Court documents reveal demolished drug den in Timmins owned by insolvent real estate group

A vacant building recently demolished in Timmins was owned by an insolvent real estate company that owns properties across northern Ontario, court documents show.

The group of companies, which filed for insolvency in January under the Companies’ Creditors Arrangement Act (CCAA), owns 290 residential units in Timmins, 200 in Sault Ste. Marie, 78 in Sudbury, and 63 others in Kirkland Lake, Capreol, Val Caron and Temiskaming Shores.

The properties total 631 units – including single-family homes and apartments – of which 456 are occupied as of July of this year.

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Their Timmins holdings included the vacant property on Kimberly Avenue. Court documents released late last month reveal that the monitor for the CCAA process – KSV Restructuring – opposed the demolition of the building.

“The applicants and the monitor advised (the City of) Timmins that demolishing the property would be in violation of the stay of proceedings provided in the second amended and restated initial order,” court documents dated July 24 said.

“SID Renos obtained an engineering report from Rivard Engineering which reflected that the building required significant work, but was, among other things, not in ‘immediate danger of collapse.’”

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However, the building, located across the street from the Living Space homeless shelter, by that time had become a lightning rod in the neighbourhood.

An excavator was on the scene July 22 at the Kimberly Avenue building, located across from the Living Space Homeless Shelter in Timmins. (Photo from video)

KSV said it tried to work with the city to find “alternative options to the demolition” that included repairing the building.

However, the city demolished the building July 22 “without prior notice to the monitor,” the court documents said.

“Timmins maintained it was its right to demolish the Kimberly property without needing to seek a lift of the stay of proceedings ... The monitor has reserved all rights in respect of any damages or losses incurred.”

The insolvent real estate group operated under 11 corporation names – including Happy Gilmore Inc., Interlude Inc., Multiville Inc., The Pink Flamingo Inc. and others – and filed for CCAA protection in January after piling up $144 million in debt.

The company would buy homes and apartment buildings, mainly in northern Ontario, renovate them and make a profit by renting them out at higher rates.

Questionable business practices

But the CCAA proceedings have revealed the company engaged in many questionable business practices.

As reported by CTV Northern Ontario in June, the entrepreneurs involved in the case are former YTV child actor Robby Clark, Burlington business owners Aruba Butt and Ryan Molony and Hamilton real estate agent Dylan Suitor.

They filed for creditor protection in January, blaming higher interest rates, but monitor KSV Restructuring uncovered that the business partners were spending their millions in ways not intended by their lenders.

Out of the $144 million owed – with more than $1.7 million of which to northern municipalities – the report cited millions of dollars in "questionable transfers" both between the applicant companies and others and hefty dividend payments to themselves, all without clear explanations.

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The report also cited more than $1 million spent on jewelry, lavish travel with private jets, luxury hotels and villas, private chefs, nightclub outings and payments to social media personalities.

An updated report on the company in June said the investigation has uncovered numerous other questionable practices, including:

- questionable transfers from the applicants to the principals, affiliated entities and third parties without any apparent benefit to the business;

- questionable dividend payments or repayment of amounts identified as shareholder loans; and

- a pervasive lack of proper record keeping, particularly for a business with assets and liabilities with a book value in the hundreds of millions of dollars.

KSV has been working to replace SID Management as the property manager. SID is implicated in many of the questionable business practices and itself charged much higher than normal fees for its services.

The full report from KSV can be found here.