Urbancorp housing developer wants to restructure under bankruptcy laws
Property developer currently has more than 1,000 units under construction in the GTA
One of Toronto's biggest property developers wants to restructure itself by selling assets to pay down debt and finish the more than 1,000 housing units it is currently trying to build across the Greater Toronto Area.
Urbancorp Toronto Management Inc. said on Friday it is seeking to restructure its operations under Canada's Bankruptcy and Insolvency Act, and is asking a court for permission to sell assets to pay down debt.
"We determined, after much consideration and consultation, that a court-supervised process is the best way to deal with current cash flow issues," CEO and founder Alan Saskin said in a statement. "This will allow us to reduce debt in an efficient manner while continuing to focus on our core business."
The company doesn't specify in its statement what assets it plans to sell. According to its website, Urbancorp is currently developing 17 different sites across the GTA, with some 1,058 individual units under construction. None of the company's condo units are affected, only freehold homes.
"The court process is intended to ensure that ... we will be delivering these homes in the next two years," Saskin said.
"This will support efforts to maximize real estate values for the benefit of creditors and other stakeholders, in an orderly manner."
In addition to the parent company, five Urbancorp subsidiaries linked to individual developments filed for restructuring. They are:
- Urbancorp Downsview Park Developments Inc.
- Urbancorp (St. Clair Village) Inc.
- Urbancorp (Patricia) Inc.
- Urbancorp (Mallow) Inc.
- Urbancorp (Lawrence) Inc.
The news release says Urbancorp is working with Toronto trustee KSV Kofman Inc. to restructure its operations. According to filings, none of the companies have any assets or any debt on their books.
It's not clear what the news means for buyers who have bought or paid deposits for developments that have yet to be completed. A voice mail to Saskin from CBC News on Monday was not immediately returned.
Last month, Ontario's new-home warranty insurer Tarion warned Urbancorp could lose its registration due to its failure to meet certain financial requirements.
But the insurer made it clear that buyers would be protected no matter what. "It is important for homebuyers and homeowners to know that they remain protected under the warranty, and Tarion will step in to fulfil the warranty obligations if Urbancorp fails to do so," said Tarion, which has set up a hotline to serve Urbancorp homebuyers and homeowners at 1-877-982-7466.
In December, Urbancorp raised more than $60 million by selling four-year bonds in Israel with a coupon rate of 8.6 per cent. As of Monday morning, the price of those bonds was down by more than half, Bloomberg data showed.