3 landlords among largest real estate holders in Ontario owe $144M, under bankruptcy protection: documents

A small group of landlords who own hundreds of rental properties across the provincehave run out of money, owe over $144 million in unpaid loans and face dozens of lawsuits from creditors, according to documents filed with the OntarioSuperior Court of Justice.

Dylan Suitor, Ryan Molony and Aruba Buttare behind 11 now-insolvent corporations that face a"liquidity crisis" with only $100,000 in the bank, the documents say.

The three received court-ordered protection, under the Companies' Creditors Arrangement Act (CCAA), from over 300 lenders until the end of March 2024,wrote Justice Jessica Kimmel in her decision this week.

Also known as bankruptcy protection, it means any legal action taken by lenders to recoup their money has been paused so the landlords can attempt to save their business. Documents say 32 lawsuits are currently filed against the corporations in courthouses across Ontario.

The landlords and their corporations are based in the Hamilton area, but specialize in buying, renovating andin some cases relisting "distressed residential real estate in undervaluedmarkets," said a court factum.

Those markets are in Timmins, Sault Ste. Marie and Sudbury, as well as smaller communities, including Kirkland Lake, Temiskaming Shores and Val Caron.

The landlords currently own 406 properties where 1,000 tenants live, making them "one of the largest holders of residential real estate in Ontario," Kimmel wrote.

They did not respond to a request for comment sent through their lawyers.

Over 200 rental units sitting empty: documents

Suitor is a Hamilton investor who made headlines last year for shutting off tenants' water for nearly three months at 1083 Main St. E. after a pipe burst. At the same time, he was trying to evict them throughthe Landlord and Tenant Board to renovate their units, which is an ongoing process, lawyers representing the tenants have said.

The corporation that owns the building which sits across from Hamilton's picturesque Gage Park is not among those in financial trouble that require creditor protection.

Suitor is also a Realtor with over 200,000 followers on Instagram, where he shares business advice as a "self made" entrepreneur and real estate investor.

LastAugust, Suitorhosted a "Business Results Training Seminar" in Burlington, Ont.,promisingattendees would learn togrow their business up to 150 per cent over 12 months, according to hissocial media posts.

Butt is a director of some of the corporations under creditor protection, which own dozens of properties in Sault Ste. Marie.

Molony is president of SID Developments, according to the website of the company, which provides renovation and management services to the corporations.

SID Developments was founded by Robert "Robby" Clark, a former child actor known for his starring role in The Zack Files. Clark described the corporations' unravelling in an affidavit filed in court.

"To reduce the [landlords'] significant interest expense and improve their free cash flow, the company began exploring refinancing and sale opportunities in 2022," Clark said.

Their efforts were "hampered" by the Bank of Canada's interest rate hikes beginning in March 2022and falling home prices.

They ran out of money to finish renovating some units, which now sit empty, and represent $350,000 a month in lost revenue, Clark said. More than 200 of the 631 rental units they own are currently empty, documents show.

Along with owing $144 million for mortgages and other loans, they owe:

• $2.8 million in unpaid municipal taxes, utility bills and corporate income taxes.
• $600,000 to contractors, trades and service providers.
• $55,000 in payroll deductions to the federal government.

Links between companies can be 'hard to unravel': lawyer

With the creditor protection order, the landlords have access to a $12-million loan to pay for the cost of the court proceedings and complete renovations. They'll also pursue "comprehensive refinancing or restructuring," and a "consensual plan of compromise" with lenders to continue operations.

Filing for creditor protection is often used as "a very last resort" for companies on the brink of bankruptcy, said lawyer Karen Fellowes, based in Calgary and Vancouver,who specializes in restructuring and insolvency and is not involved in this case.

Other times, companies use it strategically if they predict a looming "liquidation crisis" and need to restructure over several months, she said.

Whether the landlords will be successful in saving their business depends on if the 300 lenders agree to support them, Fellowes said. They will likely get an extension for creditor protection and try to sell some properties, she added.

Tenants have rights that would allow them to stay in their homes even if there's a new owner, unless lenders want the units vacated and it's ordered by the court, Fellowessaid.

For tenants living in properties not part of the proceedings, like the one at 1083 Main St. E. in Hamilton, it's unlikely those buildings would be directly impacted as they're owned by other corporations, shesaid.

Real estate investors often try to "limit liability" by creating multiple corporations.

"It's not that uncommon, but it does create this really complicated corporate structure where you have multiple companies, multiple lenders, and sometimes the links between them are hard to unravel," Fellowes said.

Are you a tenant who may be impacted by this case? Email us: Hamilton@cbc.ca