Balboa: the investors' claims stop at principal

The house at 430 Toke Street in Timmins was listed in October 2025 at $225,000, already $25,000 under the listing agent's first recommendation because it needed updating. Uncooperative tenants made it hard to get into and show for months before they left, and there were mould concerns that would have cost money to fix had it been kept and rented. After several cuts, to $198,000, two offers came in January 2026, at $209,000 and $135,000, and the monitor accepted the higher, per the Fifteenth Report of the Monitor, July 21, 2026, s. 8.1, para. 1 & n. 7.

Selling it still took a court order. The first mortgagee, expected to be about $56,500 short, consented. Behind it sits a $1,200,000 second mortgage, which the monitor believes is a blanket over several properties, in favour of seven mortgagees under a Lift Capital Incorporated mortgage. The monitor reached two of them. It says it asked Lift for the others' contact information on January 29, 2026 and repeatedly after that, and Lift did not provide it; Lift told the monitor that not all seven still held an interest but did not say which, per the Fifteenth Report, s. 8.1, para. 1(d)–(e) & n. 6. On July 30, 2026, Justice Cavanagh approved the sale under s. 36 of the Companies' Creditors Arrangement Act and the Soundair factors, per the Endorsement of Justice Cavanagh, July 30, 2026, paras. 18–23.

Toke Street is one of the last seven. When Balboa Inc., DSPLN Inc., Happy Gilmore Inc. and eight affiliates filed under the CCAA on January 23, 2024, they owned 405 houses holding 631 rental units in Timmins, Sault Ste. Marie, Sudbury, Kirkland Lake, Capreol, Temiskaming Shores and Val Caron, and a golf course that was not operating; the monitor's later reports count 407 properties. The money to buy and renovate them was borrowed, predominantly from individuals. Substantially all of 390 first mortgages, $81,455,930.19 in principal, were sourced by The Windrose Group Inc., a Hamilton mortgage brokerage. Nearly all of 121 second mortgage loans, $8,642,697.00, came from Lift, which syndicated them; a preliminary title review found them registered in the names of Lift and numerous individual investors. And 802 unsecured promissory notes carried $54,236,109.51, about 602 of them issued to The Lion's Share Group Inc. and the rest to individuals Windrose found. The loans generally paid interest only, monthly, on terms of three to twelve months: 8% to 9% on the first mortgages, 12% to 19% on Lift's seconds and 8% to 17% on the notes, rising to 9%–11%, 14%–20% and 11%–20% if principal went unpaid at term, per the Affidavit of Robert Clark, Jan. 23, 2024, paras. 6–7, 71–73, 78–80 & n. 5, 90–92. The proposed monitor counted over 300 lenders, "many of which are individual investors," per the Pre-filing Report, Jan. 23, 2024, s. 5.2, para. 1.

The applicants' account, sworn by Robert Clark as president of two of the SID companies that provided acquisition, renovation and management services to them, is that they had struggled to generate enough free cash flow to service the debt; that the Bank of Canada's rate increases from March 2022 and falling home prices ended a mortgage-backed refinancing with a major Canadian institution; and that none of the more than 60 institutions approached in 2023 had a product for a residential portfolio of this kind. "While financing is readily available for businesses akin to the Company's Business in the United States, it is unfortunately not in Canada," the affidavit says. At filing the applicants had less than $100,000 in cash and were in default of substantially all of the mortgages and notes, per the Clark affidavit, paras. 1, 8–13.

Two and a half years later, with the houses nearly all sold, Justice Cavanagh on July 30 signed the four orders the monitor's Fifteenth Report asked for: an interim distribution to first mortgagees, a claims procedure that limits every mortgage and note claim to principal, the Toke Street vesting order, and a stay extension to January 31, 2027, per the Endorsement, paras. 1, 26 and the Ancillary Matters Order, July 30, 2026, para. 3.

How 407 houses became seven

The monitor has run the companies since June 25, 2024, when the court expanded its powers and removed the principals' decision-making authority. The secured lenders' representative counsel brought that motion, with the monitor's support, after an investigation that, in the monitor's summary, identified "questionable transfers from the Applicants to the Principals, affiliated entities and third parties without any apparent benefit to the Business," questionable dividends or repayments of amounts identified as shareholder loans, and "a pervasive lack of proper record keeping." The applicants first objected and then consented, per the Fifteenth Report, ss. 1.2, para. 8; 1.3, paras. 1–3.

The sale process drew 12 letters of intent for third-party sales or refinancings; none was pursued, and the monitor says none would have repaid the interim lender and the first mortgagees in full. The summary of offers remains sealed, per the Fifteenth Report, s. 3.0, paras. 2, 4.

Instead, a restructuring term sheet approved on August 30, 2024 invited mortgagees to credit-bid for the houses they had lent against. By the September 2024 deadlines mortgagees had submitted 323 credit bids covering about 79% of the portfolio, all but two from first mortgagees, approved together in one omnibus vesting order on December 6, 2024. Three hundred and sixteen closed around December 17, and the roughly $15 million owed to the interim lender, Harbour Mortgage Corp., was repaid from their cash and replacement financing from Viscount Capital Inc. Two bidders failed to pay their share of the interim financing and lost their deposits. With amended and secondary bids since, 333 houses, about 82% of the portfolio at filing, have gone to credit bidders, per the Fifteenth Report, ss. 3.0, paras. 5–6; 3.1, paras. 1–7.

The other 74 were listed on MLS from around April 1, 2025, and an April 14, 2025 order lets the monitor sell them with the affected creditors' consent, without returning to court. Sixty-seven have sold, for about $9.49 million net of commissions, tax arrears and closing costs. Of the seven left, four were listed at a combined $549,600 with no offer, two had conditionally accepted offers totalling $353,900, and the seventh was Toke Street, per the Fifteenth Report, ss. 1.2, para. 17; 4.0, paras. 1–3; App. "B". AlixPartners Restructuring, Inc. replaced KSV Restructuring Inc. as monitor effective June 1, 2026; the report says the professionals on the mandate are unchanged, per the Fifteenth Report, s. 1.0, n. 1.

Thirteen million dollars of principal

The monitor's distribution schedule starts from $6,521,795.63, the net proceeds of the 74 houses (actual, or estimated for the seven unsold) after each one's share of the interim financing, allocates $2,755,853.32 of costs against them, and leaves $3,765,942.31: $2,967,749.67 attributable to the 64 houses with a first mortgage and $798,192.64 to ten with no traditional mortgage on title. The first mortgages on the 64 carry $13,023,410.00 in principal. At 237 Wellington St., for one, costs took all of the $4,520.57 left after the interim-financing allocation, against a $500,000 first mortgage, per the Fifteenth Report, App. "C". The schedule counts principal alone, and two houses, 445 Bessie Avenue and 210 Cathcart St, are expected to clear it, by about $36,000 and $9,000; for those two the monitor intends to add the interest and charges the mortgages secure, per the Fifteenth Report, s. 5.0, paras. 3–5; App. "C".