Assembly Corp: a lender's receivership on the owners' terms

The building at 2217 Kingston Road in Toronto is a six-storey healing lodge, meant to provide transitional housing and rehabilitation services for formerly incarcerated Indigenous women. Assembly Corp. agreed in 2023 to design, build and deliver it for a fixed price of $18,638,232.43, including HST. By August it was 85% to 90% complete and had effectively stood still since Assembly's notice of intention in May; the subcontractors stopped work and the site closed on or about May 22, according to its owner, Thunder Woman Healing Lodge Society, in an Aide Memoire of Thunder Woman Healing Lodge Society, Aug. 10, 2026, paras. 3, 6, 9.

On August 11, 2026, with Assembly's senior lender asking Justice W.D. Black to put a receiver over the builder and two sister companies, Thunder Woman asked for one paragraph in the order: a right to terminate that agreement "at any time and without the consent of the Receiver, and without leave of this Court," per its Aide Memoire, para. 11. Justice Black appointed the receiver and, despite the lender's preference for a narrower order, let the receivership proceed on a form of order that included the provisions the project owners sought. Thunder Woman's paragraph was the one provision of the owners' proposed order he was not prepared to endorse "at this time," per his Endorsement, Aug. 11, 2026, paras. 19–24, 27.

The same attendance produced the lien regularization order reported here on August 13, per the Endorsement, paras. 11–17; the interim receivership granted on June 4 was reported here that day.

What the lender asked for

PaceZero Sustainable Credit Fund II Limited Partnership made $5,000,000 of credit available to Assembly under a loan agreement dated July 31, 2025, a $1,500,000 revolver and a $3,500,000 term loan, guaranteed by Assembly Manufacturing Corp. and Assembly Real Estate Corp. and secured by general security agreements from all three. The Toronto Atmospheric Fund gave an unsecured guarantee of the term loan, limited to $3,500,000 of principal. As at August 3, 2026, PaceZero was owed $5,325,589.40, according to the affidavit of Jordan Peckham, president of its general partner, in the Affidavit of Jordan Peckham, Aug. 5, 2026 (Application Record, Tab 4), paras. 1, 10, 12–13.

The default, in PaceZero's account, surfaced in April. Reviewing borrowing base certificates Assembly's management had certified, PaceZero says it found material accounts listed as eligible that did not meet the loan's criteria, among them accounts subject to holdbacks or set-off and accounts "the collection of which was suspect." Excluding them left the revolver overadvanced by about $400,000, which, the affidavit says, Assembly failed and refused to pay down. Demands and s. 244 notices followed on or about April 27, per the Peckham Affidavit, paras. 16–17. Justice Black found it "clear" that the debtors had been in default with PaceZero "since at least April of this year," per the Endorsement, para. 3.

After Assembly's May 6 filing, subcontractors and suppliers registered liens against certain projects, owners invoked contractual rights to withhold payments, and many of the projects stalled. GlassRatner Restructuring Inc., as proposal trustee and interim receiver, said those developments "effectively eliminated Assembly's forecasted cash receipts from the Project contracts." It reported that the City of Toronto and the owners had indicated any City funding to finish the four City-funded projects would not be on terms producing an economic recovery for Assembly's creditors, and that on July 15 PaceZero said it would no longer permit the proceeding's continuing costs to be funded from Assembly's cash, which is subject to its first-ranking security, per the Third Report of the Proposal Trustee and Interim Receiver, Aug. 7, 2026, para. 16. On Assembly's own analysis, GlassRatner reported, it was likely that none of the projects would produce future net revenue for Assembly. On July 29 Assembly advised that it would not seek a third extension "absent a clear and funded path forward," per the Third Report, paras. 32, 44.

Granting the second extension on July 20, Justice Myers had recorded that PaceZero would likely seek a receiver to realize on its secured collateral "with minimum disruption to the corporate undertaking of Assembly," which would leave Assembly "available as a corporate entity to legally continue construction to be funded by others," per his Endorsement, July 20, 2026, para. 5. The Peckham affidavit put PaceZero's position this way: "Any use of [PaceZero's] collateral should be for the benefit of [PaceZero] as Assembly's senior secured creditor," per the Peckham Affidavit, para. 25. PaceZero's draft order, which its factum called substantially similar to the Commercial List model, gave the receiver a first-ranking charge and a $250,000 borrowing charge. It had no schedule of the housing projects, and no role in them beyond a power, subject to further order, to terminate, disclaim or assign Assembly's construction contracts, per the Application Record, Tab 3 (draft order), paras. 3, 20, 23 and the Factum of the Applicant, Aug. 9, 2026, para. 30.

In for a penny

No party at the hearing suggested the receivership order should not issue. The debate was over scope: PaceZero wanted "a clean and straightforward realization receivership order," while various owners wanted "the near-term stabilization intended to be afforded by the Receivership Order," and said it would be inefficient to exclude them and leave them, presumably, to start receiverships of their own. There was "general agreement that the pending bankruptcy, without more, would be worse," per the Endorsement, paras. 9, 19–21.

The YMCA of Greater Toronto, owner of the project at 7 Vanauley Street, preferred that the proposal proceeding continue and called the receivership its "second best alternative." "This is not a private Receivership," its aide memoire said: the receiver would owe duties to all claimants with an interest in the debtor's property, not solely to the applicant. Vanauley, it said, was the subject of 17 liens totalling approximately $4.5 million, per the Aide Memoire of YMCA of Greater Toronto, Aug. 10, 2026, paras. 5, 7, 18.

PaceZero's counsel had been prepared in recent days to negotiate terms of benefit to the owners, Justice Black recorded, but was "concerned not to land PaceZero in a circumstance in which it is required to pursue and fund activities not for its own benefit but primarily for the benefit of others. PaceZero worries that if it is 'in for a penny' it may end up (involuntarily) 'in for a pound.'" Counsel for the owners, the YMCA's in particular, answered that their language meant PaceZero would not be obliged to fund anything outside the realization activities its preferred "skinny" version would provide. "On the face of it," the judge wrote, "those proposed provisions should in fact have that effect," per the Endorsement, paras. 22–23.

He let the owners' form of order proceed, "at least in the near term." If it had the ill effects PaceZero feared, PaceZero could come back; its counsel noted, "fairly," that even that would cost his client time and resources, and the judge thought it "not at all certain" it would come to that. Owners' counsel confirmed there would likely be "a parting of ways in the not-too-distant future in any event," and he would not set in motion events "that will necessarily require separate receivership orders, and the level of inefficiency that such scenario will inevitably yield," per the Endorsement, paras. 24–26.

What the owners' terms say

The signed order schedules five projects as property the receiver may act on: 2217 Kingston Road and 28 Algoma Road for Thunder Woman, 60 Bowden Street for WoodGreen Community Housing Inc., 215 Wellesley Street East for the Elizabeth Fry Society Toronto Branch, and 7 Vanauley Street for the YMCA. The receiver may take stabilization and preservation steps on each, in consultation with the owners, "pending determination on whether the Assembly Projects will be disclaimed, assigned and/or completed," and is not obligated to take further completion steps until more financing is confirmed or the court orders otherwise, per the Receivership Order, Aug. 11, 2026, para. 4 and Sch. "A".