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Action
No. 0201 – 13248 IN
THE COURT OF QUEEN’S BENCH OF ALBERTA JUDICIAL
DISTRICT OF CALGARY KENDAX INVESTMENTS INC. Applicant
AND DONALD CARMICHAEL AND
658051 ONTARIO LIMITED Respondents JUDICIAL
TRUSTEE’S FIRST REPORT TO THE OWNERS OF CONDOMINIUM PLAN 8811686, UNITS 1 –
195, 205 HERITAGE DRIVE SE, CALGARY, AB (BONAVENTURE COURT) (the “Properties”) Alger & Associates Inc. (“Alger”), has been appointed Judicial Trustee in accordance with various Orders made by the Honorable Justice R.M. Cairns of the Court of Queen’s Bench of Alberta made during December 2002 through February 2003. The purpose of this report is to inform the owners of the Properties of our appointment, those actions undertaken by us to date and of other relevant information. As Judicial Trustee, we are a neutral party whose duties include: · Taking possession of and managing and operating the Properties, via a property management agreement with Fireside Management Ltd. (“Fireside”), the current property manager. · Holding the legal title to each of the 195 condominium units in trust for the beneficial owners, in the event that 658051 Ontario Limited’s corporate status is not revived by February 28, 2003. · Attending to the affairs of the Properties in general and particularly to renew the 1st Mortgage in favour of Sun Life Assurance Company due April 1, 2003. To investigate the validity of the second mortgage in favour of Kingscroft Investments Limited and review the appropriateness of any other encumbrances to the titles on the units. · Monitoring the past and current affairs of the Properties, including reviewing the propriety of prior transactions and the current management of the Properties. Most of our duties and powers are set out in the Order of the Honorable Justice R.M. Cairns of the Court of Queen’s Bench of Alberta, dated January 22, 2003, a copy of which is attached for your reference. Copies of all other Orders made with respect to this matter are available on our website at www.corporaterecovery.ca under ‘Engagement Bulletin Board’. If you do not have access to the Internet, please contact our office to obtain copies of the additional Orders if you wish. 1. Change of Title to Your Unit 658051 Ontario Limited, which holds a title to the Properties in trust, is currently not a legally subsisting corporation, having been struck from the Ontario Registry of Corporations in 1995. If 658051 Ontario Limited does not regain its legal status by February 28, 2003, then title to units will automatically be transferred to a nominee corporation wholly controlled by the Judicial Trustee. 2. 1st Mortgage - Sun Life Assurance Company (“Sun Life”) The blanket first mortgage on the Properties of approximately $6.2 million matures April 15, 2003. We have met with officials of Sun Life and confirm that the mortgage is in good standing and that they have expressed a willingness to work with the Judicial Trustee. If 658051 Ontario Limited regains its legal status before February 28, 2003, it is obligated by Order of the Alberta Court to renew the mortgage otherwise, we will attend to this renewal. Please be advised that we intend to renew the mortgage on a short-term basis of between six months and a year, so that we may explore further the option of fracturing the mortgage or obtaining a new blanket mortgage capable of being paid down on a unit-by-unit basis. Any such mortgage other than a blanket mortgage would have to be obtained elsewhere as Sun Life has indicated they do not provide this type of financing. We have had preliminary discussions with five lenders and are also waiting to hear from Mr. Carmichael regarding steps that may have already been taken to obtain alternate mortgage financing. Our own investigations indicate that at least one lender has some level of interest in providing a blanket mortgage capable of being paid down on a unit-by-unit basis. However, no lender we spoke to was interested in providing a fractured mortgage. It is our intention to provide a report to the owners regarding the various options available for mortgage financing once we have completed our investigations. 3.
Day to Day Operations As you will note from the Court Order appointing Alger, we are to continue using the existing management company, Fireside unless we determine that, in the interests of the owners, new managers should be retained. We have met with officials of Fireside, reviewed the Properties and made various inquiries regarding Fireside, which have led us to conclude that it is appropriate for Fireside to continue to manage the day-to-day operations of the property. 4.
Cash Flow All day-to-day operating payments and 1st Mortgage payments will, with our supervision, continue to be made by Fireside. Net cash, after operations and 1st Mortgage payments, is to be paid to the Judicial Trustee. These funds will be held on deposit in an interest bearing account which currently earns prime minus 2%. Disbursements from this account will include the Judicial Trustee’s costs and other payments as ordered by the Court. The Court has also ordered that “No further monies shall be paid out by Fireside to Kingscroft Investments Ltd. or any other Donald Carmichael company in respect of the second mortgage that is registered against title to the Properties” … “pending a review and audit by” the Judicial Trustee and a report to the Court. We have commenced our review in this regard. 5.
Monitoring Past Financial Affairs of the Properties An in trust financial statement as at December 2001 indicated that 658051 Ontario Limited held the following assets in trust for the owners of the Property:
We have commenced preliminary inquiries to determine the disposition of cash, reserve funds and the amount due from Related Party. A report of our findings will be provided to the owners as further information becomes available. 6. Income Tax Information We have recently requested that Mr. Carmichael provide us with a cost estimate to prepare the annual income tax information required by each owner. Assuming this cost is reasonable, we anticipate having this information prepared by Mr. Carmichael and his accountants for distribution to all owners. 7. Contacting the Judicial Trustee If
you would like to contact us to provide your views regarding a fracturable mortgage or to discuss
anything in this letter, please contact undersigned at 1-800-661-8284. Information, as it becomes available, may also be obtained from our
assignment bulletin board located at www.corporaterecovery.ca. Yours truly, ALGER & ASSOCIATES INC.
Bruce E. Alger, CA·CIRP, President Dated: February 20, 2003 Enclosures cc.
Maureen Dawson Bishop
& McKenzie LLP Terry
Czechowskyj Miles
Davison McCarthy McNiven LLP Carla
Murray Burnet Duckworth & Palmer LLP
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