Sunrise Properties


CCAA Filing

Page last updated: November 6, 2017

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 December 16, 2016, PricewaterhouseCoopers Inc. was appointed Monitor under the Companies’ Creditors Arrangement Act (“CCAA”) of a group of legal entities (known as “the Petitioner Entities”), by Order of the Supreme Court of British Columbia.  A list of the Petitioner Entities can be found under the Motion Materials tab.



Status Update as at November 6, 2017

The Court hearing held on October 31, 2017 resulted in a Court Order being issued, which is summarised below:

  • The fees and disbursements of the Monitor were approved;
  • The fees and disbursements of the Monitor's legal counsel were approved; and
  • The Monitor was authorized to return the residual DIP financing funds.

The Monitor notes there are a few minor administration matters outstanding. Upon completion of these matters, the Monitor will be discharged (tentative time frame is December 15, 2017).

A copy of the Court Order can be found under the Court Orders tab.

Status Update as at October 24, 2017

Further to the Monitor’s last status update, the remaining properties, identified as or commonly known as Bond; Elan; Fabrik; Gate; Helix; Canvas; Onyx; Standard; and Village, collectively known as the Group Two Lands, have now been transitioned to KingSett Real Estate Mortgage LP No.3 (or its designated nominee). 

The CCAA proceedings are now essentially complete, with the exception of minor administrative matters for the Monitor to deal with. 

A court hearing has been scheduled for October 31, 2017 at which time, the Monitor will seek approval of its fees, and those of its legal counsel.  The Monitor will also seek its discharge in these proceedings.  The Monitor has prepared its 9th report dated October 23, 2017 to support this application, which has been posted to this website.  Assuming the Court approves the Monitor's application, the Monitor will proceed to finish the minor administrative matters and subsequently advise the court when that work is completed, after which, the Monitor's discharge will be effective.   

As noted in previous Monitor's reports, many debts owing y the Petitioners will remain unpaid, as the realized value of the properties was not sufficient to satisfy the secured lenders.  Further, Investors will not see any return of their capital.  

Investors can expect to receive income tax information slips from New Summit Partners early in 2018, as the Monitor understands that New Summit Partners intends to complete them at that time.  The Monitor does not possess any of the records necessary to complete this task, and as such all questions relating to tax slips must be directed to Tamiko Iwata of New Summit Partners, by telephone to (778) 328 5888.

Status Update as at August 9, 2017

The Monitor's Supplemental Report to the 8th Report, is now posted under the Monitor's Reports tab.

The court hearing held on August 8th resulted in two court orders being issued, recapped as follows:

  • The stay of proceedings has been extended to October 31, 2017, and the Monitor's obligations have been reduced as noted in the Order, and
  • The sale of the Group Two Lands to KingSett Real Estate Mortgage LP No. 3 (or its designated nominee) was approved.  

Both orders can be found under the Court Orders tab.


Sale of Group Two Lands

The Court approved the sale of the remaining properties, identified as or commonly known as Bond; Elan; Fabrik; Gate; Helix; Canvas; Onyx; Standard; and Village, collectively known as the Group Two Lands.  

The Monitor understands that the sale of these properties is expected to be completed on August 10, 2017.

Completion of these sales will result in no monies being available for pre-filing creditors who have claims against these entities, and who rank subordinate to the Senior Secured Lenders (Timbercreek and  MCAP).  Pre-filing creditors are defined as creditors whose receivable relates to providing goods or services to these entities before December 16, 2016;  

Additionally, upon completion of these sales, any pre-filing creditor with a subordinate mortgage charge or lien will not be paid, as the charges and liens will be removed from title.

Status Update as at August 3, 2017

We advise that a court hearing is scheduled for August 8, 2017, and two applications are being made.  KingSett is seeking a vesting and approval Order concerning the Group 2 Lands, and the Monitor is seeking an extension to the stay of proceedings, to October 31, 2017.  The stay extension is needed in part to ensure that a smooth and fulsome transfer of information and documentation is made to the Groups 2 Lands purchaser, and to the Company.  A copy of KingSett's and the Monitor's applications can be found under the Motion Materials tab. 

Status update as of July 19, 2017

We advise that the closings of six properties known as the Crossing, Cielo, Cilo, Avant, Highline and Nutana took place on June 30, 2017.  

The remaining 9 properties (known as the Group 2 Lands) have been listed for sale, and a sales process has begun.  The Monitor has filed its 7th Report to Court on July 14, 2017, which provides a brief update on the sales process for the Group 2 Lands to date.  

Status update as of June 26, 2017

The Monitor advises that after conducting certain due diligence procedures and holding discussions with the Monitor, that Realstar has elected not to proceed with the purchase of the Nutana property. Therefore, pursuant to an Order by the Court made on June 16, 2017, the Monitor intends to enter into a purchase and sale agreement with KingSett LP No. 3 or its nominee for the sale of the Nutana property.

The closing of the sale of the five properties known as the Crossing, Cielo, Cilo, Avant and Highline is now scheduled for June 29, 2017. Efforts are underway to include the close the sale of Nutana on June 29, 2017 as well.

Status update as of June 16, 2017

On Friday June 16, 2017, the Supreme Court of British Columbia (the "Court") made orders with respect to three matters.  An update on each matter is provided:

Sale of 5 Properties

  • The Court approved the sale of the Idylwyld Property (called the "Crossing"), the Willis Property (called "Cielo"), the Cilo Property ("Cilo"), and two Sunrise properties (called "Avant" and "Highline") to KingSett Real Estate Mortgage LP No. 3. ( "KingSett LP No. 3") or its designated nominee;
  • Security was provided for the Contractor Obligations arising from the completion of the sub-floor remediation work at Cielo during the CCAA proceedings;
  • The Monitor understands that efforts will be made to complete the sale of these properties on June 28, 2017;
  • Completion of these sales will result in no monies being available for pre-filing creditors who have claims against these entities, and who rank subordinate to the Senior Secured Lenders (Timbercreek, MCAP, KingSett and Greystone as applicable).  Pre-filing creditors are defined as creditors whose receivable relates to providing goods or services to these entities before December 16, 2016;  
  • Additionally, upon completion of these sales, any pre-filing creditor with a subordinate mortgage charge or lien will not be paid, as the charges and liens will be removed from title.

Back Up Sale for Nutana

  • A sale agreement dated May 25, 2017 was entered into with Realstar Properties Limited ("Realstar") who have commenced its due diligence on the Nutana property.  Realstar has indicated that it has some concerns about the negotiated price, in light of certain findings from its due diligence, and is therefore seeking a price adjustment.  The Monitor is currently considering its response to Realstar;
  • In the meantime, the Court approved a sale of the Nutana Property to KingSett LP No. 3 (or its designated nominee), unless the current contract of sale to Realstar can be concluded for a price in excess of $20 million (or some lessor amount agreed to by MCAP Financial Corp.);
  • The Monitor will seek to conclude a sale with Realstar in excess of $20 million or in the alternative, it shall enter into a purchase and sale agreement with KingSett LP No. 3 as directed by the Court;
  • Completion of either of these sales will result in no monies being available to pre-filing creditors (as described above) in relation to the Nutana property who have claims that rank subordinate to KingSett's two mortgage loans;  Upon completion of the sale to either Realstar of KingSett LP No. 3, any creditor with a subordinate mortgage charge or  lien claim will not be paid as the charges and liens will be removed from title.

Commencement of a Sales Process for the Remaining Properties (the "Sunrise Properties")

  • The Court directed that the Group Two lands be listed for sale on a portfolio basis, no later than June 19, 2017 in accordance with a sales process that the Monitor considers appropriate.  This sales process relates to the 9 Sunrise properties remaining after the sale of the Avant and Highline properties;
  • The Monitor expects to seek offers for the Sunrise Properties by July 14, 2017, and prospective purchasers will be advised of a credit bid by KingSett LP No. 3;
  • The Court order provides the Monitor with the flexibility to terminate the sales process at any time, should the Monitor conclude that it is unlikely that the process will result in an offer in excess of the credit bid to be provided by KingSett LP No. 3;
  • Renovation construction is underway on the Sunrise Properties and will continue during the course of the sales process.  The construction loan facility provided by KingSett to fund the renovation construction remains in place.  The Court order also approves the form of purchase and sale agreement ("PSA") to be used in the event that the Sunrise Properties are ultimately sold to KingSett LP No. 3.  The Court order and the PSA have provisions that are intended to ensure that contractors and suppliers providing service/supplies to the Company during the CCAA proceedings, and until the sale of the properties, will be paid.  These provisions include:
  • Security for Contractor Obligations which includes a provision that KingSett LP No. 3 assume any unpaid Contractor Obligations and that KingSett LP No. 3 place an amount of money in trust with its legal counsel on the closing date, to ensure that funds are available for payment of Contractor Obligations post closing.  These funds will not be released from trust other than to satisfy the Contractor Obligations.  The Monitor will be advised of these payments so it can ensure that the Contractor Obligations are satisfied.
  • An indemnification payment to be made to Monitor's solicitor on closing for utility charges incurred to the closing date but not yet billed.
  • The Monitor has re-commenced discussions with KingSett for additional financing from KingSett to fund operations of the Sunrise Properties.  These renewed discussions will incorporate the anticipated timeline for the sales process to be undertaken for the Sunrise Properties;
  • The availability of funds for payment of pre-filing creditors who have claims in relation to the Sunrise Properties is solely dependent upon the outcome of the sales process and is currently not known.  In the event that the Sunrise Properties are sold to KingSett LP No. 3, no monies will be available to pre-filing creditors who have claims that rank subordinate to the mortgage loans provided by Timbercreek and MCAP.

Status update as of June 5, 2017

On Friday June 2, 2017 the Supreme Court of British Columbia (the "Court") adjourned the application made by KingSett Mortgage Corporation ("KingSett") for an order that will transfer title of CILO, the Group 1 lands (except for Nutana) and the Group 2 lands currently under renovation to June 16, 2017 to allow time for negotiations to occur between the Company and the Senior Secured Lenders to resolve the sale issue and the terms of a sale.

One of the reasons that the Court declined to issue an order, was that the terms of the Asset Purchase Agreement that would transfer the properties to KingSett was not fully negotiated/finalized.  The agreement must be to the satisfaction of the Monitor.  To ensure all the creditors are paid for services/supplies provided during the CCAA, the Monitor is discussing with KingSett the approach to be followed to make that happen.  In the meantime, both construction undertaken by Cisask and operations under Block 1, continue under the supervision of the Monitor in accordance with the Amended and Restated Initial Order made on February 3, 2017.

The construction financing facility remains in place between the Monitor and KingSett.  Arbutus has commenced work on compiling the second draw request for work done to May 25, 2017. 

The Court adjourned the Monitor's application for approval of additional interim financing for the Sunrise Properties, the Willis property and the approval of the Monitor's costs, all as requested by the Monitor.  These approvals were not sought as the Monitor continues to hold discussions with KingSett regarding the terms of the financing and the restructuring costs for the proceeding.

Status Update as at June 2, 2017

We advise that yesterday's court hearing is continuing today with respect to the KingSett application.  However, 2 Orders were granted yesterday, being the DIP financing for the CILO and ID properties.  Copies of those orders can be found under the Court Orders tab.    

Status Update as at May 29, 2017

The following summarizes the significant events/activities that have taken place over the past 6-8 weeks:

  1. Construction/renovation work on the Sunrise properties has commenced as interim financing was agreed to with KingSett Mortgage Corporation ("KingSett").  KingSett has agreed to provide a $16 million construction financing facility to fund the Sunrise work.  The first draw request under this facility for work to April 25, 2017 was submitted to KingSett on Monday, May 29, 2017 and funding is expected shortly.  Arbutus has commenced work on compiling the next draw request for work done to May 25, 2017.
  2. Work has re-commenced on the Willis property to resolve certain deficiencies and finish 22 units that were unavailable for rent as a result of the deficiencies.
  3. The deadline for receiving bids for the Group 1 lands was May 2, 2017.  The CILO property was also included in the sale process and was taken to market by Avison Young with a bid deadline of May 23, 2017.  Following receipt of the bids, the Monitor discussed the bids with the senior secured lenders, the petitioners and other stakeholders to determine the approach to be undertaken with respect to the properties.  The Monitor has now executed a conditional sale agreement with respect to the Nutana property, and the purchaser has commenced its due diligence which is expect to be completed in approximately 6 weeks.  The results of the sales process has been disappointing to the petitioners and the senior secured lenders.  The senior secured lenders expect to realize a loss on all the Group 1 properties and CILO in light of the expressions of interest submitted to date.  The senior secured lenders have concluded that the bids received support appraisals that they obtained in early April 2017, which suggests that they will realize a loss on all the properties owned by the Sunrise Group with the exception of Nutana.  As a result, KingSett has applied to the Supreme Court of British Columbia (the "Court") for an order that will transfer title of CILO, the Group 1 lands (except for Nutana) and the Group 2 lands currently under renovation to KingSett.  This application is scheduled to be heard on June 1, 2017.  If the application is granted, the anticipated date upon which title of the buildings will be transferred is June 28, 2017.  The Monitor understands that the Company intends to oppose the application by KingSett.
  4. The Monitor has developed revised cash flow forecasts that incorporate the delayed start in construction and therefore, leasing activities, as well as the possible transfer of the properties to KingSett on June 28, 2017.  These forecasts reflect a need for further financing for general operations (not construction) and therefore, the Monitor is in further discussions with KingSett to secure that financing in advance of any transfer of the properties.  In support of this effort, the Monitor has applied to the Court for approval of additional interim financing with the objective that Court approval of this additional funding can be obtained on June 1, 2017. 
  5. Concurrent with the other applications to be heard on June 1, 2017, the Monitor is seeking approval from the Court of its costs as well as those of the Monitor's counsel.  Details of these fees and costs will be contained within the Monitor's fifth court report.  The Monitor intends to file its fifth court report in the next couple of days with additional information regarding the application to the Court on June 1, 2017.

Status Update as at April 21, 2017

The Court issued an Order from the hearing held on April 21, 2017, approving the stay of proceedings be extended to August 11, 2017.

Status Update as at April 19, 2017

Application materials from the Company, and from KingSett, both to be heard at this week's hearing, have been posted under the Motion Materials tab. As well, the Monitor has issued a Supplemental Report to its 4th Report to Court, which can be found under the Monitor's Reports tab.

The Company is seeking an extension to the stay of proceedings to August 31, 2017.      

Status Update as at April 17, 2017

A hearing will be held on Friday April 21, 2017, wherein the Company will request an extension to the stay of proceedings.  The Monitor has issued a comprehensive 4th Report, which can be found under the Monitor's Reports tab.  Specifically, sections 10.1 and 10.2 state:

"At the time of finalizing this report, the Monitor had not received any application material filed by the various parties, including the Company. While the Monitor has been involved in discussions with each of the stakeholder groups and is aware that certain discussions have taken place between stakeholder groups, the Monitor does not wish to comment on the go-forward plan until the material has been filed. It is the Monitor’s hope that ongoing discussions between the parties will lead to consensual plans going forward, which the Monitor will then comment upon.  As a result, it is the intention of the Monitor to file a supplemental report next week, once the parties have concluded their discussions and filed their material."

Status Update as at March 16, 2017

Since the ARIO was made on February 3, 2017, multiple initiatives have been underway and the following is a brief update with respect to key initiatives:

All Properties

Sixth Avenue Arbutus Management Corp. ("Arbutus") was retained to conduct a review of the petitioner's construction plan, and this review has been completed.  Some modifications to the scope of the construction plan were recommended.  The Monitor has reviewed the recommendations and discussed them with the petitioners, secured lenders, and members of the investor steering committee.   Following those discussions, the Monitor has concluded on an amended construction plan, which reflects the recommendations of Arbutus.

The Monitor is currently in the process of seeking interim financing from the senior lenders in order to carry out the amended construction plan, and is hopeful that the funding will be confirmed soon.

Sunrise Properties

Two of the Sunrise Properties (Avant & Highline) were classified as Group 1 lands within the Amended and Restated Initial Order ("ARIO").  The ARIO required that the Group 1 lands be listed for sale on March 15, 2017, if no prior agreement had been reached between the senior lenders and the limited partners to remove the properties from the sale process.  No efforts were made by the Sunrise limited partners to prevent the sale of Avant & Highline, and therefore these buildings have been listed for sale with Avison Young.   A copy of the Avison Young Teaser has been posted to this website under the Properties/Group 1 Lands tab.  

Nutana, Idylwyld & Willis LPs

The Monitor understands that key investors in these limited partnerships have held discussions with the senior lenders of these projects, with the goal of restructuring the ownership/control of the limited partnership, and retaining ownership of these buildings.  No agreement has been reached to date.  As these properties were classified as Group 1 lands within the ARIO, they were listed for sale with Avison Young on March 15, 2017.

Cilo LP

The Monitor understands that key investors in this limited partnership are working on a proposal to provide to the senior lenders.  The Monitor is seeking a date from key investors, in order to hold an initial meeting with the senior lenders, wherein the investors can discuss their proposed plan.

Creditors

Creditors are advised that any potential payment on pre-filing debt (debt incurred for goods and services provided to the Company up to and including December 16, 2016), will be considered and addressed under any Plan of Compromise and Arrangement that the Company may file.  Currently, we do not have a timeline for a Plan to be filed, however, we will provide updates to this website on a periodic basis, as the restructuring efforts continue.    

Status Update as at February 3, 2017

The Court approved the ARIO (Amended and Restated Initial Order) today, and a copy of it can be found under the Court Orders tab.  Additionally, the Court approved the stay extension to May 1, 2017.

Status Update as at February 2, 2017

The Company has filed a Notice of Application  to be heard at the February 3rd hearing.  A copy of the application can be found under the Motion Materials tab. In the application, the Company is requesting the Initial Order be amended and restated, in order to incorporate provisions that will facilitate a review and recommencement of construction activities, and the financing of same.

The Monitor has issued its 3rd Report to the Court, in respect of that application, which can be found under the Monitor's Reports tab.  

Status Update as at January 31, 2017

At the January 27th hearing, the Court granted an extension of the stay of proceedings to February 3rd.  After that, the hearing was adjourned by consensus amongst the parties. The Company and its secured lenders continue to have discussions to come to a consensus. The next hearing is scheduled for February 3rd

Status Update as at January 26, 2017

The Monitor has issued a supplement to its 2nd Report, which contains the Property Book. This can be found under the Monitor's Reports tab.

Status Update - January 25, 2017

The Monitor's Second Report to the Court is now posted under the tab entitled Monitor's Reports. Please note that the Property Book referred to in the report will also be posted in due course.  

Status Update - January 23, 2017

Please note that the Monitor's 2nd Report to the Court, will be published by Wednesday January 25, 2017.

Status Update - January 17, 2017

Further to yesterday's update, we confirm the January 27th hearing will commence at 10:00 am, and is scheduled to be a full day in length.  

Status Update - January 16, 2017

Further to the January 13th status update, we confirm that the next court hearing will be on January 27, 2016.  Accordingly, the Monitor's 2nd Report will be released and posted on this website, prior to that hearing.  

Status Update - January 13, 2017

The court issued an Order today, extending the stay of proceedings to February 1, 2017. A copy of the Court Order can be found under the Court Orders tab.  Also, the hearing scheduled for next Friday, January 20th, is changing, but will take place prior to February 1, 2017. Once we have a confirmed hearing date, we'll post another update to this website.  

Status Update - January 12, 2017

The Monitor has released its 1st Report to the Court, which can be found under the Monitor's Reports tab. As tomorrow's hearing is a short hearing to only hear on the issue of the stay extension, a more fulsome report will be issued next week, prior to the January 20, 2017 hearing.

Status Update - January 6, 2017

Currently, the stay of proceedings expires on January 16, 2017. A short (one hour) hearing is scheduled for January 13th, wherein the stay of proceedings will be asked to be extended to Friday, January 20, 2017, wherein the Court has allotted a full day to address these CCAA proceedings. The Monitor will be filing a short report for the January 13th hearing, however a more detailed report will be available for the January 20th hearing. The Petitioner's application for the stay extension is posted under the Motion Materials tab. 

Status Update - December 22, 2016

A mailing to creditors is being sent from PwC on December 22, 2016. The mailing consists of a Notice of the proceedings, and a letter from the Petitioner Entities. Both documents are also posted to this website under the Creditor Communications tab. Please note that during the holiday break, response to calls and emails may be sporadic, but that communications will be answered.



This Web site will be updated as information becomes available.

For more information, please contact: Patricia Marshall, Telephone: +1 604 806 7237, Fax: +1 604 806 7043, or via email at patricia.marshall@ca.pwc.com.
 

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Patricia Marshall

Tel: +1 604 806 7237
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