Creditors bid to take ownership of northern Ont. properties held by insolvent companies

Creditors have moved to take ownership of most of the properties in northern Ontario owned by a group of 11 insolvent companies.

Collectively, Balboa Inc., DSPLN Inc., Happy Gilmore Inc., Interlude Inc., Multiville Inc., The Pink Flamingo Inc., Hometown Housing Inc., the Mulligan Inc., Horses In The Back Inc., Neat Nests Inc. and Joint Captain Real Estate Inc. owned 407 properties.

They were one of the largest real estate owners in northern Ontario. The properties are located in Timmins (290), the Sault (200) and Sudbury (78), as well as 63 units in Kirkland Lake, Capreol, Temiskaming Shores and Val Caron.

Including apartments, the companies owned 631 units.

Initial estimates of their debts when they declared insolvency in January of this year were as high as $144 million, but the firm overseeing the process said the actual amount is about $90 million.

KSV Advisory is the monitor of the Companies' Creditor Arrangement Act (CCAA) process. In its latest report, KSV said creditors owed money by the firms have bid to take ownership of most of the properties.

"In total, the monitor received 323 credit bids, each accompanied with the required deposit," the report said.

"Subject to court approval to be sought at the next motion in these proceedings and completion of the credit bid transactions, 84 properties will remain in the portfolio."

Under the CCAA, lawsuits and other legal proceedings are delayed – or stayed – until the insolvency process is completed.

KSV applied to the court to extend the stay period until the end of November to give it time to deal with the remaining 84 properties and for the credit bids for the properties to be approved.

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)

The hearing on extending the stay period will be held Oct. 30, one day before the current period expires.

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The entrepreneurs involved in the companies include former YTV child actor Robby Clark, Burlington business owners Aruba Butt and Ryan Molony and Hamilton real estate agent Dylan Suitor.

While the companies told investors they were buying the properties to renovate and rent or sell them at a profit, CCAA documents showed a number of questionable business practices.

For example, at least $1 million was spent on luxury purchases and trips that had no relation to the business. A company owned by the directors of the company was paid high fees to oversee the renovations and high dividends were paid despite the companies losing money.

However in June, the business partners' public relations team sent CTV News a statement disputing the report’s findings, adding that key evidence was omitted which contradicts it.

"The vast majority of the transactions cited as 'payments' to the principals are, in fact, reimbursements for standard business expenses," the statement reads.

"Allegations of excessive luxury expenditures are inaccurate. These expenses were related to company retreats and capital-raising activities. The principals are committed to defending their lawful and appropriate business practices."

A recent report in the Sault said many of the properties in the city have been fined under the vacant property bylaw.

And one of the companies owned a derelict property in Timmins known as a drug den that was demolished earlier this year.