A major development project in Vancouver’s downtown peninsula has been put into receivership after Bank of Montreal BMO-T filed a petition saying it’s owed most of the $95-million it loaned the consortium that owns the property in August, 2018.
A B.C. Supreme Court order last week said the consortium owes $82.7-million plus $24,000 a day in interest charges from Oct. 16, 2023, onward. The consortium appears in court documents as 14 corporate entities under the umbrella name of Harlow Holdings, some of them numbered, and individuals.
Justice Shelley Fitzpatrick also ordered that Deloitte Restructuring Inc. be appointed to manage the property and be empowered to sell it to pay the debt.
In her reasons for judgment, Justice Fitzpatrick found that refinancing efforts undertaken prior to the receivership application were “opaque,” “minimal” and “hopeful” and “inadequate to even pay out BMO.”
Notably, she found that it is uncertain as to whether the applicants can refinance without the involvement of one of the limited partners, Terrapoint Developments Ltd., which refuses to participate.
The property was bought by Harlow Holdings in August, 2018, for $165-million and it’s currently assessed at $98-million. There is a mortgage registered to Forseed Haro Holdings Ltd. but there is no court action at this point from that entity.
In July, 2022, Vancouver City Council approved a 55-storey tower for the West End development, with 450 strata condos and 66 rentals.
The project had not moved ahead though because the developer was still trying to contest limits on the size imposed by Vancouver’s policy on restricting mountain views.
The judge’s order said the property can be marketed after Feb. 24 this year.
The consortium, which was working with local company Intracorp Homes as its development manager, includes Kang Yu Zou, Wei Zou and Xia Yu. Those three individuals were all involved with the equally complex consortium that bought Grouse Mountain Resorts in 2017 and then abruptly sold it in 2020.
Intracorp representatives declined to comment on the legal proceedings and The Globe and Mail was not able to reach anyone from the consortium Wednesday.
Some members of the consortium are also being sued by another participant, Treasure Bay HK Ltd. That lawsuit, initiated in 2021, alleges that Kang Yu Zou got an advance of $25-million from other partners in the group without providing adequate security.
That lawsuit also alleges that Mr. Zou, who is the son-in-law of Wenbiao Dong, chairman of China Minsheng Investment Group Corp., “leveraged family relationships” to obtain the loan. CMIG was also involved in the Grouse Mountain purchase and sale.
The 16-page statement of claim alleges many other examples of breaches of “fiduciary duty.”
Mr. Zou and others named in the suit filed a statement of defence in December, 2022, denying all of the allegations in the Treasure Bay claim.
Frances Bula