The principal assets owned by the Companies were development properties located in Halton Hills, Ontario. The Companies owned five properties. A related company owned an option to purchase a property which, together with four of the five properties owned by the Companies, forms a development project that had received early-stage approvals from the Halton Region (the “Assembly"). Each of the properties owned by the Companies had a different capital structure (including different senior ranking mortgagees) which impaired the development, sale and financing of the properties. These and other issues caused the Companies to file Notices of Intention to Make a Proposal.
KSV was the Proposal Trustee and subsequently Licensed Insolvency Trustee. As Proposal Trustee, we developed a sale and investment solicitation process (“SISP) for the Assembly. The SISP was designed to unlock the value of the development, which could not be realized outside of a court-supervised process because of the capital structure issues referenced above. Each of the mortgagees consented to the SISP, failing which they would have been in a position to enforce their security and commence power of sale proceedings. Such proceedings would have impaired recoveries to each of them.
An en bloc sale of the Assembly was the only way to unlock full value for stakeholders. The SISP was a stalking horse sale process. Such a process secures a transaction, as a baseline, and provides an opportunity to generate recoveries greater than the value of the stalking horse. As a result of the SISP, all first mortgagees were repaid in full.