ashcroft homes, one of ottawa's leading developers, now in receivership
a toronto-based receiver, ksv restructuring inc., now has control of ashcroft’s extensive real estate portfolio in ottawa.
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in october 2024, ashcroft homes lost control of its 200-acre eastboro development.
jean levac
/
postmedia
one of ottawa’s leading developers, the ashcroft homes group, has been forced into receivership by a group of creditors who lost confidence in the company’s managers and their turnaround plan.
a toronto-based receiver, ksv restructuring inc., now has control of ashcroft’s extensive real estate portfolio in ottawa.
that portfolio includes three retirement homes, the ravines, park place and promenade, along with three seniors’ residences that use the same names.
all of them operate under ashcroft’s alavida lifestyles banner, one of eight related companies that make up the ashcroft homes group.
the receiver is also in control of envie i and envie ii, student rental buildings on champagne avenue in little italy, and restays, a boutique hotel on queen street.
more than 1,000 people live in ashcroft residences in ottawa.
in a recent notice sent to residents of ashcroft’s seniors’ homes, ksv restructuring officials said its priority was to maintain services, programs and continuity of care at the facilities.
“the interim receiver also intends to retain a property manager that specializes in managing retirement care communities to augment the existing management team at each community,” ksv said in its letter.
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ashcroft homes sought and received court-ordered creditor protection in december. in an affidavit, ashcroft founder and majority owner david choo said the protection was needed to allow the company time to restructure its business and reduce its debt.
according to documents filed at the time by ashcroft, the company’s real estate portfolio was worth $460 million. it owed $284 million to banks and other lenders, leaving roughly $175 million in net equity, the company said.
but ashcroft sought creditor protection without notifying the majority of its creditors about the court action. that group of secured creditors — acm commercial mortgage fund, cmls financial ltd., equitable bank and institutional mortgage capital canada — are collectively owed $194 million.
they considered ashcroft’s manoeuvre an act of bad faith. so, when ashcroft went back to court in late 2024 to extend its period of creditor protection, the group opposed the application.
they asked the court to appoint a receiver instead of extending protection to ashcroft under the companies’ creditors arrangement act (ccca).
in court, the group of lenders — they represented 84 per cent of ashcroft’s secured debt — argued that ashcroft’s real estate valuations were dated and did not reflect current market conditions. lawyers for the lenders pointed to the case of promenade senior suites, a seniors’ facility built in 2020. it has a 65 per cent occupancy rate, they said, even though its appraisal relied upon a stable, 90 per cent occupancy rate.
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what’s more, they argued, ashcroft had not put forward a cogent restructuring plan, leading to a “mounting loss of confidence” in the company’s management team.
“ultimately, the secured creditors regard the applicants (ashcroft) as having sought ccaa protection in order to buy time to continue their hitherto ineffective attempt to raise meaningful amounts of new funding,” ontario superior court justice graeme mew said in recounting their argument.
mew ultimately sided with the creditors’ group, saying the evidence and arguments put forward by ashcroft had “a distinctly aspirational quality.”
“their message is one of hope, despite the failures of the past 18 months,” mew said.
during that time, the judge said, ashcroft engaged in “an ongoing juggling act” with their secured creditors, sometimes using the same assets as collateral for more than one loan. in the meantime, he said, unpaid taxes mounted, unsecured creditors went unpaid and occupancy rates remained sub-optimal.
mew said he believed a receivership offered the best path forward.
“to some extent, the applicants have, by the manner in which they have, sometimes chaotically, played insolvent projects and their secured creditors off against each other and eroded the confidence of the creditors, been the authors of their own misfortune,” the judge said, adding: “it could, potentially, have been otherwise.”
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founded by engineer-turned-entrepreneur choo in 1992, ashcroft has built thousands of homes, condos, apartment and retirement units in and around ottawa.
its previous projects include planned communities such as central park at the experimental farm, and townhouse neighbourhoods such as manhattan square at bells corners.
in an affidavit, choo said the company’s liquidity problem developed in recent years due to the combined effects of rising interest rates and falling occupancy levels.
it led to a dramatic cascade of problems.
in june 2024, ashcroft defaulted on a $6.5-million loan, which resulted in three richmond road condominium properties going into receivership. then, in october 2024, ashcroft lost control of its 200-acre eastboro development, which was sent into receivership after the company defaulted on an $80-million loan with the royal bank of canada.
in an email, ashcroft’s chief financial officer, manny difilippo, said he and choo did not have any comment on the decades-old firm being sent into receivership. he said ashcroft officials are working collaboratively with ksv restructuring, noting “the business continues to operate with minimal disruption and with insignificant impact to all residents of the buildings.”
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ksv restructuring must now manage a complicated receivership process.
in an affidavit, ksv officials said they intend to “silo” ashcroft’s businesses to protect the interests of individual creditors, and to ensure that money-making operations do not subsidize underperforming ones.
it has also hired a property management firm, brightwater, to oversee ashcroft’s retirement and seniors’ residences, and another, the kingston-based varsity communities, to manage the student residences.
ksv said it wanted to improve and stabilize the businesses to make them more attractive to potential buyers.
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