Ottawa Construction News staff writer
Two significant Ottawa developers are experiencing serious financial problems, though the businesses behind them are continuing and their leaders say they are working to resolve the outstanding issues.
Ashcroft Homes has recently lost control of its troubled Eastboro development, while developer San Mizrahi has been given creditor protection for a 12-storey condo at 1451 Wellington St. W.
Superior Court Justice Stanley Kershman granted creditor protection to Mizrahi Development Group on Oct. 15. The order allows Mizrahi and his company, WellingtonCo., time to put the project at Island Park Dr. and Wellington Street West back on track.
While the original court order gave Mizrahi a 10-day reprieve from its creditors, the developer was expected to extend it. The court appointed MNP Ltd. to oversee the company’s finances.
The court protection “ensures the company has the resources and time to achieve its original vision for the project with utmost precision and quality,” Mizrahi said in an email to The Ottawa Citizen, with the aim of completing work by May, 2025.
“Mizrahi Development Group is committed to ensuring all its projects and developments consistently exceed customer expectations without compromising standards and quality,” Mizrahi told the newspaper in its statement.
“We don’t compromise on our values, and we will always stay true to this vision.”
Court documents say 72 of the high-rise condo’s 93 suites have beens sold. However, construction is more than a year behind schedule, with the project 85 per cent complete in October, according to the documents.
MNP in court filings said creditor protection provides the “most viable path” to completing the project, which has substantial “potential value”.
“It’s completion is paramount to realizing this value, which will benefit all stakeholders involved,” MNP, a licensed insolvency trustee, says in its court filings.
Meanwhile, on the other side of the city, Ashcroft’s problems with Eastboro on Navan Road have reached the stage where the Royal Bank of Canada has put the project into receivership, after the company failed to make $4.85 million in interest payments on an $80 million bank debt for the Orleans housing development.
Ashcroft is facing other problems with projects in various parts of the city. The Ottawa Citizen says these relate to the consequences of the COVID-19 pandemic, higher materials prices and borrowing costs, and the downturn in the market for commercial leased space.
The Citizen reported several construction trades and suppliers have filed liens against other Ashcroft projects, and overall four projects have been placed into receivership
“Ten local firms have this year registered $6.5 million in construction liens against Ashcroft Development Inc., another Ashcroft subsidiary, in connection with two seniors’ residences, The Astoria and The Astoria II, at 150 Central Park Dr.,” the newspaper reported.
Ashcroft chief financial officer Manny Difilippo told the newspaper last Friday (Oct. 25) the Astoria project liens have been resolved.
Among liens filed, electrical contractor Lecompte Electric Inc., registered a $2.5-million lien; drywaller Serco Construction, registered a $1.6-million lien; and concrete formwork business Coffrages Synergy registered a $1.1-million lien.
The Citizen reported other firms with liens include Stephenson’s Rental Services ($237,216), YSB Hoist Inc. ($151,323), Sunbelt Rentals of Canada ($135,612), M. Davis Landscape and Design ($136,854), Canada Paving and Construction Ltd. ($152,160) and Ontario Iron Works Ltd. ($123,868).
As well, other liens were filed earlier against the Eastboro project before it was placed into receivership.
The newspaper cited filings that say Taggart Construction has a $2.75-million construction lien and a related lawsuit against Ashcroft Homes-Eastboro Inc. to recover the outstanding cost of sewer and road work, completed on May 30.
The lawsuit, launched earlier in October, also names Ashcroft Homes and the City of Ottawa as defendants, the Citizen says.
As well, Bolton Electric has launched a $202,000 lawsuit against Ashcroft Homes-Eastboro Inc. in an effort to obtain payment for materials and electrical installation services at the same development. The lawsuit also names Ashcroft Homes, Ashcroft Construction and Ashcroft founder David Choo as defendants, The Citizen reports.
“We are unfortunately in a tight liquidity position, and we continue to work with lenders and all trades so that trades are paid for the work that has been completed,” Difilippo told The Citizen. “It is an ongoing process, which will take time to resolve.”