The developer of Castlegar's Twin River Estates, KS Property Management Inc., has been placed under a receivership order by the B.C. Supreme Court at the request of its lender Kootenay Savings Credit Union (KSCU).
KS Property Management (KSPM) owns the land in the incomplete section of the Twin River Estates development and 16 empty strata lots in a Wardner, B.C. development known as Osprey Landing. The Twin River land was intended to be subdivided and sold as residential lots.
The developments have been in a precarious financial position for about six years. In 2018 as part of a Bankruptcy and Insolvency Act transaction to avoid bankruptcy, KSCU obtained the shares of the original developers, Osprey Landing Development Corp. and Twin River Estates Ltd., by creating the wholly-owned subsidiary KS Property Management.
In 2023 the BC Financial Services Authority ordered KSCU to divest itself of its shares in the company.
KSCU then sold KSPM to 0997677 BC Ltd. also known as CDG Enterprises (CDG), who was the head contractor for the Twin River Development.
The sale of KSPM to CDG included all issued and outstanding shares of KSPM and all aggregate indebtedness owed by KSPM to KSCU in exchange for the purchase price of $10. The indebtedness included a $15.2 million promissory note.
As part of the transaction KSCU acquired a nine-per-cent interest in CDG. KSCU also advanced $2 million in shareholder loans to CDG.
According to court documents, the shareholder loans were intended to fund the completion of the Twin River Development, including paying contractors and completing registration of the Twin River subdivision plan, facilitating the listing and sale of lots in the development.
In its submission to the court, KSCU claims the CDG shareholder loans were not used for their intended purpose.
The documents also state that in June 2024, KSCU was advised by Christianne Hossmann, director of KSPM and CDG, that KSPM and CDG had run out of money and were shutting down their sales offices.
In a Sept. 10, 2024, affidavit from Brian Moroney, KSCU's chief credit officer, Moroney stated that KSCU was advised by CDG directors in June 2024 that former directors of CDG had withdrawn all cash holdings from CDG (approximately $3 million); Christianne Hossmann had funds from recent lot sales in the Osprey Development in an account outside of KSCU, which would likely be used for legal fees; builders liens totalling $2 million had been registered on title to the Twin River lands; there was no money to cover the liens and the Twin River Development subdivision could not be registered with liens on title.
"Being advised that KSPM and CDG had no funds was shocking and concerning news to receive considering that the Petitioner had recently advanced $2.0 million in shareholder loans to CDG to fund, among other things, payments to contractors, and considering that KSPM had recently received close to $500,000 in net proceeds from lot sales in the Osprey Development, which completed on May 31, 2024," said Moroney.
The receivership application states the builders liens are now over $2.5 million from claimants including Colas Western Canada Inc., Marwest Industries Ltd., Pennco Engineering (BC) Ltd., and Geo Stabilization International Inc.
According to the court documents, KSPM is in default of its obligation to make required monthly interest payments to KSCU and default of its obligation to pay the balance due under the promissory note (approximately $15.2 million at the time of filing).
The application stated, "KSPM lacks the funding required to complete the Twin River Development and to market and sell the lands in an orderly manner that will optimize recovery for the Petitioner and, ideally, for all of KSPM’s creditors."
On Oct. 28, 2024, B.C. Supreme Court Justice Michael Tammen placed KSPM/0997677 BC Ltd./CDG under a receivership order. Deloitte Restructuring Inc. will act as the receiver.
The receiver is authorized to take control of and protect the property, manage the business of the debtor, engage experts and managers, market any or all of the property and apply for government permits and licenses.
