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Friday, March 26, 2010

Fw: Breckenridge Proposal -- EVans & Sons -- Giffen 100138

Regards,

Paul

From: "Simon J. Adler" <sja@giffenlawyers.com>
Date: Wed, 24 Mar 2010 14:58:22 -0400
To: Ken Tessis<ktessis@soberman.com>
Cc: 'pivany@compasswealth.com'<pivany@compasswealth.com>; Evelyn Bowles<ebowles@soberman.com>; Terrence Reiber<terry@reiber.ca>
Subject: RE: Breckenridge Proposal -- EVans & Sons -- Giffen 100138

Dear Ken,
 
Thank you for your response.  I agree with you completely that there is no particular way out of this mess without a refinancing.  The only possible source for the costs associated with this refinancing is the second mortgagees.  They are also the ones who will most immediately (and maybe exclusively) benefit.  I think it is reasonable, in exchange for my client's cooperation, that we at least reach an understanding on that point and the concept that the proposal process will be used, not merely to destroy Evans & Sons, but to achieve the maximum recovery for all creditors.  This would require an understanding that, if we file "just any" proposal now to meet the deadline, there would be a serious process of refinement and possible amendment before the proposal is finalized and put to a vote.
 
A response on this point from Messrs Ivany &/or Reiber is highly desirable.  I will certainly cooperate in meetings etc. but next week is impossible.
 

Simon Adler

Giffen LLP Lawyers

Mailing address: P.O. Box 2396,

Kitchener, Ontario N2H 6M3

Street address: 500 - 50 Queen St. N.

Kitchener, Ontario

 

Tel: (519) 578-4150 ex. 545

Fax (519) 578-8740

 

e-mail: sja@giffenlawyers.com

website: http://www.giffenlawyers.com


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CONFIDENTIALITY NOTICE: This communication and any accompanying document(s) are confidential and may be privileged.  They are intended for the sole use of the addressee. If you receive  this transmission in error, you are advised that any disclosure,  copying, distribution, or the taking of any action in reliance upon  the communication is strictly prohibited. Moreover, any such  inadvertent disclosure shall not compromise or waive solicitor-client privilege as to this communication or otherwise. If you have received this communication in error, please immediately contact inform the sender by return e-mail or by telephone at (519) 578-4150 and delete this e-mail message and all copies.  Due to the inherent risks associated with the Internet, we assume no responsibility for unauthorized interception of any Internet communication with you or the transmission of computer viruses.

 

From: Ken Tessis [mailto:ktessis@soberman.com]
Sent: Wednesday, March 24, 2010 2:40 PM
To: Simon J. Adler
Cc: 'pivany@compasswealth.com'; Evelyn Bowles; Terrence Reiber
Subject: RE: Breckenridge Proposal

1.            Re the stay –
i.              Equitable advises that they will move to lift the stay if the trustee or companies tried to enforce it - in any case and based on the history as we discovered - as this matter moved forward – it would appear that they have validity in their position if they opposed the stay.  

ii.             We  and our lawyers also believe that even if they were sent in 2008 they most likely are too old, or the old default was cured -  to be considered effective as against the NOI- however …….

iii.            there is no positive – or minimal cash flow in any case -   which if  the companies still collected the rents – would also require that the property manager be paid,  and the trustee in the proposal to monitor all cash receipts and disbursements – as such fees and cash outflows are actually reduced if Equitable collects the rents.  (Equitable actually made this “part” of the administration much easier)

iv.           The goal here is to obtain refinancing as no other plan will seem to work .

 

2.            Re Proposal  -

 

The wording is almost irrelevant at this time – as the seconds (with the lawyers in each proposal ) should be in control the votes – assuming 2 voting for in excess of 1 million dollars (their anticipated shortfall ) as – Equitable will most likely file as fully secured and hence no vote , and the only opposition  may come from the third – but they will be only one vote and not over 33.33% of the voting in dollars – as such the proposal can be amended before or at the meeting.

 

3.            Extension

It is more practical  to file a proposal and have creditors – by dollar vote – which the seconds control  - request an adjournment as no court applications (and one is London or Windsor court ) will have to be made/ Also the application would now have to be booked and all material prepared to be heard this Friday

 

I hope this answers  your questions etc

______________________________________________________
Kenneth M. Tessis CA•CIRP 
Soberman Inc.
T: 416.963.7120
 
P Please consider the environment before printing this email.

From: Simon J. Adler [mailto:sja@giffenlawyers.com]
Sent: Wednesday, March 24, 2010 2:15 PM
To: pivany@compasswealth.com; Evelyn Bowles; glen1.macdonald@gmail.com; luc.berube@sympatico.ca; kenich@sympatico.ca; marshall.chasin@rogers.com; jo.deluzio@utoronto.ca; jmlebe@gmail.com; mevans@evansmarketinginc.com; sgurr@rogers.com; jlhilson54@hotmail.com; lluckevich@sympatico.ca; ompco@rogers.com; mwityk@mountaincable.net; adouglasburns@burnsargiropoulosllp.ca; Byoungproperties@yahoo.ca; byoung@croftonhouse.ca; carole.evans@kone.com; carolevns@yahoo.ca
Cc: terry@reiber.ca; Ken Tessis
Subject: RE: Breckenridge Proposal
Importance: High

 

Dear All,

 

This is in response to the most recent emails of Ms. Bowles of Ken Tessis' office and of Mr. Ivany.

 

On behalf of Ms. Evans, I have to express very significant concern at the present turn of events.  So far as I can establish, Evans & Sons did not receive a s. 244 notice under the Bankruptcy and Insolvency Act from Equitable.  If this is the case, then Equitable is bound by the stay and a refinancing can be forced on Equitable.

 

However, even if a section 244 notice had been served on Evans & Sons, with cooperation we can still achieve the desired objective without disastrous consequences to Evans & Sons or any other party as, under the Mortgages Act, a refinancing can be forced on Equitable.

 

I therefore strongly suggest that the relevant parties -- and here I am particularly referring to the second mortgagees -- agree to act in their best self-interests and cooperate to an effective interim resolution of this matter.

 

The entire concept of preventing Equitable from selling in bulk, one way or the other, was always dependent on further funding by the second mortgagees -- if only in respect of the proposal process.  I know nothing about Lakeshore but it is clear that Evans & Sons has absolutely no means to fund further opposition to Equitable or the replacement of the first mortgage.  Evans & Sons agreed to make the proposal at the insistence of the second mortgagees and specifically to assist the second mortgagees in gaining time to do what is necessary to sell the units on an individual basis.

 

For a very considerable time I have been seeking details as to what has happened with the historic rents on the Evans & Sons properties before the Equitable notices of attornment and still have not received this information.  The real concern from my client's point of view, is whether rental  money produced by its units has been used for the benefit of units owned by others either by funding renovations or making mortgage payments.

 

This will have to be clarified in due course.  In the meanwhile however, if Equitable is to be prevented from a sale in bulk, the first mortgage must be refinanced.  I would expect that even if it costs the second mortgagees some few thousands in order to achieve this, they will enjoy a very significant reduction in the amounts owing to them on the sale of the properties even after repayment of the amount advanced.  If the costs involved are even $21,000 -- the second mortgagees stand to benefit by far more than $1,000/unit if the units sell for anything approaching their individual fair market value (guessed to be about $140,000) instead of the likely Equitable bulk sale value (guessed to be about $95,000).

 

I would like to suggest that the Evans & Sons proposal be redrafted so that it provides that:

-- a series of new first mortgages will be sought (from one lender) to replace the Equitable mortgage such that units can be sold on an individual basis and in the meanwhile the rents can used to service the interest on the first and second mortgages and other priorities

 

-- the second mortgagee will advance the necessary costs related to that process and add the amounts to the second mortgage principal

 

-- the units will be sold as soon as commercially reasonable and the proceeds used to pay the secured creditors as far as possible

 

-- the litigation against Campagnaro will continue

 

-- the proceeds of the litigation (if any) will be used first to pay the legal costs and the balance will be divided pro rata among all unsecured creditors

 

It will not be acceptable to me simply to allow the proposal process to fail by non-filing.  Either we file or we get an extension of time.

 

I would appreciate hearing from you as soon as possible.  In particular, I would appreciate hearing from Mr. Tessis as to the practicalities involved in obtaining an extension of time for the filing of the proposal. 

 

Mr. Ivany:  Please advise if we should (or should not) continue copying emails to Mr. Reiber.

 

Simon Adler

Giffen LLP Lawyers

Mailing address: P.O. Box 2396,

Kitchener, Ontario N2H 6M3

Street address: 500 - 50 Queen St. N.

Kitchener, Ontario

 

Tel: (519) 578-4150 ex. 545

Fax (519) 578-8740

 

e-mail: sja@giffenlawyers.com

website: http://www.giffenlawyers.com


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CONFIDENTIALITY NOTICE: This communication and any accompanying document(s) are confidential and may be privileged.  They are intended for the sole use of the addressee. If you receive  this transmission in error, you are advised that any disclosure,  copying, distribution, or the taking of any action in reliance upon  the communication is strictly prohibited. Moreover, any such  inadvertent disclosure shall not compromise or waive solicitor-client privilege as to this communication or otherwise. If you have received this communication in error, please immediately contact inform the sender by return e-mail or by telephone at (519) 578-4150 and delete this e-mail message and all copies.  Due to the inherent risks associated with the Internet, we assume no responsibility for unauthorized interception of any Internet communication with you or the transmission of computer viruses.

 

 

From: H. Paul Ivany [mailto:pivany@clearwire.net] On Behalf Of H Paul Ivany
Sent: Tuesday, March 23, 2010 9:07 PM
To: ebowles@soberman.com; glen1.macdonald@gmail.com; luc.berube@sympatico.ca; kenich@sympatico.ca; marshall.chasin@rogers.com; jo.deluzio@utoronto.ca; jmlebe@gmail.com; mevans@evansmarketinginc.com; sgurr@rogers.com; jlhilson54@hotmail.com; lluckevich@sympatico.ca; ompco@rogers.com; mwityk@mountaincable.net; Simon J. Adler; adouglasburns@burnsargiropoulosllp.ca; Byoungproperties@yahoo.ca; byoung@croftonhouse.ca; carole.evans@kone.com; carolevns@yahoo.ca
Cc: terry@reiber.ca; ktessis@soberman.com
Subject: RE: Breckenridge Proposal

Evelyn et al,

 

The intent of involving a receiver/trustee was to seek a solution whereby the Breckenridge townhouses could be sold individually and not as two groups of 21 and 20 as Equitable, the 1st mortgage holder intends to sell them. It appears that forcing Equitable to sell them individually is a more complex and costly process that anticipated and that Mr Tessis is seeking a solution whereby  a 'new' lender will take over the Equitable 1st mortgage and then allow the individual sales. In order to achieve this goal, there are cost associated with the financing. I would recommend that Mr Tessis call a meeting of the creditors, the purpose being to better explain the process and to determine the level of interest in his solution.

 

The individual market price is estimated to be 140,000. Equitable requires a value in the range of 75,000 to 80,000 to satisfy their 1st mortgage. The spread, less costs involved, does appear to warrant serious consideration of Mr Tessis's solution by the creditors.

 

 Regards,

Paul
__________________________
H. Paul Ivany CFP, CFSB, EPC
pivany@compasswealth.com

P: 905.428.0956 F: 905.428.9833 P: 1.800.862.8882 C: 386.871.1374




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Original message
From: "Evelyn Bowles"   
To: glen1.macdonald@gmail.com; luc.berube@sympatico.ca; kenich@sympatico.ca; marshall.chasin@rogers.com; jo.deluzio@utoronto.ca; jmlebe@gmail.com; mevans@evansmarketinginc.com; sgurr@rogers.com; jlhilson54@hotmail.com; lluckevich@sympatico.ca; ompco@rogers.com; mwityk@mountaincable.net; sja@giffenlawyers.com; adouglasburns@burnsargiropoulosllp.ca; Byoungproperties@yahoo.ca; byoung@croftonhouse.ca; carole.evans@kone.com; carolevns@yahoo.ca
Received: 3/23/2010 6:18:39 PM
Subject: Breckenridge Proposal

Ken would like all to be aware that we have been advised that Mr. Reiber does not appear to be further retained in this matter and Mr. Ivany has advised that it does not appear that the second mortgagees would be prepared to provide additional funding for the process.

 

As such, it appears that there are no funds to pursue the refinancing/mortgage commitment which would require approximately $15,000.00.

 

At this stage, it appears that we have two options:

 

a.       File a proposal for each entity and continue attempts to pursue financing;  or

b.      Allow the proposal process to fail (by not filing proposals within the time required by the Act – being this coming Sunday) which will result in the automatic deemed bankruptcy of each entity effective Monday.

 

Please contact Ken with your comments or instructions at ktessis@soberman.com or 416-963-7120.

 

Thank you.

____________________________________
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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This email contains privileged and confidential information intended only for the use of the addressee(s) named. If you are not the intended recipient of this email, or the employee or agent responsible for delivering it to the intended recipient, you are hereby notified that any dissemination or copying of this email is strictly prohibited. If you have received this email in error, please immediately notify us by email. Do not disclose the contents to anyone or retain any portion of this message.
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