CRYSTAL HEIGHTS CO-OPERATIVE INC. FIRST REPORT OF THE RECEIVER November 13, 2015

Court File No. A-12903-15
CRYSTAL HEIGHTS CO-OPERATIVE INC.
FIRST REPORT OF THE RECEIVER
November 13, 2015
Court File No. A-12903-15
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CANADA MORTGAGE AND HOUSING CORPORATION
Applicant
-ANDCRYSTAL HEIGHTS CO-OPERATIVE INC.
Respondent
FIRST REPORT OF RECEIVER
November 13, 2015
2
TABLE OF CONTENTS
A.
Introduction .................................................................................................................................... 4
B.
Purpose of this Report................................................................................................................... 4
C.
Disclaimer and Terms of Reference ............................................................................................ 5
D.
Background ..................................................................................................................................... 6
E.
Activities of the Receiver............................................................................................................... 7
F.
Sales Process for Real Property.................................................................................................... 9
G.
Repairs and Maintenance ........................................................................................................... 10
H.
Receiver’s Statement of Receipts and Disbursements............................................................ 13
I.
Cash Flow Forecast and Receiver’s Borrowings ...................................................................... 15
J.
Conclusion and Recommendation............................................................................................. 17
APPENDICES
A Receivership Order
B Sale Process Approval Order
C Pre-Filing Report
D Notice to Residents
E Second Notice to Residents
F Notice of Appointment
G November Cash Flow Forecast
NOTICE TO READER: The reports of the Receiver and related materials filed with the Court are available
on the Receiver’s website at www.pwc.com/car-crystalheightscoop.
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A.
INTRODUCTION
1.
Pursuant to an application (the “Application”) by Canada Mortgage and Housing Corporation
(“CMHC”) under section 101 of the Courts of Justice Act R.S.O. 1990 c.43, as amended, and an order
(the “Receivership Order”) of the Ontario Superior Court of Justice (the “Court”), dated
September 30, 2015 (the “Date of Appointment”), PricewaterhouseCoopers Inc. (“PwC”) was
appointed receiver and manager (the “Receiver”) without security, of all real property of Crystal
Heights Co-Operative Inc. (“Crystal Heights” or the “Co-Operative”) including rents pertaining
thereto and otherwise as set out in the Receivership Order, including the real property bearing
Parcel Identification Number 31515-0293 (LT) and known municipally as 1-21, 24, 29, 36
Clearview Drive and 12-18, 26-38 Crystal Place, Sault Ste. Marie, Ontario, and all proceeds
thereof (the “Real Property”). A copy of the Receivership Order is included as Appendix “A” to
this report.
2.
On September 30, 2015, the Court also granted an order approving the Sale Process as
described in the Pre-Filing Report (the “Sale Process Approval Order”). A copy of the Sale
Process Approval Order is included as Appendix “B” to this report.
3.
These proceedings are referred to as the “Receivership Proceedings.”
4.
The materials filed in conjunction with the Application included a report prepared by PwC
dated September 23, 2015 (the “Pre-Filing Report”) providing, among other things,
information on the background of the Real Property owned by the Co-Operative, the CoOperative’s financial difficulties, repairs and maintenance required to be completed at the Real
Property, the proposed sales process to market and sell the Real Property (the “Sale
Process”), and a cash flow forecast including borrowings (“Receiver’s Borrowings”) to
fund the Receivership Proceedings, including required repairs and maintenance, for the period
to November 21, 2015,. A copy of the Pre-Filing Report prepared by PwC, without appendices,
is included as Appendix “C” to this First Report (as defined herein).
B.
PURPOSE OF THIS REPORT
5.
This is the Receiver’s first report to the Court (the “First Report”), the purpose of which is to:
a) provide the Court with information in respect of:
i. the activities of the Receiver since the Date of Appointment;
ii. the Sales Process commenced in respect of the Real Property;
iii. the status of necessary repairs and maintenance to the Real Property including
related costs;
iv. the Receiver’s statement of receipts and disbursements from the Date of
Appointment to October 31, 2015 (“First R&D”); and
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v. the Co-Operative’s cash flow forecast for the period November 1, 2015 to April 30,
2015 (the “November Cash Flow Forecast”); and
b) to seek an order of the Court:
i. approving the Pre-Filing Report and the activities of PwC described therein;
ii. approving the First Report and the activities of the Receiver as described herein;
iii. authorizing an amendment to the maximum Receiver’s Borrowings provided for
by the Receivership Order from $500,000 to $900,000; and
iv. approving the Receiver’s First R&D.
C.
DISCLAIMER AND TERMS OF REFERENCE
6.
In preparing this First Report and conducting its analysis, the Receiver has obtained and relied
upon certain unaudited, draft and/or internal financial information of the Co-Operative, the
Co-Operative’s books and records, discussions with various parties including the property
management company Richmond Advisory Services Inc. (“Richmond”) engaged to manage
the Real Property (collectively, the “Information”).
7.
In accordance with industry practice, except as otherwise described in this First Report:
a) the Receiver has not audited, reviewed or otherwise attempted to verify the accuracy or
completeness of the Information in a manner that would wholly or partially comply with
Generally Accepted Assurance Standards pursuant to the Chartered Professional
Accountants Canada Handbook - Assurance; and
b) the Receiver has not conducted an examination or review of any financial forecast and
projections in a manner that would comply with the procedures described in the
Chartered Professional Accountants Canada Handbook – Assurance.
8.
Future oriented financial information referred to in this First Report is based on estimates and
assumptions. Actual results may vary from forecasts, even if the assumptions materialize, and
such variances may be significant.
9.
Unless otherwise stated, all monetary amounts contained herein are expressed in Canadian
Dollars and include harmonized sales tax (“HST”) where applicable. The Co-Operative does
not qualify as a registrant for HST purposes under the Excise Tax Act. A “k” in this First Report
denotes thousand
10.
Capitalized terms not defined herein are as defined in the Receivership Order, Sale Process
Approval Order and the Pre-Filing Report, which should be read in conjunction with this First
Report.
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D.
BACKGROUND
11.
Crystal Heights was incorporated in 1978 as a non-profit housing co-operative in accordance
with the Co-Operative Corporations Act (Ontario). The members of co-operatives
(“Members”) are responsible for, inter alia, electing the board of directors to govern the
housing co-operative’s affairs and approving the annual budget. Members have membership in
the co-operative corporation, but the co-operative corporation owns all of the property of the
co-operative, not the Members.
12.
Housing co-operatives can also have tenants occupying a limited number of units (the
“Tenants”) (collectively, the Tenants and Members of Crystal Heights are the “Residents”).
13.
The Real Property is a multi-family residential complex located on approximately 4.39 acres of
property containing 60 co-operative housing units in four 8-unit walk up apartment style
buildings and five clusters of two-storey row house style units. The Real Property was built in
1983 with CMHC providing mortgage insurance for the construction financing.
14.
CMHC assumed the mortgage for approximately $2.8 million from a third party financial
institution in 1996. Subsequent advances and accrued interest, secured by mortgages and
personal property security, increased the total owed by Crystal Heights to CMHC to
approximately $4.8 million as at September 10, 2015. Such indebtedness is secured by three
mortgages (collectively, the “Mortgages”) registered in favour of CMHC against title to the
Real Property (the “CMHC Security”) owned by Crystal Heights.
15.
Additional information on the Mortgages and the CMHC Security is provided in the Affidavit of
Carl Lawrence sworn September 16, 2015 and filed on September 17, 2015 with the motion
materials in support of an Application to appoint the Receiver.
16.
CMHC has informed the Receiver that Crystal Heights had not made any payments of principal
or interest to CMHC in respect of the Mortgages since 2001. The lack of funding was attributed
to poor management including insufficient monthly occupancy charges to Residents
(“Occupancy Charges”) to fund mortgage payments and other obligations for operating costs
and a reserve fund for capital improvements.
17.
Despite CMHC having taken steps to maintain and repair the Real Property, Crystal Heights did
not generate sufficient cash flow to honour its mortgage obligations to CMHC or to fund
payments for property taxes, insurance, property management fees and necessary repairs.
CMHC subsequently filed an Application to appoint a Receiver to undertake certain necessary
repairs and sell the Real Property, which appointment was granted.
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E.
ACTIVITIES OF THE RECEIVER
Preservation and Possession of the Real Property
18.
Pursuant to the Receivership Order, on September 30, 2015 the Receiver took certain actions to
preserve and protect the Real Property and accordingly the Receiver:
a) notified the Co-Operative’s insurance broker of the Receiver’s appointment and arranged
for the Receiver to be added as a loss payee and named insured in respect of the CoOperative’s insurance policies;
b) arranged for the continuation of all essential services to the Real Property, including
utilities;
c) notified the property management company, Richmond, of the Receiver’s appointment
and continued its engagement to manage the Real Property until October 30, 2015;
d) notified the Residents of its appointment and instructed the Residents to remit all future
rent payments to the Receiver, as described in greater detail later in this First Report;
and
e) entered into a new property management agreement with Richmond effective November
1, 2015.
19.
There was no need to change the locks at the Real Property since Richmond’s engagement to
manage the Real Property was continued and the Residents who lived at the Real Property prior
to the Date of Appointment continued to live at the Real Property subsequent to the Receiver’s
appointment.
20.
The Receiver did not take possession of the Co-Operative’s books and records (“Books and
Records”) because the Books and Records in the possession of Richmond were necessary for
Richmond’s ongoing management of the Real Property and have been made available to the
Receiver when Information has been required by the Receiver to fulfill its duties pursuant to the
Receivership Order and the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended,
(the “BIA”).
Correspondence with Residents
21.
On the Date of Appointment, the Receiver notified the Residents of its appointment by way of a
written notice (“Notice to Residents”), which was hand delivered to each occupied unit of the
Real Property. The Notice to Residents was also posted in various common areas of the Real
Property and posted on the Receiver’s website: www.pwc.com/car-crystalheightscoop.
22.
The Notice to Residents included:
a) a description of the Receiver’s appointment;
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b) a list of frequently asked questions that Residents may have about the Receivership
Proceedings, and the answers thereto;
c) notification of two (2) town hall meetings to be held at the Real Property for Residents on
October 7, 2015 at 3:00pm and 6:00pm (the “Town Halls”) to discuss the Receivership
Proceedings and provide a forum for Residents to ask questions;
d) notification that the Receiver would provide regular updates during the Receivership
Proceedings in order to mitigate concerns of the Residents, which may include further
written notices and additional town hall meetings, as needed;
e) details of the Receiver’s website address and notice that the Receiver’s Pre-Filing Report,
which contained additional background information to the Application to appoint a
Receiver was available on the Receiver’s website, with other important information on the
Receivership Proceedings, which would be updated regularly; and
f)
contact information for Richmond and the Receiver, in the event Residents had
additional questions.
A copy of the Notice to Residents is included as Appendix “D” to this First Report.
23.
On October 7, 2015, the Receiver held the Town Halls at the Real Property. Eight Residents
attended the Town Hall held at 3:00pm while three Residents attended the Town Hall held at
6:00pm.
24.
Since the Date of Appointment, the Receiver has received three inquiries from Residents.
Richmond has advised the Receiver that it has received five inquiries from Residents. These
inquiries have been responded to and dealt with in the normal course of the Receivership
Proceedings.
25.
On November 13, 2015, the Receiver intends to hand deliver a second written notice to the
Residents (“Second Notice to Residents”), which will include:
a) an update on the Receivership Proceedings; and
b) an update on the status of certain repairs and maintenance in respect of the Real
Property.
26.
The update on the Receivership Proceedings and certain repairs and maintenance in respect to
the Real Property will be posted in certain common areas of the Real Property and will also be
posted on the Receiver’s website. A copy of the Second Notice to Residents is included as
Appendix “E” to this report.
Statutory Notices and Other
27.
The Receiver is a receiver as that term is defined in the BIA, notwithstanding that its
appointment was made under the Courts of Justice Act. Accordingly, on October 7, 2015, in
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accordance with subsection 245(1) of the BIA, the Receiver sent a notice of its appointment
(“Notice of Appointment”), pursuant to section 246(1) of the BIA, to all known creditors of
the Co-Operative and to the Office of the Superintendent of Bankruptcy. A copy of the Notice of
Appointment is included as Appendix “F” to this report.
28.
Based on the Co-Operative’s Books and Records, and as evidenced in the Notice of
Appointment, as of the Date of Appointment, the Co-Operative had 30 unsecured creditors with
liabilities totaling approximately $40k. This included 13 Residents with security deposits
totaling approximately $9k. CMHC is the only known secured creditor of Crystal Heights.
29.
Since the Date of Appointment, the Receiver has authorized payment of certain pre-filing
liabilities pursuant to the Receivership Order, and where necessary.
30.
The Receiver has also established a website (www.pwc.com/car-crystalheightscoop) for
creditors, Residents and other stakeholders, to obtain information on the Receivership
Proceedings. The website is updated regularly.
31.
The Receiver has addressed inquiries from stakeholders, including creditors and Residents as
described above.
F.
SALES PROCESS FOR REAL PROPERTY
32.
Paragraph 3(p) of the Receivership Order and paragraph 4 of the Sale Process Approval Order
provide that the Receiver is empowered and authorized to market and sell the Real Property,
subject to the limitations set forth therein.
33.
As described in the Pre-Filing Report, the Sale Process takes into consideration the challenges
of selling a non-profit housing co-operative and the additional factors to be considered in a sale
of this nature. The Sale Process will, if feasible, maintain the Real Property’s status as nonprofit social housing.
34.
Since its appointment, the Receiver has undertaken the following pre-marketing and
transaction-readying due diligence tasks:
a) engaged third parties to perform certain due diligence procedures including:
i. obtained two quotes and on October 19, 2015, engaged an appraiser to provide an
independent appraisal of the Real Property, which is in process as of the date of
this First Report; and
ii. obtained two quotes and on October 21, 2015, engaged Pinchin Ltd. (“Pinchin”)
to prepare a Phase I Environmental Site Assessment (“Phase I”), and a Baseline
Property Condition Assessment (“PCA”). The Phase I and PCA have been
completed and relevant reports have been delivered to the Receiver;
b) prepared a teaser to be circulated to parties interested in purchasing the Real Property;
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c) prepared a Non-Disclosure Agreement (“NDA”) for execution by parties interested in
obtaining access to the due diligence materials in the online data room;
d) commenced preparation of a Confidential Information Memorandum (“CIM”), which
included a site visit to the Real Property to collect certain information to be included in
the CIM;
e) collected materials for an online data room that will include due diligence materials such
as financial statements, environmental reports, building drawings, site plans, survey and
lease agreements; and
f)
engaged in preliminary discussions with municipal service providers and not-for-profit
organizations to determine if they would be prepared to purchase or take possession of
the Real Property in exchange for assuming the existing mortgage (including, principal,
interest, and receivership costs) and operating agreement with CMHC (a “Non-Profit
Housing Transfer”), which would continue to make the Real Property available as
affordable housing.
35.
As of the date of this report, the Receiver is continuing its discussions with municipal service
providers and not-for-profit organizations. At this time, it is too early in the Sale Process to
determine if a Non-Profit Housing Transfer is likely to be achieved on appropriate terms.
G.
REPAIRS AND MAINTENANCE
36.
As described in the Pre-Filing Report, PwC was advised by CMHC and Richmond that the Real
Property was in need of various significant repairs (collectively, the “Repairs”). The Receiver
is of the view that these Repairs are required as they may have a direct impact on the health and
safety of the Residents.
Fire Safety Issues
37.
As described in the Pre-Filing Report, on August 6, 2015, Sault Ste. Marie Fire Services (“Fire
Services”) served an Inspection Order pursuant to the Fire Protection and Prevention Act,
1997, S.O. 1997, c4 (the “Fire Act”) identifying that the common clothes dryer exhaust
ventilation system at the Real Property was installed contrary to manufacturer’s standards (the
“Dryer Exhaust Issue”), posing a potential fire hazard and was not in compliance with the
Fire Act. The repairs required to address the Dryer Exhaust Issue have been completed and on
October 6, 2015, Fire Services completed its inspection of the completed repairs and issued a
compliance letter confirming that the Inspection Order issued in respect of the Dryer Exhaust
Issue had been resolved.
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Water Drainage Issues
38.
As described in the Pre-Filing Report, a site inspection conducted on behalf of CMHC
determined that there were potential grading and drainage issues (“Water Drainage
Issues”) at the Real Property, which may have contributed to leaks in the foundation walls of
certain buildings located on the Real Property. These leaks in the foundation walls may have
contributed to moisture and mould issues at the Real Property, which may create a health and
safety issue for the Residents who inhabit these buildings. Accordingly the Water Drainage
Issues need to be addressed as soon as practically possible.
39.
The Receiver understands that repairs to remediate the foundation leaks may include
excavating and repairing the chimney, re-grading around all buildings, replacing the catch
basins and possibly installing additional catch basin and storm sewer pipe, installing new
foundation waterproofing, drainage board and weeping tile, and redirecting roof drains,
followed by landscape restoration (collectively, the “Water Drainage Repairs”).
40.
Following its appointment, the Receiver continued the engagement of Kresin Engineering
Corporation (“Kresin”), the engineer previously retained by Richmond to assess the extent of
the Water Drainage Issues and the Water Drainage Repairs, and to prepare the tender package
(“Tender Package”) in respect of the Water Drainage Repairs.
41.
On November 4, 2015, Kresin distributed the Tender Package to six contractors (“Bidders”), to
facilitate their submission of bids (“Bids”) to complete the Water Drainage Repairs. The
Tender Package, which has also been posted to the Receiver’s website includes:
a) background information on the Water Drainage Repairs, such as the location and scope
of the repairs required;
b) standard Bid form to be completed by Bidders;
c) site drawings of the Real Property;
d) construction bonding requirements;
e) Workplace Safety and Insurance Act and Occupational Health and Safety Act
requirements;
f)
timeline and method for submission of Bids;
g) timeline for completion of the water Drainage Repairs; and
h) certain terms and conditions acceptable to the Receiver in the context of the Receivership
Proceedings.
42.
The deadline for submission of Bids is November 13, 2015 (“Bid Deadline”). Subsequent to
the Bid Deadline, Kresin and the Receiver will review the Bids received, and subject to the
receipt of an acceptable Bid, negotiate the terms of engagement.
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43.
As discussed in the Pre-Filing Report, due to the early onset of winter in Sault Ste. Marie, all of
the Water Drainage Repairs cannot be completed this fall. However, it is intended that the
Water Drainage Repairs that cannot be completed in the fall will be completed in the spring of
2016.
Water Damage Issues
44.
The Water Drainage Issues may have contributed to moisture and mould issues at the Real
Property, which may create a health and safety issue for the Residents.
45.
In September 2015, prior to the Date of Appointment, Winmar Sault Ste. Marie Property
Restoration Specialist (“Winmar”) was engaged to inspect each of the 60 units of the Real
Property (the “Inspections”), including the common areas in the apartment buildings, for
visible signs of water damage and mould (“Water Damage and Mould”) and to provide a
quote in respect of any necessary remediation and abatement. Winmar had not completed the
Inspections as of the date of the Pre-Filing Report. However, based on the Inspections
completed at that time, Winmar advised that there had been flooding and moisture issues in
certain units and common areas, due to water seepage and accumulation. The Inspections
identified the presence of mould in certain units and common areas.
46.
Winmar has now completed the Inspections and provided the Receiver with a quote for the cost
to remediate, repair and abate the Water Damage and Mould.
47.
Subsequent to its appointment, the Receiver engaged a contractor to conduct a second
Inspection for visible Water Damage and Mould and to provide a second quote for the cost to
remediate, repair and abate any such Water Damage and Mould.
48.
The Receiver is reviewing the quotes received and intends to engage a contractor to address the
Water Damage and Mould subsequent to negotiating the terms of an agreement. The Receiver
notes that, based on the quotes received, the estimated cost to remediate, repair and abate the
Water Damage and Mould, is significantly higher than previously estimated. The contractors
have also advised that additional Water Damage and Mould may be uncovered during the
course of the remediation and abatement work resulting in further related costs. Accordingly,
this is taken into consideration in the November Cash Flow Forecast as described later in this
First Report.
49.
In addition to Water Damage and Mould, the Inspections also identified corrosion on certain
electrical equipment. The Receiver arranged for an inspection of the electrical equipment in the
electrical rooms at the Real Property (“Electrical Inspection”) to determine whether the
corrosion to the electrical equipment that might impact the operation, functioning and safety of
the electrical equipment. The Electrical Inspection was completed on November 6, 2015, by a
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qualified electrician, with the assistance of the local Public Utility Commission. The electrician
reported that the electrical equipment was in working order and that there was no damage
present.
50.
Certain Water Damage and Mould appears to be related to the Water Drainage Issues, which as
discussed earlier, cannot be fully completed until the spring of 2016. Notwithstanding the
aforementioned, the Receiver will be addressing Water Damage and Mould that may have a
direct health and safety impact on the Residents, within the constraints described above.
51.
In addition, Pinchin has been engaged to complete certain air quality tests (“Air Quality
Tests”) before and after the remediation and abatement of mould in certain areas of the Real
Property to confirm that the mould issue has been addressed and the air quality is acceptable
for the health and safety of the Residents.
H.
RECEIVER’S STATEMENT OF RECEIPTS AND DISBURSEMENTS
52.
The Receiver’s First R&D is summarized in the table below, which includes actual cash flows for
the period September 30 to October 31, 2015 (“Cash Flow Period”), compared to the same
period in the Receiver’s initial cash flow forecast for the eight week period commencing
September 30, 2015 and ending November 21, 2015, which was included in the Pre-Filing
Report:
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Crystal Heights Co-Operative Inc. Receivership
Receipts & Disbursements
For the Period September 30 to October 31, 2015
Actual
Total
Cash Flow
Period Total
Variance
51,696
323
52,019
44,887
448
45,336
6,809
(126)
6,683
18,270
3,286
26,796
4,835
53,187
(7,852)
(563)
3,286
(175)
4,610
7,160
13,842
Net change in cash
18,833
26,971
225
46,028
5,991
5,991
200,000
205,991
Opening cash balance
Ending cash balance
37,449
243,440
$ in CAD
Receipts
Occupancy charges
Other
Total receipts
Disbursements
Operating costs
General and administrative costs
Capital expenditures and Repairs
Disbursement contingency
Total operating disbursements
Net change in cash flow from operations
Professional Fees
Net change in cash before Receiver's borrowings
Receiver's borrowings
110,000
(117,852)
110,000
123,842
200,000
-
82,148
123,842
42,225
124,373
(4,776)
119,066
Note: These amounts include HST.
53.
During the Cash Flow Period, receipts totaled approximately $52k, consisting primarily of
Occupancy Charges. Receipts were $6.7k higher than forecast as a result of the collection of
Occupancy Charges in respect to the period prior to the appointment of the Receiver.
54.
Operating disbursements for the Cash Flow Period totaled approximately $46k, consisting
primarily of operating costs, and capital expenditures and significant Repairs. These amounts
include certain pre-filing liabilities, as discussed earlier in this First Report. During the Cash
Flow Period, general and administrative costs were $3k lower than forecast due to timing
differences.
55.
In addition to the above, there was a favourable timing difference of $110k related to
professional fees and expenses of the Receiver (including the fees and disbursements of its legal
counsel) (“Professional Fees”) for the period to September 30, 2015. This timing difference
is expected to reverse in the coming weeks. Accrued and unpaid Professional Fees for the
period ending October 31, 2015, are approximately, $138k and $50k, respectively.
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I.
CASH FLOW FORECAST AND RECEIVER’S BORROWINGS
56.
The Receiver has prepared the November Cash Flow Forecast for the six (6) month period
November 1, 2015 to April 30, 2015 (the “November Cash Flow Forecast Period”).
57.
The amounts included in the November Cash Flow Forecast, including the Professional Fees,
are estimates and actual results will vary from the forecast.
58.
The November Cash Flow Forecast is summarized below:
Crystal Heights Co-Operative Inc. Receivership
Summary Cash Flow Forecast
For the Period November 1, 2015 to April 30, 2016
$ in CAD
Receipts
Occupancy Charges
Other
Total receipts
Total
264,726
3,794
268,520
Disbursements
Operating costs
General and administrative costs
Sale Process costs
Capital expenditures and Repairs
Total operating disbursements
Net change in cash flow from operations
(283,280)
(23,169)
(13,221)
(285,122)
(604,792)
(336,272)
Professional Fees
Contingency reserve
Net change in cash before Receiver's borrowings
(424,000)
(88,736)
(849,008)
700,000
Receiver's borrowings
Net change in cash
(149,008)
Opening cash balance
Ending cash balance
243,440
94,432
Note: This Cash FlowForecast must be read in conjunction with the notes
related thereto. These amounts include HST.
59.
A detailed version of the November Cash Flow Forecast, along with the assumptions related
thereto is included as Appendix “G” to this report.
60.
The November Cash Flow Forecast includes the following key assumptions:
a) receipts of approximately $269k including:
i. Occupancy Charges levied by the Co-Operative; and
ii. other receipts related to items such as laundry income and interest income in
respect of cash held by the Receiver and Richmond; and
b) operating disbursements of approximately $605k including:
i. operating costs in respect to utilities, janitorial services, external and internal
maintenance, insurance, and property taxes, etc.;
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ii. general and administrative costs in respect to management fees paid to
Richmond pursuant to the current property management agreement;
iii. Sale Process costs in respect of pre-marketing and transaction-readying due
diligence tasks, includes the appraisal, Phase I, PCA, etc.; and
iv. capital expenditures and Repairs, including certain non-recurring expenditures,
such as work related to the Water Drainage Repairs and Water Damage and
Mould, among others;
c) Professional Fees of approximately $424k in respect of addressing the repair and
remediation the Real Property, implementing the Sales Process and conducting its
Receiver’s duties (including those of its legal counsel) in the Receivership Proceedings.
Accrued and unpaid Professional Fees for the period to October 31, 2015, are estimated at
$188k. No Professional Fees had been paid to date; and
d) a contingency reserve of approximately $89k, estimated at 15% of total operating
disbursements, for any unforeseen expenditures that may be required in respect to the
Real Property.
61.
The November Cash Flow Forecast projects cash outflow from operations of $336k, before
Professional Fees of $424k and a contingency reserve of $89k. The forecasted net cash outflow
during the November Cash Flow Forecast Period is approximately $849k.
62.
The Receivership Order authorized Receiver Borrowings in the maximum principal amount of
$500k, secured by way of a Receiver’s Borrowings Charge (as defined in the Receivership
Order). To date the Receiver has borrowed and issued Receiver Certificates to CMHC in the
amount of $200k, leaving $300k of Receiver’s Borrowings available to the Receiver.
63.
The remaining $300k of Receiver’s Borrowings is not sufficient to fund the Receivership
Proceedings and cash outflow of $849k projected in the November Cash Flow Forecast.
64.
The Receiver has reviewed the November Cash Flow Forecast with CMHC and CMHC has
agreed to fund the Receivership Proceedings and cash shortfall via Receiver’s Certificates
secured by the Receiver’s Borrowing Charge. Accordingly, the Receiver requests that the Court
grant an order increasing the maximum principal amount of the Receiver’s borrowings under
the Receivership Order to $900k.
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J.
CONCLUSION AND RECOMMENDATION
65.
The Receiver’s activities as described in the Pre-Filing Report have been in support of the
Receiver’s statutory duties and pursuant to the Receivership Order and the Sale Process
Approval Order.
66.
The Co-Operative’s operating cash flows are insufficient to fund the continued operating costs
of the Co-Operative, including capital expenditures and Repairs, and Professional Fees.
Accordingly, the Receiver will require additional borrowings to continue to fund the
Receivership Proceedings until the Real Property is sold.
67.
The Receiver respectfully requests that the Court grant an order which provides for the
following:
a) approving the Pre-Filing Report and the activities of PwC described therein;
b) approving the First Report of the Receiver and the activities of the Receiver as described
herein;
c) authorizing an amendment to the maximum borrowings provided for by the Receivership
Order to $900,000; and
d) approving the Receiver’s First R&D.
All of which is respectfully submitted on this 13th day of November, 2015.
PRICEWATERHOUSECOOPERS INC.
Receiver of Crystal Heights Co-Operative Inc.
Michelle Pickett
Senior Vice President
Aldis Makovskis
Senior Vice President
17
APPENDIX A
90
THE HON OTJRABLE MR.
JUSTICE R. GORDON
)
)
)
\kEDKESDAY, JHE 30TH
DAY OF SEPTEMBER. 2015
DA MORTGAGE AND HOUSING CORPORATION
Applicant
and
CRYSTAL HEIGHTS CO-OPERATIVE INC.
Respondent
APPLICATION UNDER SECTION 101 OF THE
CO(RTSOFJUSTICEACT, RSO. 1990, C. C.43, AS AM
IVERSIIIP ORDER
THIS APPLICATION made by the Applicant for an order pursuant to section 101 of
the Courts qf Justice Act, RSO. 1990, c C 43, as amended (the "CiA") appointing
PricewaterhouseCoopers inc. as receiver and manager (in such capacities. the "Receiver")
without security. of all of the assets, undertakings and properties of the Respondent acquired for,
or used in relation to a business carried on b the Respondent, and granting related relief,
as
heard this day at 155 Elm Street, Sudbury, Ontario.
ON READING the Notice of Application, dated September 17. 2015, the Affidavit of
Carl Lawrence sworn September 16, 2015 and the Exhibits thereto, and the Pre-Filing Report of
the Proposed Receiver, dated September 23, 2015. and on hearing the submissions of counsel for
Canada Mortgage and Housing Corporation and the Receiver no one appearing for the
Respondent although duly served as appears from the affidavit of ser ice. filed, and on reading
the consent of Price\aterhouseCoopers Inc to act as the Recei\er,
SeOv'CC of tiic \ot
Appiication Record is hereby abridged and
aIidated so hat this
is properly
returnable today and hereby dispenses with further ser ice thereof.
NTMENT
2.
THIS
COURT ORDERS that pursuant to section 101 of the
CJA.
PricewaterhouseCoopers Inc. is hereby appointed Receiver and manager, without security, of all
real properties of the Respondent including rents pertaining thereto and otherwise as set out in
this Order, including the real property bearing Parcel Identification Number 31515-0293 (LT)
and known municipally as 1-21, 24, 29. 36 Clearview Dri\e and 12-18. 26-38 Crystal Place,
Sault Ste Marie, Ontario. and all proceeds thereof (the "Real Property").
RECEIVER'S POWERS
3.
THIS COURT ORDERS that the Receiver is hereby empowered and authorized, but not
obligated, to act at once in respect of the Real Property and, without in any wny limiting the
generality of the foregoing, the Receiver is hereby expressly empo\\ ered and authorized to do
an of the folloiing \\here the Receiver considers it necessary or desirable:
to take possession of and exercise control o er the Real Property and an
and all proceeds. receipts and disbursements arising out of oi from the
Real Property:
(b)
to receive. preser e. maintain, repair and protect the Real Property. or any
part or parts thereof, including. but not limited to, the changing of locks
and security codes as necessary and practicable, the relocating of property
to safeguard it. the engaging of independent security personnel. the taking
of ph\ sical inventories and the placement of such insurance co erage as
ma) be necessary or desirable;
to manage, and operate the Real Prop
powers to enter into an) aureernents. incur an\
Respondent, including the
s in the ordinary
sers,
experts, auOltors,
accountants, managers, property managers, counsel and such other persons
from time to time and on n hate\ er basis, including on a temporary basis.
to assist with the exercise of the Receivers powers and duties, including
\\lthout limitation those conferred by this Order:
(e)
to purchase and lease such machinery. equipment. inventories, supplies,
premises or other assets related to the Real Property of the Respondent or
any part of parts thereof
(f)
to recei e and collect all monies and accounts no
owed or hereafter
owing to the Respondent for rents or rental subsidies and to exercise all
remedies of the Respondent in collecting such monies;
to settle, extend or compromise any indebtedness owing to the Respondent
in relating to the Real Property;
to execute, assien. issue and endorse documents of vhatever nature in
respect of any of the Real Property. whether in the Recei\ ers name or in
the name and on behalf of the Respondent. for any purpose pursuant to
this Order;
to undertake environmental or health and safety assessments of the Real
Property and to take any steps to remediate the Real Property including
engaging contractors, engineers and such other persons to undertake and
otherwise assist with any remediation efforts;
to initiate, prosecute and continue the prosecution of any and all
proceedings and to defend all proceedings noa pending or hereafter
instituted nith respect to the Real Property or the Recefrer and to settle or
compromise any such proceedings. The authority hereby conveyed shall
(k)
to provi
pp1icant vth access
accouno
and records relating to the Real Property,
(1)
to terminate the membership of the Respondenfs members (I1
for misconduct, or failure to pay rent or other occupancy charges:
)
to bring motions herein or other proceedings for the e iction of residents
of the Respondent for misconduct or failure to pay rent or other occupancy
charges:
to adjust to market-level rents the rent of those tenants of the Respondent
nhich are unable to provide the Receiver ith satisfactory and up-to date
aOdence that they are eligible for rent which is geared to income, subject
to Court approval,
to identify and retain a nei
manager for the Real Property and, if the
Recei\ er deems it advisable, to terminate the existing manager;
(p)
to sell, cons ey, transfer. lease or assign the Real Property or any pact or
parts thereof,
without the approval of this Court in respect of any transaction not
exceeding $10,000. provided that the aggregate consideration for
all such transactions does not exceed $50000; and
with the approval of this Court in respect of any transaction in
which the purchase price or the aggregate purchase price exceeds
the applicable amount set out in the preceding clause:
and in each such case notice under section 31 of the Ontario kfortgages
4cL shall not apply
to report to, meet vith and discuss with such affected Persons (as defined
below) as the Recei\ er deems appropriate on all matters relating to the
Real Property and the receivership, and to share information, subject to
such terms as to confidentiality as the Receiver deems advisable;
to register a copy of this Order and any other Orders in respect of the Real
Property against title to any of the Real Property;
(t)
to apply for any permits. licences, appro als or permissions as may be
required by any governmental authority and any reneivals thereof for and
on behalf of and, if thought desirable by the Receiver, in the name of the
Respondent in respect of the Real Property; and
(u)
to take any steps reasonably incidental to the exercise of these powers or
the performance of any statutory obligations.
and in each case nhere the Recci\ er takes any such actions or steps. it shall be exclusively
authonzed and empowered to do so, to the exclusion of all other Persons (as defined belov).
including the Respondent, and without interference from any other Person.
DUTY TO PROVIDE ACCESS AND CO-OPERATION TO TEE RECEIVER
4
COURT ORDERS that (1) the Respondent, (ii) all of its current and former
directors, officers, employees, agents. accountants, legal coimsel and Members. and all other
persons acting on its instructions on behalf, and (iii) all other individuals, firms, corporations.
gov ernmental bodies or agencies, or other entities having notice of this Order tall of the
foregoing. collectively, being 'Persons" and each being a "Person") shall forthn ith advise the
Receiver of the existence of any Real Property in such Persons possession or control, shall gTant
immediate and continued access to the Real Propert\ to the Recei\ en and shall deli\ er all such
property to the Receier upon the Recei\ er's request
mdiidual units or the Real Property. or for such other purposes as the Recei\er may cons
necessary or desirable in carrying out its duties and pon ers hereunder.
6.
THIS COURT ORDERS that all Persons shall forthwith advise the Receiver of the
existence of any books. documents, securities, contracts, orders, corporate and accounting
i ecords, and any other papers, records and information of any kind related to the Real Property or
affairs of the Respondent, and any computer programs, computer tapes, computer disks. or other
data storage media containing any such information (the foregoing, collectively, the "Records")
in that Persons possession or control, and shall provide to the Receiver or permit the Receiver to
make, retain and take away copies thereof and grant to the Receiver unfettered access to and use
of accounting, computer, sofi\are and phy sical facilities relating thereto, provided howe\ er that
nothing in this paragraph 5 or in paragraph 6 of this Order shall require the delivery of Records,
or the granting of access to Records, which may not be disclosed or provided to the Recei er due
to the privilege attaching to solicitorclient communication or due to statutory pros isions
prohibiting such disclosure,
7
THIS COURT ORDERS that if any Records are stored or otherise contained on a
computer or other electronic system of information storage, nhether by independent service
prokider or othernise, all Persons in possession or control of such Records shall forthwith give
unfettered access to the Receiver for the purpose of allowing the Receiver to reco er and fully
copy all of the information contained therein whether by way of printing the information onto
paper or making copies of computer disks or such other manner of retrieving and copying the
information as the Receiver in its discretion deems expedient. and shall not alter. erase or destroy
any Records without the prior written consent of the Recel\ en Further. for the purposes of this
paragraph. all Persons shall pros ide the Recei er v ith all such assistance in gaining immediate
access to the information in the Records as the Receiver may in its discretion require including
proriding the Receiver nith instructions on the use of any computer or other system and
providing the Recei\ er with any and all access codes, account names and account numbers that
may be required to gain access to the information.
mis
in aoy Lourt or
r continued gainst the Receiver except
tribunal (each, a
with the written consent of the Receiver o
ease of this Court
O PROCEEDINGS &GAINST THE RESPONDENT OR
9
tL PROPERTY
THIS COURT ORDERS that no Proceeding against or in respect of thu. Respondeutor
the Real Property shall be commenced or continued except with the written consent of the
Recei\ er or with leave of this Court and any and all Proceedings currently under ay against or
in respect of tlu.R pondeuttd the Real Property are hereby stayed and suspended pending
further Order of this Court.
NO EXERCISE OF RIG]
10.
THIS COURT 01
that all rights and remedies
the Real
Property. the Receiver, or affecting the Real Property. are hereby stayed and suspended except
with the written consent of the Receiver or leave of this Court, provided that nothing in this
paragraph shall (i) empower the Receiver or the Respondent to carry on any business which the
Respondent is not lawfulh entitled to carry on, (ii) exempt the Receiver or the Respondent from
compliance v ith statutory or regulatory pros isions relating to health, safety or the environment,
pre ent the filing of any registration to preser e or perfect a security interest, or i\) prevent
the registration of a claim for lien,
NO INTERFERENCE WITH THE RECEIVER
11
THIS COURT ORDERS that no Person shall discontinue, fail to honour, alter, interfere
with. repudiate, terminate or cease to perform an\ righi, rene\\ai right, contract, aureement,
licence or permit in favour of or held by the Respondent with respect to the Real Property.
vithout written consent of the Recei\ er or leave of this Court
CONTIMJATION OF SERVICES
a Se
centralized banking serr ices, payroll ser ices, insurance transportation services, utility or other
services to the Respondent with respect to the Real Property are hereby restrained until further
Order of this Court from discontinuing, altering, interfering with or terminating the supply of
such goods or ser\ ices as may be required by the Receri er. and that the Receiver shall be entitled
to the continued use of the Respondent's current telephone numbers. facsimile numbers. internet
addresses and domain names, provided in each case that the normal prices or charges for all such
goods or services received after the date of this Order are paid by the Recei\ er in accordance
with normal payment practices of the Respondent or such other practices as may be agreed upon
by the supplier or service pros ider and the Receiver, or as may he ordered by this Court.
13.
THIS COi.RT ORDERS that the Recei\er may pay amounts payable for any repair and
remediation ser\ ices that were pros ided to the Real Propert\ prior to the date of the appointment
of the Receiver, and with lien rights against the Real Property. but unpaid at the date of the
Recei\ ership. after confirmation by the Receri er of:
(a)
completion of the work in accoidancc with the relevant purchase orders
and or other contractual documentation; and
(b)
confirmation of the inspection and required certification of the work as
properly completed by Sault Ste. Marie Fire Serr ices Safety or other
municipal authorities (if applicable).
in accordance with the normal prIces or charges set out in the rele ant contractual documentation
for all such goods or serr ices, and in accordance with the normal payment practices of the
Applicant, the Respondent or their agents (as applicable), or such other practices as may be
agreed upon by the supplier or service proider and the Receiver, or as may be ordered by this
Court
of parnents received or cAle
any source whatsoe\ er. including without limitation the sale of all or any of the Real Property
and the collection of am accounts recei\ able with respect to rents, rental subsidies or any other
amounts related to the Real Property, in whole or in part. whether in existence on the date of this
Order or hereafter coming into existence, shall be deposited into one or more nen accounts to be
opened by the Receiver (the 'Post Receivership Accounts") and the monies standing to the
credit of such Post Receivership Accounts from time to time, net of any disbursements provided
for herein, shall be held by the Receiver to be paid in accordance with the terms of this Order or
any further Order of this Court
EMPLOYEES
15,
The Recei\ er shall not be liable for any employeerelated liabiliries, including any
successor employer liabilities as pros ided for in section l4O6(l 2) of the Bankruptcy and
InsoliencyAct (Canada) R,S.C, 1985, c. B3, as amended (the "BIA"), other than such amounts
as the Receiver may specifically agree in writing to pay, or in respect of its obligations under
sections 81 ,4(5) or 81.6(3) of the BIA or under the Wage Earner Protection Proain Act.
PIPEDA
16.
THIS COURT OERS that, pursuant to clause 7(3)(c) of the Canada Personal
Information Protection and Electronic Documents Act, the Receiver shall disclose personal
information of identifiable individuals to prospective purchasers or bidders for the Real Property
and to their advisors, but only to the extent desirable or required to negotiate and attempt to
complete one or more sales of the Real Property (each a "Sale") Each prospectise purchaser or
bidder to whom such personal information is disclosed shall maintain and protect the privacy of
such information and limit the use of such information to its e aluation of the Sale, and if it does
not complete a Sale. shall return all such information to the Receiver, or in the alternative destro
all such information, The purchaser of any Real Property shall be entitled to continue to use the
personal nforni:tion pros ided to it, and related to the Real Propertr purchased. m a manner
TATION ON
17.
THIS COURT ORDERS that nothing herein contained shall requIre the Receis er to
occupy or to take control, care. charge. possession or management (separately andy or
collecti\ ely, 'Possession") of any of the Real Property that might be ens ironmentally
contaminated, might be a pollutant or a contaminant, or might cause or contribute to a spill.
discharge, release or deposit of a substance contrary to any federal, provincial or other law
respecting the protection. consen ation. enhancement. remediation or rehabilitation of the
environment or relating to the disposal of waste or other contamination including, without
ion, the Canadian Environmental Protection 4ct, the Ontario Envii onmental Protection
Act, the Ontario Tlater Resources Act, or the Ontario Occupational Health and Safety Act and
regulations thereunder (the "Environmental Legislation"). provided however that nothing
herein shall exempt the Receiver from any duty to report or make disclosure imposed by
applicable Ens ironmental Legislation.
The Receiver shall not, as a result of this Order or
anything done in pursuance of the Recei\ ers duties and po\\ ers under Lhis Order, be deemed to
be in Possession of any of the Real Property nithin the meaning of any Environmental
Legislation. unless it is actually in possession.
LIMITATION ON THE RECEIVER'S LIABILITY
18.
THIS COURT ORDERS that the Recei\er shall incur no liability or obligation as a
result of its appointment or the carTs ing out the pros isions of this Order, save and except for any
gross negligence or nilful misconduct on its part, or in respect of its obligations under sections
or 81 6(3) of the BIA or under the Wage Earner Protection Program Act, Nothing in
this Order shall derogate from the protections afforded the Recei\ er by section 14 06 of tlte BIA
or by any other applicable legislation.
RFCEIVERS ACCOUNTS
the Receiver shall be entitled to and are hereby granted a charge (the Reeei er's Charg
the Real Property. as security for such fees and disbursements. both before and after the n
of this Order in respect of these proceedings. and that the Receiver's Charge shall form a first
charge on the Real Property in prioritr to all security interests, trusts, liens, charges and
encumbrances, statutory or otherwise, in favour of any Person, but subject to sections 14.06(7).
8L4(4) and 81.6(2) of the BIA
20.
THIS COURT ORIERS that the Receiver and its legal counsel shall, at the request of
the Respondent or any creditor, pass its accounts from time to time, and for this purpose the
accounts of the Receier and its legal counsel are hereby referred to a judge of the Ontario
Superior Court of Justice Sudbury.
21.
THIS COURT ORDERS that prior to the passing of its accounts. the Receiver shall be
at liberty from time to time to apply reasonable amounts, out of the monies in its hands, against
its fees and disbursements. including legal fees and disbursements, incurrod at the standard rates
and charges of the Receer or its counsel, and such
shall
remuneration and disbursements \\hen and as approved by this Court.
FUNDING OF THE RECEIVERSIIIP
22
THIS COURT ORDERS that the Receiver be at liberty and it is hereby emponered to
borrow by vay of a re olving credit or otherwise, such monies from time to time as it may
consider necessary or desirable, pro' ided that the outstanding principal amount does not exceed
$500,000 (or such greater amount as this Court may by further Order authorize) at any time, at
such rate or rates of interest as it deems advisable for such period or periods of time as it may
arrange. for the purpose of funding the exercise of the poners and duties conferred upon the
Recei er by this Order. including interim expenditures. The whole of the Real Property shall be
and is hereby charged by vay of a fixed and specific charge (the "Receiver's B
Charge") as security for the payment of the monies borro\ved, together with interest and charges
thereon, in priority to all security interests, trusts, liens, charges and encumbrances stotutory or
Cc
t neither t
ncr
security granted by the Recei\ er in coimection v
gs under this Order shall be
enforced vvithout lease of this Court.
24.
THIS COLRT ORDERS that the Recei\er is at libert and authorized to issue
certificates substantially in the form annexed as Schedule
A" hereto (the "Recei er's
Certificates") for any amount borrowed by it pursuant to this Order.
25.
THIS COURT ORDERS that the monies from time to time bonoed by the Receiver
pursuant to this Order or an further order of this Court and an and all Receiver's Certificates
evidencing the same or any part thereof shall rank on aparipassu basis, unless otherwise agreed
to by the holders of any prior issued Receii ers Certificates.
SERVICE AND NOTICE
THIS COURT ORDERS that the EService Protocol of the Commercial List (the
26.
"Protocol") is appro ed and adopted by reference herein and, in this proceeding. the ser ice of
documents made in accordance with the Protocol (nhich can be found on the C ommercial List
website
at
ppgpl) shall be valid and effective seinice. Subject to Rule 17.05 this Order shall constitute
an order for substituted service pursuant to Rule 16.04 of the Rules of Civil Procedure. Subject to
Rule 3.01(d) of the Rules of Civil Procedure and paragraph 21 of the Protocol, service of
documents in accordance with the Protocol vvill be effective on transmission. This Court fur
orders that a Case Website shall be established in accordance with the Protocol with the
follovv ing URL <www.pwc.coni car"cr stalheightscoop>'.
27.
THIS COURT ORDERS that if the serv ice or distribution of documents in accordance
with the Protocol is not practicable. the Receiver is at liberty to serv e or distribute this Order, am
nther materials and orders in these proceedings, any notices or other correspondence. b
forn arding true copies thereof b prepaid ordinary mail courier, personal dcliv cry or facsimile
transmission to the Respondent's creditors or other interested 1arties at their re
ess day after mailing.
GUN]
THIS COURT ORDERS that the Recefter may from time to time apply to this Court
28.
for ad\ ice and directions in the discharge of its pov ers and duties hereunder
THIS COURT ORDERS that nothing in this Order shall prevent the Receiver from
29.
acting as a trustee in bankruptcy of the Respondent.
THIS COURT HEREBY REQUESTS the aid and recoanition of an) court, tribunal,
30.
regulatory or administrative body having jurisdiction in Canada or in the United States to give
effect to this Order and to assist the Recei\er and its agents in carr\ing out the terms of this
All courts, tribunals, regulatory and administrati\ e bodies are hereby respectfully
Order
requested to make such orders and to provide such assistance to the Receiver, as an officer of this
Court as may be necessary or desirable to give effect to this Order or to assist the Receiver and
its agents in carrying out the terms of this Order.
3
1.
THIS COURT ORDERS that the Receiver be at liberty and is hereby authorized and
empoivered to apply to any court, tribunal, regularory or administrative body. vvherever located.
for the recognition of this Order and for assistance in carrying out the terms of this Order. and
that the Receiver is authorized and empovv ered to act as a representativ e in respect of the within
proceedings for the purpose of hay ing these proceedings recognized in a jurisdiction outside
Canada.
32.
THIS COURT ORDERS that the Applicant shall have its costs of this application. up to
and including entry and service of this Order, provided for by the terms of the Applicant's
security or, if not so provided by the Applicant's security, then on a substantial indemnity basis
to be paid by the Reedy er from the Respondent's estate vith such priority and at such time a
this Court may determine.
oruer
34.
THIS COURT ORDERS that the Receiver is hereby directed to file a report to this
Court on or before six (6) weeks from the date of this Order, which report shall provide an
update on the state of the Real Propert), including an health and safety issues, the progress of
any remediation acthitics and any other matters that the Receier considers rele\ant. In the
event the Receiver or any other party wishes to seek relief before this Court in respect of the
within receivership proceedings, such motion shall be heard by this Court at 10:00 a,m. on
No ember 18, 2015.
CLRITFICJE NO
___
-____
AMOU\T $
HIS IS TO CERTIFY that Pri
ouseCoopers mc,. the receAer and manag
of the properties including rents pertaining thereto and otherwise of Crystal
Heights Co-Operati\ e Inc. (the "Respondent"), the real property of the Respondent bearing
Parcel Identification Number 31515-0293 (LT) and known municipally as 1-21, 24, 29. 36
Clearie
Drive and 12-18. 26-38 Crystal Place, Sault Ste. Marie, Ontario, including all
proceeds thereof (collectively, the "Real Property") appointed by Order of the Ontario Superior
Court of Justice (the "Court") dated the 30th day of September. 2015 (the "Order") made in an
action ha\ing Court file number A-12903-l5, has received as such Recei\er from the holder of
this certificate (the "Lender") the principal sum of $
principal sum of S _________
_____ , being part of the total
which the Receiver is authorized to bono
under and pursuant
to the Order,
2
The principal sum eidenced by this certificate is payable on demand by the Lender nith
interest thereon calculated and compounded daily after the date hereof at a notional rate per
annum equal to the rate of 2 per cent above the prime commercial lending rate of tlìe Royal Bank
of Canada from time to time,
3
Such principal sum nith interest thereon is, by the terms of the Order, together with the
principal sums and interest thereon of all other certificates issued by the Receiver pursuant to the
Order or to an\ further order of the Court, a charge upon the hoIe of the Real Property, in
priority to the security interests of any other person. but subject to the priority of the charges set
out in the Order and in the Bankruptcy and Insolvency Act (Canada) R,S C, 1985. c. B-3, as
amended (the "BIA"), and the right of the Recei\ er to indemnify itself out of such Real Property
in respect of its remuneration and expenses,
All sums payable in respect of principal and interest under this certificate are payable at
office of the Lender at Ottana, Ontario,
holder of this certificate
6
The charge securing this certificate shall operate so as to permit the Recei\ er to deal with
the Real Property as authorized b the Order and as authorized b any further or other order of
the Court.
7.
The Receiver does not undertake, and it is not under any personal liability, to pay any
sum in respect of which it may issue certificates under the terms of the Order.
DATED the
day of______
2OYR,
PRICE WATERHOUSECOOPERS INC.
solely in its capacity as Recei\er of CD
Heights Co-Operative Inc., and not in i
personal capacity
Per:
Name: Michelle Pickert
Title: Senior Vice President
Court Ii1e No \
C NADA MORTGAGE ANI) I lOUSING CORPoRATION
A )pl leant
-and-
CRYSTAL hEIGHTS CO-OPERA 1
Respondent
ONTARiO
SUPERIOR COURT OF JUSTIC}
PROCEEDING COMMENCED \ 1'
SUDBURY
RECEIVERSIII P ORDE
DENTONS CANADA LLP
77 King Street West, Suite 400
ioronto-Domlnlon Centre
Foronto, ON M5K OA 1
Fax:
(416) 863-4592
Renee BrOSSCaH
LSUC No. 47074B
Fe!:
416-863-4650
Email: renee. brosseau(çdentons.eo1n
Sara-Aim \Taii Alien
LSUC No, 560 16C
Tel:
416-863-4402
Email: sara.vanal len()dentons.eomn
Lawyers frr ('anada Mortgage and ha
APPENDIX B
APPENDIX C
CRYSTAL HEIGHTS CO-OPERATIVE INC.
PRE-FILING REPORT OF THE PROPOSED RECEIVER
PRICEWATERHOUSECOOPERS INC.
September 23, 2015
Court File No. A-12903-15
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CANADA MORTGAGE AND HOUSING CORPORATION
Applicant
- AND CRYSTAL HEIGHTS CO-OPERATIVE INC.
Respondent
APPLICATION UNDER SECTION 101 OF THE
COURTS OF JUSTICE ACT, R.S.O. 1990, c. C.43, AS AMENDED
PRE-FILING REPORT OF THE PROPOSED RECEIVER
PRICEWATERHOUSECOOPERS INC.
September 23, 2015
2
TABLE OF CONTENTS
A. INTRODUCTION ......................................................................................................................................... 4
B. PURPOSE OF THIS REPORT ...................................................................................................................... 4
C. DISCLAIMER AND TERMS OF REFERENCE ............................................................................................ 5
D. BACKGROUND ............................................................................................................................................ 5
C. CO-OPERATIVE’S FINANCIAL DIFFICULTIES......................................................................................... 8
E. MORTGAGES GRANTED ON THE REAL PROPERTY............................................................................. 10
F. SECURITY OPINION ................................................................................................................................. 10
G. REPAIRS AND MAINTENANCE ................................................................................................................ 11
H. PROPOSED SALE PROCESS......................................................................................................................14
I. INITIAL CASH FLOW FORECAST AND RECEIVER’S BORROWINGS ....................................................17
J. RECOMMENDATION .................................................................................................................................19
APPENDICES
A. Sale Process timelines
NOTICE TO READER: The reports of the Receiver and related materials filed with the Court are
available on the Receiver’s website at www.pwc.com/car-crystalheightscoop.
3
A. INTRODUCTION
1.
PricewaterhouseCoopers Inc. (“PwC”) understands that an Application (“Application”) has
been made before the Ontario Superior Court of Justice (“Court”) by Canada Mortgage and
Housing Corporation (“CMHC”) for an order (“Receivership Order”) pursuant to section
101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended appointing PwC as receiver
and manager (the “Receiver”) without security, of all of the assets, undertakings and
properties (the “Property”), owned by Crystal Heights Co-Operative Inc. (“Crystal Heights”
or the “Co-Operative”).
2.
PwC is a licensed trustee within the meaning of section 2 of the BIA. PwC has consented to act
as Receiver in these proceedings in the event the Court grants the Receivership Order. Until
the granting of the Receivership Order and in the context of this pre-filing report, PwC is
referred to as the “Proposed Receiver”.
B. PURPOSE OF THIS REPORT
3.
This is the Proposed Receiver’s pre-filing report (the “Pre-Filing Report”) to the Court, the
purpose of which is to provide the Court with information in respect of:
a) background on the Real Property (as defined herein) owned by Crystal Heights;
b) the Co-Operative’s financial difficulties;
c) the Mortgages granted on the Real Property (both as defined herein);
d) the Security Opinion in respect of CMHC’s charges over the Property of Crystal
Heights;
e) Repairs and maintenance required to be completed at the Real Property (both as
defined herein);
f) the Sale Process (as defined herein) that the Proposed Receiver proposes to
undertake in order to market and sell the Real Property; and
4
g) the Cash Flow Forecast, including the Receiver’s Borrowings, (both as defined
herein) required to fund the Repairs and the receivership proceedings.
C. DISCLAIMER AND TERMS OF REFERENCE
4.
In preparing this report and conducting its analysis, the Proposed Receiver has obtained and
relied upon certain unaudited, draft and/or internal financial information of the Co-Operative,
the Co-Operative’s books and records, and discussions with various parties including the
property management company Richmond Advisory Services Inc. (“Richmond”) currently
engaged by CMHC (collectively, the “Information”) to manage the Real Property.
5.
Except as otherwise described in this report:
a) the Proposed Receiver has not audited, reviewed or otherwise attempted to verify the
accuracy or completeness of the Information in a manner that would wholly or partially
comply with Generally Accepted Auditing Standards pursuant to the Chartered
Professional Accountants Canada Handbook - Assurance; and
b) the Proposed Receiver has not conducted an examination or review of any financial
forecast and projections in a manner that would comply with the procedures described in
the Chartered Professional Accountants Canada Handbook - Assurance.
6.
Future oriented financial information referred to in this Pre-Filing Report is based on
estimates and assumptions. Actual results may vary from forecasts, even if the assumptions
materialize, and such variances may be significant.
7.
Unless otherwise stated, all monetary amounts contained herein are expressed in Canadian
Dollars and exclude harmonized sales tax (“HST”). Capitalized terms not defined herein have
the same meaning as defined in the draft Receivership Order.
D. BACKGROUND
8.
Crystal Heights was incorporated in 1978 as a non-profit housing co-operative pursuant to the
Co-Operative Corporations Act (Ontario) (the “Co-Operative Act”). Non-profit housing co-
5
operatives are democratic communities where the residents, called members (“Members”),
make decisions on how the co-operative operates. The Members are responsible for, inter alia,
electing the board of directors to govern the housing co-operative’s affairs and approving the
annual budget. Members have membership in the co-operative corporation, but the cooperative corporation owns all of the property of the co-operative, not the Members. Cooperatives can also have tenants occupying a limited number of units (the “Tenants”)
(collectively, the Tenants and Members of Crystal Heights being the “Residents”).
9.
The primary asset of Crystal Heights is a 60-unit housing co-operative located at 1-21, 24, 29,
36 Clearview Drive and 12-18, 26-38 Crystal Place, Sault Ste. Marie, Ontario, which bears
parcel identification number 31515-0293 (LT) (the “Real Property”). The Real Property was
originally constructed in 1983, with CMHC providing mortgage insurance for the construction
financing.
10.
The Real Property is an older multi-family residential complex located on approximately 4.39
acres of property where the 60 co-operative housing units are contained within nine separate
buildings located throughout the site.
11.
The nine separate buildings are comprised of four 8-unit walk up apartment style buildings
and five clusters of two-storey row house style units. In total, these nine buildings contain
some 62,200 square feet in total floor area, with units divided between 15 one-bedroom units
and 17 two-bedroom units located exclusively in the four walk-up apartment-style buildings,
and 24 three-bedroom and 4 four-bedroom units located exclusively in the five row house-style
buildings. As of the date of this report, we understand that only one unit in the Real Property
is vacant.
12.
CMHC has advised the Proposed Receiver that since May 2001, the Co-Operative has not made
any payments of principal or interest to CMHC in respect of the Mortgages (as defined herein).
Deferred maintenance, poor management by the former Board and local rental market
conditions at that time contributed to the Real Property entering into a critical funding deficit
situation. PwC further understands that in or about the spring of 2001, all of the officers and
directors (the “Board”) of the Co-Operative resigned and CMHC became a mortgagee in
possession under the terms of the Mortgages.
6
13.
Since the resignation of the Board and CMHC becoming mortgagee in possession, CMHC has
implemented a number of steps to manage and maintain the Real Property, including the
following:
a) CMHC has engaged a third party property management company to oversee the ongoing day-to-day management of the Real Property, including the collection of
monthly occupancy charges (“Occupancy Charges”) from Residents and
conducting routine property maintenance. The current property management
contract is with Richmond;
b) CMHC caused a site review of the Real Property to be conducted, which identified a
number of issues with respect to on-site water catch basins, foundation leakage and
improper surface water drainage. The cost of rectifying these issues is significant.
These repairs are discussed in further detail later in this Pre-Filing Report;
c) Winmar Sault Ste. Marie Property Restoration Specialist (“Winmar”) was recently
engaged to inspect all of the units and common areas of the Real Property for visible
signs of mould, as discussed in further detail in this Pre-Filing Report; and
d) Topline Electric Limited was recently engaged to address fire and safety concerns
with respect to the Dryer Exhaust Issues (as defined herein) as identified by Sault
Ste. Marie Fire Services (“Fire Services”), which is discussed in further detail later
in this Pre-Filing Report.
14.
While CMHC has taken steps to maintain and repair the Real Property, the Co-Operative
continues to generate insufficient cash flow to honour its mortgage obligations to CMHC or to
fund the payment of property taxes, insurance, property management fees and necessary
repairs.
15.
In order to evaluate its potential options, in August 2015 CMHC retained PwC to review the
current marketability of the Real Property, including options analysis, market assessment,
identification of prospective purchasers, estimated duration of a potential marketing and sale
process, etc. (the “Business Review”).
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16.
The findings from the Business Review are included herein and form the basis of the Sale
Process to be undertaken by the Receiver, if appointed by this Court, in conjunction with the
completion of certain required repairs and maintenance.
17.
In addition to the financial difficulties discussed in detail below, the Co-Operative continues to
experience corporate governance and reporting deficiencies and is not in compliance with the
Co-Operative Act. The Proposed Receiver understands that the Co-Operative does not have a
properly constituted Board and has not held regular Board meetings or annual meetings since
before 2000. In addition, to the knowledge of the Proposed Receiver, the Co-Operative has not
prepared or filed its audited annual financial statements since the date of the resignation of the
Board.
C. CO-OPERATIVE’S FINANCIAL DIFFICULTIES
18.
As discussed earlier in this report, the Co-Operative has not made any payments to CMHC in
respect of its Mortgages (as defined herein) since May 2001, resulting in CMHC becoming a
mortgagee in possession. At the time, the Co-Operative’s financial difficulties were attributed
to poor management, including not calculating and collecting sufficient Occupancy Charges to
fund the operating costs of the Co-Operative, and not maintaining an adequate reserve fund
(“Reserve Fund”) to fund capital repairs.
19.
The Proposed Receiver understands that at the date of this Pre-Filing Report these financial
difficulties are largely unchanged and the Co-Operative continues to generate insufficient cash
flow to honour its Mortgage obligations, property taxes, insurance, property management fees,
etc., and cannot fund necessary repairs.
20.
During its Business Review, PwC determined that the Occupancy Charges currently levied by
the Co-Operative are significantly below market, particularly when one considers that the
Occupancy Charges levied by the Co-Operative includes accommodation and utilities such as
heat and electricity, whereas market rents generally exclude utilities and are only for
accommodation.
8
21.
The Occupancy Charges (including utilities) levied by the Co-Operative for one and two
bedroom apartments are on average approximately 20% below average market rents in Sault
Ste. Marie, whereas the Occupancy Charges (including utilities) levied by the Co-Operative for
three and four bedroom units are at or slightly above average market rents.
22.
When looking at the Occupancy Charges levied by the Co-Operative to all 60 units combined,
on average, the Occupancy Charges are approximately 9% below market rents.
23.
While average market rents in Sault Ste. Marie have increased by approximately 4.0% per year
since 2012, Occupancy Charges levied by the Co-Operative increased by only 2.0% in 2013 and
by 0.8% in 2104. Such increases are not only significantly below the increases which occurred
generally within the private rental market, they are also at or below the rental increase
guidelines of 2.5% in 2013 and 0.8% in 2014 imposed annually by the Ontario Ministry of
Municipal Affairs and Housing. Again, rent increase guidelines issued by the Ontario Ministry
of Municipal Affairs and Housing relate only to accommodation costs; rents at the Real
Property include both accommodation costs and utilities such as the electricity used to heat the
units.
24.
The Proposed Receiver understands that the Co-Operative does not have a Reserve Fund, and
at the current Occupancy Charges cannot establish one. Accordingly, the Co-Operative has no
funds to undertake required Repairs and maintenance at this time, as discussed later in this
Pre-Filing Report.
25.
The draft Receivership Order empowers and authorizes the Receiver, subject to Court
approval, to adjust to market-level rents the Occupancy Charges of the Residents who are
unable to provide the Receiver with satisfactory and up-to date evidence that they are eligible
for rent which is geared to income. Subject to Court approval, the Receiver may adjust
Occupancy Charges to the extent necessary to fund the operating costs of the Co-Operative and
to develop a Reserve Fund to fund capital repairs.
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E. MORTGAGES GRANTED ON THE REAL PROPERTY
26.
CMHC is an agent of Her Majesty in Right of Canada pursuant to the Canada Mortgage and
Housing Corporation Act, R.S.C. 1985, c. C-7, as amended, with its head office in Ottawa,
Ontario. CMHC make loans and other investments under the National Housing Act (Canada)
and provides, inter alia, services in housing related areas.
27.
Crystal Heights is the registered owner of the Real Property. There are three mortgages
(collectively, the “Mortgages”) registered in favour of CMHC against title to the Real Property
(the “CMHC Security”). No other secured creditors have registered interests on title to the
Real Property as at September 1, 2015. Further details on the Mortgages and the CMHC
Security are provided in the Affidavit of Carl Lawrence sworn September 16, 2015 (the
“Lawrence Affidavit”).
28.
As described in the Lawrence Affidavit, pursuant to the Mortgages, CMHC has advanced a total
of $3,433,161 to Crystal Heights since 1982 and as at September 10, 2015, Crystal Heights was
indebted to CMHC in the total amount of $4,833,157.54 (the “Indebtedness”).
29.
The Indebtedness includes the outstanding principal and accrued interest, as well as amounts
expended by CMHC on Crystal Heights’ behalf to fund repairs and maintenance, property
taxes, property management fees, insurance, and other costs.
30.
As described in the Lawrence Affidavit, Crystal Heights has defaulted on each of its Mortgages
and the Co-Operative has not made any payments of principal and interest since May, 2001.
31.
The Mortgages provide that CMHC is entitled to appoint a receiver.
F. SECURITY OPINION
32.
The Proposed Receiver engaged Pallett Valo LLP (“Pallett Valo”) to undertake an
independent legal review of inter alia, the validity and enforceability of the Mortgages in the
jurisdiction of Ontario.
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33.
Pallett Valo has provided the Proposed Receiver with its opinion on the validity and
enforceability of the CMHC Security in Ontario. Subject to the standard assumptions and
qualifications contained therein, including those relating to statutory and possessory liens and
claims that have priority by operation of law, it is Pallett Valo’s opinion that the CMHC
Security is valid and enforceable with respect to the Real Property under the laws of the
Province of Ontario and there are no other interests registered on title to the Real Property.
34.
A copy of the Pallett Valo opinion will be provided to the Court upon request.
G. REPAIRS AND MAINTENANCE
35.
As described earlier in this Pre-Filing Report in August 2015, PwC was engaged to conduct a
Business Review and in connection therewith was advised by CMHC and Richmond that the
Real Property is in urgent need of various significant repairs (collectively, the “Repairs”). The
Proposed Receiver is of the view that these Repairs are required as they may have a direct
impact on the health and safety of the Residents.
Water Drainage Issues
36.
As described earlier in this Pre-Filing Report, a site inspection conducted for CMHC
determined that there were potential grading and drainage issues (“Water Drainage
Issues”) at the Real Property, which may have contributed to leaks in the foundation walls of
certain buildings located on the Real Property. These leaks in the foundation walls may have
contributed to moisture and mould issues at the Real Property. This may create a health and
safety issue for the Residents who inhabit these buildings. Accordingly the mould needs to be
abated and remediated as soon as practicably possible.
37.
The Proposed Receiver understands that Repairs to remediate the foundation leaks include
excavating and repairing the chimney, re-grading around all buildings, replacing the catch
basins and possibly installing additional catch basin and storm sewer pipe, installing new
foundation waterproofing, drainage board and weeping tile, and redirecting roof drains,
followed by landscape restoration (collectively, the “Water Drainage Repairs”).
11
38.
Richmond has advised the Proposed Receiver that an engineer engaged to assess the extent of
the Water Drainage Repairs has estimated the Water Drainage Repairs will take up to 6 weeks
to complete, at a cost of approximately $200,000.
39.
The Proposed Receiver understands that because of the early onset of winter in Sault Ste.
Marie, the Water Drainage Repairs cannot be completed this fall. In the event the Court grants
the Receivership Order and PwC is appointed as Receiver, it would run a tender process for the
Water Drainage Repairs over the coming months, with certain aspects of the Water Drainage
Repairs to be commenced in the fall and the remainder completed in the spring of 2016.
Water Damage Issues
40.
As described earlier in this Pre-Filing Report, Winmar was engaged to conduct an inspection of
each of the 60 units, including the common areas in the apartment buildings.
41.
As of September 21, 2015, Winmar had completed an inspection of 55 of the 60 units (Winmar
was unable to gain access to five (5) of the units) and all common areas.
42.
Winmar has provided its preliminary findings on the areas inspected, which indicate that there
has been flooding and moisture issues in certain units and common areas, due to water
seepage and accumulation. The inspections also identified the presence of mould in certain
units as well as certain common areas, as well as corrosion on certain electrical equipment
(collectively, the “Water Damage Issues”).
43.
Winmar has estimated the cost of remediating the visible and known Water Damage Issues in
the affected units and common areas at approximately $135,000. Winmar has also advised
that there may be other Water Damage Issues.
44.
In the event the Court grants the Receivership Order and PwC is appointed as Receiver, it will
engage a third party to address the Water Damage Issues that may pose a health and safety
concern to the Residents as soon as practicably possible. The remaining Water Damage Issues,
that the Proposed Receiver understands are related to the Water Drainage Issues, will be
completed subsequent to the completion of the Water Drainage Repairs in the spring of 2016.
12
Fire Safety Issues
45.
Richmond has advised that on July 29, 2015, Fire Services attended at the Real Property and
conducted an inspection of all of the buildings located on the Real Property to ensure their
compliance with the Fire Protection and Prevention Act, 1997, S.O. 1997, c4 (the “Fire Act”).
46.
On August 6, 2015, Fire Services served an Inspection Order pursuant to the Fire Act
identifying that the common clothes dryer exhaust ventilation system (the “Dryer Exhaust”)
at the Real Property was installed contrary to manufacturer’s standards (the “Dryer Exhaust
Issue”), posing a potential fire hazard and was not in compliance with the Fire Act.
47.
The Inspection Order further outlined that the Dryer Exhaust must be installed in
conformance with the manufacturer’s instructions, applicable building code established under
the Building Code Act, 1992 and the Fire Act by September 10, 2015. Richmond advises that it
has engaged a third party to complete the repair work required to address the Dryer Exhaust
Issue.
48.
The repair work is currently in progress and Richmond advises that it is expected to be
completed by September 25, 2015. Richmond has advised the Proposed Receiver that Fire
Services is aware that the Dryer Exhaust Issue is being addressed and no further action is
expected by Fire Services at this time.
49.
Once the repairs to the Dryer Exhaust have been completed, Fire Services will complete an
inspection to approve the work and clear the Inspection Order.
50.
The Proposed Receiver understands that the cost to address the Dryer Exhaust Issue is
approximately $32,771.
Funding of Repairs
51.
As described earlier in this Pre-Filing Report, the Proposed Receiver understands that the
Co-Operative has no funds to undertake any of the Repairs.
13
52.
The appointment of a Receiver to manage and oversee the Repairs for the Real Property is
required on an urgent basis given the possible impact on the health and safety of the Residents.
If appointed, the Proposed Receiver will, inter alia, engage the contractors and other
professionals as needed to carry out the required Repairs and remediation on an expedited
timetable as set out above.
53.
Pursuant to the relief sought by CMHC, the Repairs will be funded by Receiver’s borrowings
(the “Receiver’s Borrowings”), which will be secured by the Receiver’s Borrowings Charge,
as defined in the draft Receivership Order. Pursuant to the draft Receivership Order, the
Receiver is at liberty and empowered to borrow by way of revolving credit or otherwise, such
monies from time to time as it may consider necessary or desirable, provided that the
outstanding principal amount does not exceed $500,000, which CMHC has agreed to fund.
54.
Pursuant to paragraph 13 of the draft Receivership Order, the Receiver is permitted to pay
amounts in respect of lienable services and work performed prior to the receivership
appointment date. Accordingly, the Dryer Exhaust Issue repairs will be funded by Receiver’s
Borrowings and paid by the Receiver, subject to the issuance of the Receivership Order by this
Court.
55.
The aforementioned Repairs are not meant to be an exhaustive or complete list of Repairs that
may be required for the Real Property. These are the significant Repairs currently known to
CMHC and Richmond. Further material Repairs may arise or become known after the
appointment of the Receiver by the Court.
H. PROPOSED SALE PROCESS
56.
Paragraphs 2 and 3 of the draft Sale Process Approval Order provide that the Receiver is
authorized and directed to market and sell the Real Property in accordance with the Sale
Process (as defined herein) proposed by the Proposed Receiver in its Pre-Filing Report.
57.
Should this Court grant the Receivership Order, the Proposed Receiver has proposed a sales
and marketing process (the “Sale Process”) in respect of the Real Property, which takes into
consideration the challenges of selling a non-profit housing co-operative and the additional
14
factors to be considered in a sale of this nature. The Sale Process will, if feasible, maintain the
Co-Operative’s status as a non-profit social housing provider. A copy of the proposed Sale
Process timeline is attached as Appendix “A”.
58.
The Proposed Receiver is of the view that in order to maximize realizations from a sale of the
Real Property, a comprehensive Sale Process should not formally commence until after the
Repairs to the Real Property have been completed, specifically the Water Drainage Repairs and
the repairs in respect of the Water Damage Issues.
59.
As discussed earlier in this Pre-Filing Report, due to the complications created by the winter
season, the Water Drainage Repairs are not expected to be completed until the spring of 2016.
60.
In the interim period while the Repairs are being undertaken, the Proposed Receiver proposes
that a number of pre-marketing and transaction readying due diligence tasks, collectively
referred to as Phase 1 (“Phase 1”) could be completed during the winter, including but not
limited to:
a) conducting additional due diligence;
b) create online data room that will include due diligence materials such as financial
statements, environmental reports, building drawings, site plans, surveys, etc.;
c) preparing a Confidential Information Memorandum (“CIM”);
d) determining whether a not-for-profit organization or municipal service provider
would be prepared to purchase or take possession of the Real Property in exchange
for assuming the existing mortgage (including, principal, interest, and receivership
costs) and operating agreement with CMHC (a “Non-Profit Housing Transfer”)
which would continue to make the Real Property available as affordable housing;
and
e) enter into agreements as are necessary to effect a Non-Profit Housing Transfer,
subject to further Court approval.
15
61.
Phase 1 is expected to run until the Repairs to the Real Property have been completed,
specifically the Water Drainage Repairs and the repairs in respect of the Water Damage Issues.
62.
Subsequent to Phase 1 and in the event a Non-Profit Housing Transfer is not likely to be
achieved on appropriate terms, the Proposed Receiver will undertake a number of further
marketing tasks (collectively referred to as “Phase 2”), including but not limited to:
a) identifying other potential purchasers such as private investors (including Real
Estate Investment Trusts (“REITs”));
b) marketing the opportunity to potential purchasers;
c) prioritizing targeted potential purchasers; and
d) establishing a target value range and potential deal parameters.
63.
Should this Court grant the Receivership Order on September 30, 2015, the Proposed Receiver
would undertake Phase 1 of the proposed Sale Process immediately following its appointment.
In addition, the Proposed Receiver would undertake the Repairs between October 2015 and
June 2016 and commence Phase 2 of the proposed Sale Process subsequent to the completion
thereof. The key milestones associated with the proposed Sale Process are as follows:
a) Phase 1 – completed by June 2016;
b) Phase 2 marketing - completed by July 31, 2016;
c) purchase and sale negotiations – completed by August 31, 2016;
d) final transaction due diligence – occurring during September, 2016; and
e) transaction closing – completed by October 31, 2016.
64.
The proposed timeline is expected to be sufficient for a competitive marketing process that will
assist in maximizing sale proceeds and help ensure a successful closing and transition of the
Co-Operative.
16
65.
The Receivership Order and Sale Process Approval Order authorize the appointment of the
Receiver to oversee the Sale Process and will provide a process to sell the Real Property in a
transparent manner via a Court supervised process.
66.
The Proposed Receiver is committed to a transparent Sale Process. Accordingly, if appointed
as Receiver by this Court, it will provide the Residents with regular updates about the Sale
Process and provide frequently asked questions and phone and email contact information for
the Receiver on its website: www.pwc.com/car-crystalheightscoop.
67.
The Proposed Receiver intends to hold town hall meetings for the Residents upon its
appointment to answer questions, and as needed during the remainder of the receivership
proceedings, to keep the Residents apprised of the Repairs being made to the Real Property
and the status of the Sale Process, in order to mitigate concerns of the Residents.
I. INITIAL CASH FLOW FORECAST AND RECEIVER’S BORROWINGS
68.
The Proposed Receiver has prepared a cash flow forecast for the 8 week period (the “Period”)
commencing September 30, 2015 and ending November 21, 2015 (the “Cash Flow
Forecast”) based on certain Information provided by CMHC and Richmond.
69.
The amounts included in the Cash Flow Forecast, including the professional fees and expenses
of the Receiver (including the fees and disbursements of its legal counsel) (“Professional
Fees), are estimates and the actual results will vary from the forecast.
70.
A summary of the Cash Flow Forecast is included in the table below:
17
Crystal Heights Co-Operative Inc. Receivership
Summary Cash Flow Forecast
For the Period September 30, 2015 to November 21, 2015
$ in CAD
Receipts
Occupancy Charges
Other
Total receipts
8 Week Total
74,829
896
75,725
Disbursements
Operating costs
General and administrative costs
Capital expenditures and significant Repairs
Disbursement contingency
Total operating disbursements
Net change in cash flow from operations
Professional Fees
Net change in cash before Receiver's Borrowings
42,562
3,286
36,966
8,282
91,096
(15,371)
110,000
(125,371)
200,000
Receiver's Borrowings
Net change in cash
74,629
Opening cash balance
Ending cash balance
42,225
116,854
Note: This Cash Flow Forecast must be read in conjunction with the notes
related thereto. These amounts include HST.
71.
The Cash Flow Forecast projects total receipts of $75,725 and total disbursements of $201,096
including operating disbursements of $91,096 (includes capital expenditures and significant
Repairs of $36,966) and Professional Fees of $110,000 during the Period.
72.
The forecasted disbursements in respect of capital expenditures and significant Repairs are for
repairs that were either in process or completed prior to the appointment of the Receiver,
including repairs to address the Dryer Exhaust Issue.
73.
Forecasted cash receipts are insufficient to fund the operating costs of the Co-Operative and
the required Repairs and the Professional Fees during the Period, resulting in a cash outflow or
deficit of $125,371. Accordingly, Receiver’s Borrowings are required to fund this cash shortfall.
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74.
Based on the Cash Flow Forecast, the Proposed Receiver anticipates Receiver’s Borrowings of
$200,000 during the Period.
75.
In addition, as described earlier in this Pre-Filing Report, the estimated cost of the Water
Damage Repairs and Water Drainage Repairs is $335,000. Accordingly, it is the Proposed
Receiver’s view that additional Receiver’s Borrowings (to the $200,000 included in the Cash
Flow Forecast) will be required to fund the receivership.
76.
As described earlier in this Pre-Filing Report, certain components of the Water Damage
Repairs and Water Drainage Repairs can be arranged, completed and can be paid during the
Period, however the majority of these aforementioned repairs will be completed and paid
outside of the Period.
77.
CMHC has agreed to fund the Receiver’s Borrowings and consents to the Repairs being
completed in an effort to assist in the sale of the Real Property.
78.
The Draft Receivership Order provides that the Receiver (if appointed by the Court) will file a
report with this Court within six weeks of the issuance of the Receivership Order and at that
time will report on the state of the Property, including any health and safety issues, the
progress of any repair activities and any other matters that the Receiver considers relevant. At
that time, the Receiver will provide the Court with an updated cash flow forecast of estimated
receipts and disbursements, in particular in respect of Repairs and maintenance.
J. RECOMMENDATION
79.
Based on the foregoing, the Proposed Receiver respectfully recommends that should this Court
grant the Receivership Order, that this Court approve the following:
a) the Receiver’s Borrowings in the maximum amount of $500,000 as set out in the
draft Receivership Order in order to fund the necessary Repairs, the operating costs
of the Co-Operative and Professional Fees; and
b) the Sale Process Approval Order, approving the Sale Process as described herein.
19
All of which is respectfully submitted on this 23rd day of September, 2015.
PRICEWATERHOUSECOOPERS INC.
Proposed Receiver of Crystal Heights Co-Operative Inc.
Michelle Pickett
Senior Vice President
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APPENDIX D
September 30, 2015
Notice to All Residents of the
Crystal Heights Co-Operative Inc. Property at
Clearview Drive and Crystal Place, Sault Ste. Marie, Ontario
Subject:
Crystal Heights Co-Operative Inc. Receivership
Dear Sir/Madam
On September 30, 2015, Canada Mortgage and Housing Corporation made an Application before
the Ontario Superior Court of Justice (“Court”) for an order (“Receivership Order”) pursuant
to section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, appointing
PricewaterhouseCoopers Inc. (“PwC”) as receiver and manager (the “Receiver”) without
security, of all real property, including rents pertaining thereto and otherwise as set out in the
Receivership Order, including the real property bearing Parcel Identification Number 315150293 (LT) and known municipally as 1-21, 24, 29, 36 Clearview Drive and 12-18, 26-38 Crystal
Place, Sault Ste. Marie, Ontario, and all proceeds thereof (the “Real Property”) of Crystal
Heights Co-Operative Inc. (“Crystal Heights” or the “Co-Operative”). These proceedings
are referred to as the “Receivership Proceedings.”
The Real Property of Crystal Heights consists of a 60-unit housing co-operative located at 1-21,
24, 29, 36 Clearview Drive and 12-18, 26-38 Crystal Place, Sault Ste. Marie, Ontario.
This Notice is being sent to you as we understand that you currently live in one of the 60 units
located at the Crystal Heights Real Property.
Attached to this notice is a list of Frequently Asked Questions that may help you understand how
the Receivership Proceedings impact you and your continued inhabitance of your unit at the
Crystal Heights Real Property.
On Wednesday, October 7, 2015, the Receiver will be holding town hall meetings for all residents
of the Crystal Heights Real Property to answer any questions that you may have, with respect to
the Receivership Proceedings. The town halls will be held at the following location and times:
Common room adjacent to the property manager’s office
24 Clearview Drive
Town hall 1: 3:00pm
Town hall 2: 6:00pm
PricewaterhouseCoopers Inc.
PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 814 3219, www.pwc.com/ca
If you are unable to attend one of the town hall meetings, please review the Frequently Asked
Questions in full attached to this notice as they may answer any questions that you may have. If
you still have questions after reviewing the Frequently Asked Questions, please contact
Richmond Advisory Services Inc. (the property manager) or the Receiver, contact information
for both is listed at the bottom of the Frequently Asked Questions.
The Receiver is committed to providing regular updates during the Receivership Proceedings in
order to mitigate concerns of the residents. This will include written updates mailed to you, town
hall meetings as needed and information being posted on the Receiver’s website:
www.pwc.com/car-crystalheightscoop
The Receiver filed its pre-filing report with the Court on September 23, 2015, which provides
additional background information on the Receivership Proceedings. A copy of this report can be
found on the Receiver’s website noted above.
Yours truly,
PricewaterhouseCoopers Inc.
in its capacity as Court Appointed Receiver of
Crystal Heights Co-Operative Inc.
and not in its personal capacity
Cameron Wilson
Manager
2
CRYSTAL HEIGHTS CO-OPERATIVE INC. RECEIVERSHIP
RESIDENTS: FREQUENTLY ASKED QUESTIONS
The following list of Frequently Asked Questions and answers (“FAQs”) may assist in addressing
any concerns you may have about the Receivership Proceedings. If you still have questions after
reviewing the following FAQs, please don’t hesitate to contact Richmond Advisory Services Inc.
or the Receiver, their contact information follows the FAQs below.
Q: When/how/why was a receiver appointed?
A: On September 30, 2015, an Application was be made before the Ontario Superior Court of
Justice by Canada Mortgage and Housing Corporation (“CMHC”) for an order
(“Receivership Order”) appointing PricewaterhouseCoopers Inc. (“PwC”) as receiver and
manager (the “Receiver”) without security, of all real property, including rents pertaining
thereto and otherwise as set out in the Receivership Order, including the real property
bearing Parcel Identification Number 31515-0293 (LT) and known municipally as 1-21, 24,
29, 36 Clearview Drive and 12-18, 26-38 Crystal Place, Sault Ste. Marie, Ontario, and all
proceeds thereof (the “Real Property”) of Crystal Heights Co-Operative Inc. (“Crystal
Heights” or the “Co-Operative”).
Pursuant to the Receivership Order, the Receiver is now responsible for the Real Property.
The Real Property of Crystal Heights consists of a 60-unit housing co-operative located at 121, 24, 29, 36 Clearview Drive and 12-18, 26-38 Crystal Place, Sault Ste. Marie, Ontario.
Crystal Heights was unable to meet its financial commitments, such as: the obligations under
its mortgage, property taxes and operating costs (such as repairs and maintenance), among
other costs, hence the need for the appointment of a Receiver.
Q: Will my lease/occupancy agreement be terminated?
A: Your lease/occupancy agreement will continue on the same terms and conditions as provided
until further notice. The Receiver will advise you of any changes to your lease/occupancy
agreement as soon as practically possible.
Q: What will happen to the Crystal Heights Real Property?
A: Pursuant to the Receivership Order and Sale Process Approval Order, as granted by the Court
on September 30, 2015, the Receiver is empowered and authorized to market and sell the
Real Property to a new owner. The Receiver will initially be having discussions with not-forprofit organizations and municipal social housing providers to determine whether these
organizations would wish to become the new owners of Crystal Heights.
In order to assist in this process, the Receiver will be supervising certain repairs to the Real
Property to deal with certain maintenance issues. These repairs will commence as soon as
3
practically possible and will continue into the spring of 2016. The Receiver will be providing
more specific details of the schedule for these repairs at the town hall meetings, and to
individual residents through Richmond Advisory Services Inc..
Further details on the marketing and sale process undertaken and approved by the Court is
described in the Receiver’s pre-filing report filed with the Court dated September 23, 2015,
which can be found on the Receiver’s website: www.pwc.com/car-crystalheightscoop
Q: Who do I make my rent cheques payable to and where should I deliver them?
A: Please continue to make your rent cheques payable to Richmond Advisory Services Inc.. Rent
will continue to be due on the first day of each month. Please drop off your rent cheques at the
mailbox located outside of the Crystal Heights office on site, which can be accessed 24 hours a
day, 7 days a week. Alternatively, rent cheques can be delivered in person during office hours
Thursday and Friday between 9:00 am – 5:00 pm.
Q: Who do I contact if I have a problem with the building/my unit (for example,
repairs are required)?
A: If you have a problem with the building or your unit, you can contact Richmond Advisory
Services Inc., their contact information is below.
Q: What will happen to rent that I have pre-paid or the rent deposit that I have
paid? Who/ where are they being held?
A: Rent pre-payments and/or rent deposits are still being held by Richmond Advisory Services
Inc. and will be honoured.
Q: Will Crystal Heights remain insured?
A: Yes, the Crystal Heights Real Property is required to be insured and the insurance policy is in
good standing. Residents are reminded that pursuant to their lease/occupancy agreement
that they are required to maintain their own personal liability and contents insurance. If you
have any questions regarding this, please contact Richmond Advisory Services Inc., their
contact information is below.
Q: What if I want to terminate my lease.
A: A resident who wishes to terminate their lease will be able to do so in accordance with the
terms of their existing lease/occupancy agreement. If you have any questions regarding this,
please contact Richmond Advisory Services Inc., their contact information is listed below.
4
Contact Information
If you have any further questions after reviewing the FAQs above, please feel free to contact:
Richmond Advisory Services Inc., property manager of the Crystal Heights Real
Property:
Judy Yong of Richmond Advisory Services Inc. at:
Phone:
647-547-2122 ext. 106
Toll Free:
1-855-547-2122 x 106
Email:
[email protected]
Or
PricewaterhouseCoopers Inc. Court Appointed Receiver of Crystal Heights CoOperative Inc.:
Natalia Chtcherbakova of the Receiver at:
Phone:
(416) 941-8383 ext. 14676
Email:
[email protected]
5
APPENDIX E
pwc
November 13, 2015
Notice to All Residents of the
Crystal Heights Co-Operative Inc. Property at
Clearview Drive and Crystal Place, Sault Ste. Marie, Ontario
Subject:
Crystal Heights Co-Operative Inc. Receivership
Dear Sir/Madam
As communicated to you on September 30, 2015, PricewaterhouseCoopers Inc., was appointed
Receiver of the property owned by Crystal Heights Co-Operative Inc. ("PwC" or the
"Receiver"), by the Ontario Superior Court of Justice ("Court") on that date.
This update is being provided to you as we understand that you currently live in one of the 60
units located at the Crystal Heights property.
On Wednesday, November 18, 2015, PwC will be attending before the Court in Sudbury to
provide an update on its activities as Receiver subsequent to its appointment, the status of
required repairs to the property and the sales process. A copy of the Receiver's report to the
Court dated November 13, 2015 is available on the Receiver's website at www.pwc.com/carcrystalheightscoop.
The Receiver will be conducting various repairs to the Crystal Heights property over the coming
months. Repairs will be focused on health and safety issues primarily related to some of the
water damage and drainage issues with the buildings on the Crystal Heights property. Where
feasible, and subject to weather conditions, the drainage work will commence in the near future
with the remainder being completed in the spring of 2016. Additional work will include mould
remediation and abatement in areas where such problems are unlikely to recur, interior repairs,
tree trimming and removal, where required, and the cleaning of eaves troughs.
PwC has commenced the sales process by engaging in preliminary discussions with not-for-profit
organizations and municipal service providers to determine if they would be interested in
purchasing or taking possession of the Crystal Heights property.
The Receiver is committed to providing regular updates during the Receivership Proceedings in
order to mitigate your concerns as a resident of the Crystal Heights property. This will include
written updates mailed to you, town hall meetings as needed and information being posted on
the Receiver's website.
PricewciterhouseCoopers Inc.
PwC Tower, i8 York Street, Suite 2600, Toronto, Ontario, Canada M5J oB2
T: +1 416 869 1130, F: +1 416 814 3210, www.pwc.com/ca
pwc
Orders granted by the Court and PwC reports filed with the Court are posted on the Receiver's
website. Should you wish copies of the Court Orders and/or PwC reports, please contact Natalia
Chtcherbakova, whose contact information is listed below.
If you have any questions related to the management of the property, please feel free to contact:
Richmond Advisory Services Inc., property manager of the Crystal Heights Real
Property:
Judy Yong of Richmond Advisory Services Inc. at:
647-547-2122 ext. 106
Phone:
Toll Free:
1-855-547-2122 x 106
[email protected]
Email:
Or
PricewaterhouseCoopers Inc. Court Appointed Receiver of Crystal Heights CoOperative Inc.:
Natalia Chtcherbakova of the Receiver at:
Phone:
(416) 941-8383 ext. 14676
Email:
[email protected]
Yours truly,
PricewaterhouseCoopers Inc.
in its capacity as Court Appointed Receiver of
Crystal Heights Co-Operative Inc.
and not in its personal or corporate capacities
Aldis Makovskis
Senior Vice President
2
APPENDIX F
NOTICE AND STATEMENT OF THE RECEIVER
(Pursuant to subsection 245(1) and 246(1)
of the Bankruptcy and Insolvency Act)
IN THE MATFER OF THE RECEIVERSHIP
OF THE PROPERTY OF
Crystal Heights Co-Operative Inc.
of the City of Sault Ste. Marie
in the Province of Ontario
The Receiver gives notice and declares that:
On September 30, 2015, pursuant to an order (the "Receivership Order") of the Ontario
Superior court of Justice (the "Court"), PricewaterhouseCoopers Inc. ("PwC") was
appointed as receiver and manager (the "Receiver") without security, of all real properties
of Crystal Heights Co-Operative Inc. ("Crystal Heights" or the "Co-Operative") including
rents pertaining thereto and otherwise as set out in the Receivership Order, including the
real property bearing Parcel IdentifIcation Number 31515-0293 (LT) and known municipally
as 1-21, 24, 29, 36 Clearview Drive and 12-18, 26-38 Crystal Place, Sault Ste. Marie, Ontario,
and all proceeds thereof (the "Real Property"), pursuant to section 101 of the Courts of
Justice Act, R.S.O. 1990, c. C.43, as amended.
2. The Receivership Order was granted pursuant to an application made by Canadian Mortgage
and Housing Corporation ("CMHC"), the secured lender of the Co-Operative, pursuant to its
security agreements with the Co-Operative which consist of three mortgages (collectively, the
"Mortgages") registered in favour of CMHC against title to the Real Property. No other
secured creditors had registered interests on title to the Real Property as at September 1,
2015.
3. Also, on September 30, 2015, the Court granted an order (the "Sale Process Approval
Order") approving a marketing and sale process (the "Sale Process") to be undertaken by
the Receiver to market and sell the Real Property. Particulars of the Sale Process can be
obtained from the pre-fihing report of PwC, in its capacity as the proposed Receiver of Crystal
Heights dated September 23, 2015 (the "Pre-Filing Report"). Copies of the Pre-Filing
Report, and orders granted by the Court during the receivership proceedings can be obtained
from the Receiver's website at
y.\vc.cornjcarcrvstalheightscooj2.
4. The Real Property consists of a 6o unit housing co-operative which is managed by Richmond
Advisory Services Inc. ("Richmond"). In accordance with the provisions of the Receivership
Order, it is the Receiver's intention to continue to engage Richmond to provide property
management services during the receivership proceedings. On September 30, 2015 notice of
the receivership proceedings was sent to all residents of the Real Property and town hall
PricewaterhouseCoopers Inc.
PwC Tower, i8 York Street, Suite 2600, Toronto, Ontario, Canada M5J oB2
T: +1 416 869 2616, Direct F: +1 416 814 3219, www.pwc.com/ca
pwc
meetings have been arranged to provide further information to residents.
5. On September 30, 2015, the Receiver took possession of the Co-Operative's assets, which
primarily consisted of the below amounts:
Current Assets
Value (in CAD 8)
Cash
Real Property
TOTAL
35,955
4,833,158
4,869,113
NOTES:
(i)
Cash represents the book value of cash pursuant to the Co-Operative's books and
records as at September 30, 2015.
The value of the Real Property represents the outstanding amount h respect of
the Mortgages as of September io, 2015. The value of the Real Property does not
necessarily represent the sale or liquidation value of the Co-Operative's assets.
6. The following information relates to the receivership:
(a)
Address of the head office of the Co-Operative:
24 Clearview Dr., Sault St. Marie, ON
(b)
Principal line of business:
non-profit housing co-operative in Sault Ste. Marie, ON, which provides social
housing at reduced rates to its members
(c)
Locations of business:
1-21, 24, 29, 36 Clearview Dr., Sault Ste. Marie, ON and 12-18, 26-38 Crystal
Place, Sault Ste. Marie, ON
(d)
Amounts owed, by the Co-Operative to each creditor who holds security on the
Real Property described above, pursuant to the Co-Operative's books and records
and searches obtained from the Personal Property Registration System for
Ontario ("PPSA") are as follows:
CMHC - Real Property Mortgages,
Assignment of Rents and PPSA registration
(amount outstanding as at September 10, 2015)
4,833,158
2
pwc
(e)
The list of other creditors of the Co-Operative and the amount owed to each
creditor is set out in Schedule 'A", which totals:
Unsecured Creditors
$ 40,386
(f)
The intended plan of action of the Receiver during the receivership proceedings,
to the extent that such a plan has been determined, is for the engagement of
appropriate contractors required to complete certain repairs to the Real Property
and to conduct an orderly marketing and sale of the Real Property pursuant to the
Sale Process Approval Order.
(g)
Contact person for Receiver:
PricewaterhouseCoopers Inc.
Receiver of Crystal Heights Co-Operative Inc.
PwC Tower
i8 York Street, Suite 2600
Toronto ON M5J oB2
Attention:
Telephone:
Natalia Chtcherbakova
(416) 863 1133 ext. 14676
Facsimile:
(416) 814-3219
6. Further information regarding the receivership proceedings and materials relating to
these proceedings may be obtained from the Receiver's website at
crvstalhci alitscoon.
DATED at Toronto, this 7th day of October, 2015.
PricewaterhouseCoopers Inc.
in its capacity as Receiver of
Crystal Heights Co-Operative Inc.
and not in its personal capacity
Tracey Weaver
Vice President
IN THE MATTER OF THE RECEIVERSHIP OF
CRYSTAL HEIGHTS CO-OPERATIVE INC.
Name
Unsecured Creditors:
Anky Chung
GFL Environmental Inc
Kresin Engineering Corporation
Neal's Lawn & Garden Care
Shaw Cablesystems G.P.
Waste Management of Canada Corporation
Hays Specialist Recruitment (Canada) Inc
Service Master Clean
PUC Services Inc.
NorBear Limited
Hollow Metal & Architectural Hardware Ltd.
J.E.M.S. Paralegal Services Professional Corp.
Purolator
Topline Electric Ltd
Wilson's Home & Cottage Maintenance
ADT Security Services Canada, Inc.
G&K Services
Tenant Security Deposit:
Boyer, Justice
Brandon Hooey & Sarah Tennant
Holditch, Nathan & Moskal, Jenny
Kennedy, Bobbi-Joe
Matte, Angelynne & Matte, Ron
Xu, Meng Xiao & Wu, Jianfeng
Jensen, Stacey & Garson, Kyle
Steele, Scott
Bailey, Catrina
Bothwell, Monica
Lytwynec-Bugyra, Tabitha & Running, Jordan
Yavery, Rahmat
Al Fadhel, Assad Abdullah
Total
Amount Owed -
19.48
48.97
4,520.00
1,544.34
221.67
2,653.69
1,413.97
1,204.58
11,116.90
135.60
429.00
113.00
28.88
1,048.64
5,017.20
169.50
873.60
751.00
750.00
911.00
911.00
911 .00
751.00
668.00
668.00
751.00
668.00
751 .00
668.00
668.00
40,386.02
APPENDIX G
November Cash Flow Forecast
Crystal Heights Co-Operative Inc. Receivership
Summary Cash Flow Forecast - Monthly
For the Period November 1, 2015 to April 30, 2016
$ in CAD 1
Receipts
Occupancy Charges
Other
Total receipts
Disbursements
Operating costs
General and administrative costs
Sale Process costs
Capital expenditures and Repairs
Total operating disbursements
Net change in cash flow from operations
Professional Fees
Contingency reserve
Net change in cash before Receiver's borrowings
Receiver's borrowings
Net change in cash
Opening cash balance
Ending cash balance
November December
43,876
422
44,298
44,170
907
45,077
January
February
March
April
Total
44,170
338
44,508
44,170
761
44,931
44,170
1,027
45,197
44,170
338
44,508
264,726
3,794
268,520
(283,280)
(23,169)
(13,221)
(285,122)
(604,792)
(336,272)
(28,949)
(3,797)
(13,221)
(18,984)
(64,951)
(20,653)
(38,401)
(42,086)
(6,443)
(3,232)
(133,069) (133,069)
(177,912) (178,388)
(132,836) (133,879)
(44,655)
(44,655)
275
(62,676)
(6,465)
(69,140)
(23,943)
(66,513)
(3,232)
(69,745)
(25,236)
(99,000)
(7,760)
(127,412)
(89,000) (130,000)
(26,687)
(26,758)
(248,522) (290,637)
(44,000)
(6,698)
(50,423)
(32,000)
(10,371)
(66,314)
(30,000) (424,000)
(10,462)
(88,736)
(65,698) (849,008)
-
400,000
300,000
(127,412)
151,478
9,363
243,440
116,028
116,028
267,505
267,505
276,868
-
-
-
700,000
(50,423)
(66,314)
(65,698) (149,008)
276,868
226,445
226,445
160,131
160,131
94,432
Note: This Cash Flow Forecast must be read in conjunction with the notes related thereto. These amounts include HST.
243,440
94,432
Notes to the Crystal Heights November Cash Flow Forecast for the period November 1, 2015 to April 30, 2016
General Note: PwC has prepared the November Cash Flow Forecast based on probable and hypothetical assumptions detailed in the notes below.
The November Cash Flow Forecast has been prepared solely for the Receivership Proceedings to determine liquidity requirements. It assumes
Crystal Heights will remain in receivership throughout the period.
The November Cash Flow Forecast has been prepared with significant assumptions based on limited Information provided by Richmond and CMHC
to date. Since the forecast is based on assumptions regarding future events, actual results will vary from the information presented, and the
variations may be material. Consequently, readers are cautioned that it may not be appropriate for other purposes.
Notes:
1
Occupancy Charges levied by the Co-Operative are forecasted based on the most recent rent roll, as adjusted for vacancies.
2
Other receipts comprise of items such as laundry income forecasted based on historical actuals and interest income in respect of cash held by the
Receiver and Richmond.
3
Operating disbursements include utilities, janitorial services, external and internal maintenance, insurance, and property taxes, etc.. The amounts
forecasted are based on historical results with adjustments for non-recurring items.
4
General and administrative costs are in respect to management fees paid to Richmond pursuant to the current property management contract.
5
Sale Process costs are in respect of pre-marketing and transaction-readying due diligence tasks, includes Phase I, and PCA, etc.
6
Capital expenditures and Repairs consist of certain non-recurring expenditures, such as work related to the Water Drainage Repairs and, Water
Damage and Mould, among others.
7
Professional Fees are forecasted based on estimated hours and applicable rates to complete the Receiver’s duties (including those of its legal
counsel) in the Receivership Proceedings.
8
A contingency reserve of approximately 15% of total operating disbursements has been established for any unforeseen expenditures that may be
required in respect to the Real Property.
9
Receiver's Borrowings are made pursuant to Receiver Certificates as outlined in the Receivership Order to fund operations of the Co-Operative and
the fees and disbursements of the Receiver and its legal counsel.