Ashcroft Homes: the 13 unencumbered units and the vacant head office

The ReStays building at 101 Queen Street and 110 Sparks Street in Ottawa, which Ashcroft Urban Developments Inc. operated as a luxury hotel and condominium, includes 111 fully furnished rental units, 189 underground parking units, 81 storage lockers and, as of July, 19 unsold condominium units, per the AUDI Second Report, July 7, 2026, s. 2.2, para. 1. CMLS Financial Ltd.'s first mortgage, in the principal amount of $65,000,000, was registered on title to the property on August 12, 2021, save for thirteen units. After the court approved a sale process in March 2025, the receiver determined that the company owned those thirteen and that they were not subject to CMLS's security: one residential unit and twelve underground units, being three parking stalls and nine lockers, per the AUDI Second Report, s. 1.0, para. 7; s. 2.2, para. 4. The residential one is an unfinished condominium with a mezzanine and a second floor, per the Supplement to the Second Report, July 10, 2026, s. 2.0, para. 1 (Supplementary Motion Record, Tab 2).

In the sale of the building, the buyer told the receiver it had allocated $2,471,500 of its price to the thirteen, and Cushman & Wakefield Ottawa, one of the listing agents, advised the receiver that in its view the allocation was reasonable, per the Supplement to the Second Report, s. 3.0, paras. 2–3. On September 15, 2026, AlixPartners Restructuring, Inc., the receiver, filed an assignment in bankruptcy for the company under an order of July 14, and that cash became the bankrupt estate's sole asset. "The Company has no other assets," the trustee reports, per the Trustee's Report to Creditors on Preliminary Administration, Oct. 5, 2026, s. 1, para. 5; s. 3, paras. 1–2. The receiver had sought the bankruptcy, it said, to reverse any potential priority of a Canada Revenue Agency claim for HST over CMLS's debt, per the AUDI Second Report, s. 8.0, para. 8. On October 2, in the group receivership, Justice Mew approved the sale of the group's vacant former head office at 18 Antares Drive in Nepean, on whose title a Crown lien for $1,029,987 of HST was registered after National Bank of Canada's 2022 mortgage, per the Approval and Vesting Order (Antares Drive APS), Oct. 2, 2026, para. 3 and the Eighth Report of the Receiver, Sept. 21, 2026, s. 6.0, paras. 3–4.

Two files

The July 14 approval of the ReStays sale to 1000747194 Ontario Inc., an affiliate of CLV Group Inc., was reported here on September 2. Ashcroft Urban Developments Inc., which the receiver calls AUDI, has its own receivership file, CV-25-00098804-0000, on CMLS's application; the head office company, 1019883 Ontario Inc., is a debtor in the group receivership, CV-24-00098058-0000. KSV Restructuring Inc. was appointed receiver in both on February 24, 2025, after Justice Mew's decision of December 20, 2024 dismissed the motion to extend the group's CCAA proceedings, and AlixPartners was substituted for KSV effective June 1, 2026, with the same professionals, per the AUDI Second Report, s. 1.0, paras. 2, 5 and n. 1 and the Eighth Report, s. 1.0, paras. 2–5.

After the ReStays closing

The CLV sale closed on August 19. On closing, CMLS, the first mortgagee, received what the trustee describes as "a distribution of $48 million related to its loan to the Company secured by its first mortgage over the Real Property," and the receiver paid certain priority amounts, among them municipal property taxes, broker's commissions and professional fees, per the Trustee's Report, s. 2, para. 5; s. 4.1, para. 1. The July 7 report had described a price paid partly in cash, with the balance satisfied by a $34.45 million mortgage from the lenders for a 60-month term. It projected CMLS's debt at approximately $59.2 million, with interest, fees and legal costs, at the proposed July 28 closing. Because the estate's cash, the cash proceeds and the lenders' mortgage together came to less than that, the receiver wrote, CMLS "will incur a shortfall, and is therefore the only stakeholder with an economic interest in such funds," per the AUDI Second Report, s. 4.0, para. 1(e); s. 7.0, para. 1; s. 8.0, paras. 2–3.

The report made one exception: the part of the price allocated to the unencumbered units "will be available for distribution to creditors with proven claims in the bankruptcy, assuming the Court authorizes the Receiver to assign AUDI into bankruptcy." Blaney McMurtry LLP, the receiver's counsel on AUDI, gave an opinion that, subject to standard qualifications and assumptions, CMLS's security was valid and enforceable against the company and the property other than in respect of two sets of units, one of them the thirteen, "over which CMLS does not hold security," per the AUDI Second Report, s. 7.0, para. 2; s. 8.0, para. 3. In its July 10 supplement the receiver proposed to hold back $2,471,500 from any distribution to CMLS and move it to an account the trustee would open after the assignment, per the Supplement to the Second Report, s. 3.0, para. 4. The July 14 distribution order puts CMLS fourth, after the City of Ottawa's property tax arrears, the receiver's charge and the receiver's borrowings, and makes its distribution "subject to a holdback for the Unencumbered Unit Allocation" and to the priority payables holdback, up to the amount of CMLS's debt, per the Distribution and Ancillary Relief Order, July 14, 2026, para. 4.

A potential trust

The Canada Revenue Agency's claim, a potential deemed trust claim in the receiver's description, was for $351,715 of assessed and unremitted HST for three filing periods in 2024. The receiver called its priority "potential" because the CCAA proceedings preceded the AUDI receivership order, and any deemed trust "does not apply in a CCAA proceeding pursuant to section 37 of the CCAA," in the report's words. The receiver's view was that the claim would remain unsecured in a later receivership; "for the avoidance of any doubt," it proposed to assign AUDI into bankruptcy "to reverse any potential priority, if it exists," per the AUDI Second Report, s. 9.0, paras. 1–2. The report calls a bankruptcy filed to reverse priorities "standard in the context of an Approval and Vesting Order," and names the bankrupt estate as "the forum for unsecured creditors to participate in a distribution associated with the proceeds related to the Unencumbered Units Allocation," per the AUDI Second Report, s. 9.0, para. 3.

On July 14 Justice Mew recorded that the relief had CMLS's consent and that Ashcroft did not oppose. "The record establishes that the respondent is insolvent, and meets the test to be adjudged bankrupt," he wrote, per the Endorsement of Mew J., July 14, 2026, p. 2. The order he signed that day directs the receiver to assign the company into bankruptcy, naming AlixPartners or another licensed insolvency trustee, and keeps AlixPartners on as receiver and manager until a further order discharges it, authorized to deal with the company's property to the exclusion of all others, the trustee included, per the Distribution and Ancillary Relief Order, paras. 9, 11.