada

Tel: 416-687-8959

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