Paul
__________________________
H. Paul Ivany CFP, CFSB, EPC
pivany@compasswealth.com
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Original message
From: "Ken Tessis"
To: pivany@compasswealth.com
Received: 3/26/2010 12:22:19 PM
Subject: RE: Breckenridge - Meeting for the 2nd mortgage holders
Hello Paul-
An answer to your questions:
To March 25 2010 our time and fees are as follows -
KMT 46.38 hours - $ 21,566.70
EB 22.15 Hours - $ 4,983.75
Total – 68.53 hours - $ 26,550.45
Detailed time records are available
A. With respect to the proposal we still have at least $15,000 -$25, 000 worth of work still to do :
1. File proposal
2. Written report to creditors – and we are still waiting for you to answer our 2 e-mails of Monday March 22-2010 that I will cut and paste below
3. Monitoring situation until the creditors meeting
4. Notification to all creditors when the proposals have been filed and when the creditors meeting is etc.
5. Responding to an answering all questions
6. Dealing with all proof of claims received in determining their validity
7. Anticipating some issue with the third mortgagee and or the parties being sued with respect to the sale of the properties to Evans
8. Chairing the creditors meeting
9. Notifying creditors and chairing any adjourned meeting – -- expected
10. Monitoring as a directed by the creditors – unknown
11. Collecting in any funds paid under the proposal
12. Final reporting to all creditors, superintendent of bankruptcy, the court,
13. Attending at court for final approvals and trustees discharge
B. With respect to dealing with the second mortgagees- ( estimated fees for this work will be a minimum of $7,500- and could go as high as $ 50,00,000 depending on how much time we are requested to spend in this regard and /or monitoring and reporting is requested by the seconds)
1. Arranging for %& preparation for meeting to be held next week
2. Responding to all questions in regards to that
3. An independent legal opinion on the validity of their mortgage & loan will be required for us to assist them if we act in the proposal or bankruptcy (Estimated cost – $3,500-$5,000)
4. Follow-up and negotiation as requested to obtain mortgage
5. Any other are rising matters
6. Reporting and/or monitoring as requested by the seconds any renegotiations during loan period if circumstances change
7. possible negotiations if renewals are needed
C. If a bankruptcy Occurs -( fees estimated at $5,000-$10,000 appending on complexity and/or creditors requests)
1. Notify all creditors to superintendent of bankruptcy and the court
2. Holding first meeting of creditors and chairing same
3. Holding any meeting of inspectors as requested and if appointed
4. Dealing with any creditor or inspector inquiries
5. Administering the bankruptcy
6. Final reporting as to trustees administration of the bankruptcy to all creditors, the superintendent of bankruptcy and the court
D. Contingencies
- to many to list
Please respond to the following outstanding requested from you-- below ASAP
From my Monday emails 2.41 PM
1. Please explain again about the loan & how this was set up to maintain priority position etc and how the accounting has been done ( although this should not affect the shortfall to the second at the end of the day) –
#####Terry can better explain the registration of the mortgages and Richard Hall has provided the accounting. There was 1 year on interest paid on the 2nds and I will verify that.
2. Also explain again the third mortgage – original amount that it was suppose to be, when and how was it to be repaid, and what happened - ?
#####We were not involved in the 3rd mortgages.
Second email - 6.22 PM
DRAFT Breckinridge – trustees report to the creditors on the proposal
History and background
“Breckinridge” is a 71 unit townhouse condominium project located at 35 Breckinridge Rd Kitchener Ontario.
The project was originally developed, as was operated as a rental project, that ran into financial difficulties due to ???????????
#####The developer/promoter walked away from the project.
In 200Z?? . individual units were sold off and they were purchased by either individuals – who either occupied the premises as an owner, or rented them out – some of which owned single units, a few own two or three or four and then there was three groups that purchases 10, 21, and 20 units respectively.
In 2008?? Equitable Trust that held mortgages on these three groups of units started power sale proceedings. Equitable sold off the tang unit package however arrangements were made with a 21 and 20 unit owners, both of which now have filed the proposals which we are now reporting on.
The plan was to continue renting the units, renovate units when they became vacant, and to sell them off overtime to individual owner occupiers who would pay the most for the units.
However due to previous mismanagement of the project there were large arrears in both condo fees nor had there been a reserve fund set up. As such any sales of the units, would have been at very low prices.
It should also be noted that the project has electric heating which is very expensive, and also a drawback with respect to any potential sales price.
The second mortgagee’s then also issued power of sale proceedings, advanced funds to the project to pay for the Condor rears and ?????? . , however ???????????? WHY ?????? also ran into financial difficulties, and was not able to make all the payments due to Equitable Trust on their first mortgage.
##### One of the 2nd mortgage holders advanced approx 1.2M in an attempt to see the project through. Part of this was loaned to the condo corp to fund until until units are sold and the past due assessments paid enabling repayment of the loan.
In February 2010, Equitable Trust sent out notices of “Attorment of Rent” to all the tenants and as such all-cash flows to the debtor companies was then halted. The companies then each filed a “Notice of Intention” (NOI ) to make a proposal under the Bankruptcy and Insolvency Act (BIA) , in hopes of staying the attornment of rents , and allowing the companies to continue to receive its rental revenues and attempt to obtain refinancing for the properties, and/or make new arrangements with Equitable Trust.
Equitable Trust was not interested in any further negotiations. Equitable Trust also indicated that it had sent out notices under section 244 and the BIA in 2008, which in their opinion allowed for them to continue with the attornment of rents- as their notice had been sent out more than 10 days prior to the filing of the NOI. A law firm was engaged to deal with Equitable Trust on this matter, however Equitable Trust indicated that it would not agree or consent to any stay of proceedings, nor any refinancing or interim financing, unless it was behind their first mortgage position.
Since that time the proposal trustee has contacted numerous lenders and is working on obtaining a commitment of a new first mortgage that would be large enough to take out Equitable Trust and provide financing to carry out the renovations required and everything else to sell off the unit’s belonging to the debtor company in order to generate a larger recovery for the second mortgagee’s.
The proposal calls for the unsecured creditors to receive five cents on the dollar of their unsecured claim. Although this is not a lot, without the proposal going forward, refinancing or interim financing would seem almost impossible, and the shortfalls to be suffered by the second mortgagee who will be the largest unsecured creditor under any scenario –would all be larger in a bankruptcy scenario as that would leave the units all in the hands of Equitable Trust who would proceed with its power as sale proceedings, in which Equitable Trust may choose to sell off all the units as one “package” under their security- which would greatly reduce the realization and increase any shortfall to the second mortgagees.
#####A further explanation of how 2nd mortgages are reduced to unsecured creditors is required. If the 2nds are being included in a proposal that would with a target of 5 cents/$1.00 then there there is little incentive for the 2nds to fund the process/ What am I missing?
As such it appears that the both beneficial way for all to proceed would be to accept the proposal, continue to attempt to obtain the refinancing and have the second attempt to sell off the units as originally planned in 2008.
Tom
______________________________________________________
Kenneth M. Tessis CA•CIRP
Soberman Inc.
T: 416.963.7120
P Please consider the environment before printing this email.
From: H. Paul Ivany [mailto:pivany@compasswealth.com]
Sent: Thursday, March 25, 2010 7:49 PM
To: Ken Tessis
Subject: Fw: Breckenridge - Meeting for the 2nd mortgage holders
Ken,
I fully understand the requirement for funding to secure the loan but 100K. How did we get to that number? 15K to secure loan and an amount for you firm and Terry. But an additional 85K.
Please send me a statement of your billing thus far and let's take a fair and reasonable look at this. This is about paying good value for good work.
I am looking to recommend this process but they will see right thru this.
Regards,
Paul
From: Evelyn Bowles <ebowles@soberman.com>
Date: Thu, 25 Mar 2010 18:06:49 -0400
To: 'glen1.macdonald@gmail.com'<glen1.macdonald@gmail.com>; 'luc.berube@sympatico.ca'<luc.berube@sympatico.ca>; 'kenich@sympatico.ca'<kenich@sympatico.ca>; 'marshall.chasin@rogers.com'<marshall.chasin@rogers.com>; 'therockpilenightclub@yahoo.ca'<therockpilenightclub@yahoo.ca>; 'jo.deluzio@utoronto.ca'<jo.deluzio@utoronto.ca>; 'jmlebe@gmail.com'<jmlebe@gmail.com>; 'mevans@evansmarketinginc.com'<mevans@evansmarketinginc.com>; 'sgurr@rogers.com'<sgurr@rogers.com>; 'jlhilson54@hotmail.com'<jlhilson54@hotmail.com>; 'lluckevich@sympatico.ca'<lluckevich@sympatico.ca>; 'ompco@rogers.com'<ompco@rogers.com>; 'mwityk@mountaincable.net'<mwityk@mountaincable.net>
Cc: Ken Tessis<ktessis@soberman.com>; 'pivany@compasswealth.com'<pivany@compasswealth.com>; 'Terrence S. Reiber'<terry@reiber.ca>; 'adouglasburns@burnsargiropoulosllp.ca'<adouglasburns@burnsargiropoulosllp.ca>; 'Benson Young'<byoungproperties@yahoo.ca>; 'carolevns@yahoo.ca'<carolevns@yahoo.ca>; 'carole.evans@kone.com'<carole.evans@kone.com>; 'Ridhard Hall'<rghall@canlighthall.com>; 'Simon J. Adler'<sja@giffenlawyers.com>
Subject: Breckenridge - Meeting for the 2nd mortgage holders
We are proposing that all 2nd mortgagees meet together on Wednesday March 31, 2010 at 7pm at a location in the 401 /404 area (location to be determined) in order to bring everyone up to date with this matter, and to discuss your various options and answer any questions you may have – as it appears funding will be required in order to maximize your recovery as per our previous emails.
It would appear that, at minimum, $100,000 will be required for legal, monitoring, management and lending fees – and that is based on the mortgage commitment over $3.8M – or the funding may have to be more.
We also intend to have Richard Hall from Canlight and Terry Reiber who has been acting for you, in attendance.
____________________________________
Evelyn L. Bowles
Estate Administrator, Insolvency
Soberman Inc.
2 St Clair Avenue East, 10th Floor
Toronto, Ontario M4T 2T5
T 416 963 7143
F 416 929 2555
E ebowles@soberman.com
www.soberman.com
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