Chacon Holding: two failed sales and a motion to end the receivership

On August 16, 2024, Chacon Holding Corp. asked the court for more time. Its counsel told Justice L. Shaw that the company had received an offer to purchase its building the evening before, and that "if the property was going to sell, there was no need to appoint a receiver," per the Endorsement of Shaw J., Aug. 16, 2024, paras. 6–7. The building is 25 Sun Pac Boulevard in Brampton, a multi-tenant industrial property, and the applicants, 2439656 Ontario Inc. (243) and MS Capital Corp. (MS), held the second mortgage on it: $3.6 million agreed to be advanced in June 2023, due on December 19, 2023, not repaid, and turned into a default judgment on January 18, 2024. Counsel for the proposed receiver, for National Bank of Canada as first mortgagee and for some of the later mortgagees went into a breakout room to look at the offer. The applicants came out with "concerns about the tentative offer" and pressed on. Justice Shaw, noting that the company had been served on May 31 and had already had one adjournment in which to answer, appointed BDO Canada Limited as receiver under s. 243(1) of the Bankruptcy and Insolvency Act, per the Endorsement of Shaw J., Aug. 16, 2024, paras. 1–11.

Twenty-five months later the building has not been sold. BDO's Second Report to the Court, dated September 16, 2026 and signed by its vice-president Peter Naumis, describes a court-approved sale that failed at closing, a second buyer that went back and forth with the receiver for more than a year without signing a firm agreement, and a $12,000,000 listing that ran out on July 1. It is filed in support of a motion by 243 and MS to discharge the receivership, and 243 now also holds National Bank's first mortgage, by assignment, per the Second Report of the Receiver, Sept. 16, 2026, paras. 4, 13, 61–64.

The building and the charges on it

The building has approximately 32,336 square feet of leasable office and manufacturing space on two floors and is Chacon's only known tangible asset. It had five tenants when BDO arrived, and the receiver identified three of them, English Prestige Construction Management, Kent Metal Fabrication Ltd. and Jagir Contracting Inc., as related parties to Chacon, per the First Report of the Receiver, Dec. 9, 2024, paras. 14–17. National Bank's first mortgage stood at approximately $5,945,009.14 as of September 14, 2024. The 243 and MS mortgage stood at approximately $4,404,933.69 as of October 10, 2024, with a per diem of $1,716.39, and the default judgment on that debt bears interest at 16% a year. Six more mortgage registrations follow in the receiver's list, with principal amounts from $180,000 to $1,850,000, per the First Report of the Receiver, Dec. 9, 2024, paras. 3–5, 53–55 and App. V.

A buyer that had waived its conditions

BDO listed the building with Freeway Real Estate Inc. on October 1, 2024 at $12,999,000. Freeway's campaign drew 22 enquiries, ten signed non-disclosure agreements, five tours and three formal offers, and on October 21 the receiver accepted a conditional agreement from 12755467 Canada Inc. (127 Canada). The deposit was $500,000 and non-refundable, half on acceptance and half by January 8, 2025, with closing 30 days after an approval and vesting order, per the First Report of the Receiver, Dec. 9, 2024, paras. 31–39. The price is in the unredacted agreement, filed with a confidential supplemental report that Justice Rahman sealed on January 7, 2025 "until the completion of the sale of the assets, undertakings and properties of the Debtor or further order of the Court," per the Ancillary Relief Order, Jan. 7, 2025, para. 2. The same day he approved the sale and provided for the building to vest in 127 Canada on delivery of the receiver's certificate, per the Approval and Vesting Order, Jan. 7, 2025, paras. 1–2.

The certificate was never delivered. On January 8, 127 Canada's principal wrote that the second deposit would be paid on January 28, and the purchaser asked to move closing to February 26. The receiver's terms for considering it, sent on January 14, were that the second deposit "must offer a material increase over the $250,000" and be $500,000, and that the purchaser absorb the costs of any delay. What arrived on January 20 was $50,000. The purchaser then said it could not close on February 6 because its financing was conditional on further environmental work being completed to its lender's satisfaction; the receiver reminded it that it had waived all conditions, making the delay "irrelevant to 127 Canada's obligation to complete the Transaction," per the Supplementary Report of the Receiver, Apr. 8, 2025, paras. 11–15.

An Extension and Amending Agreement, executed on February 18 with effect from February 5, moved closing to March 25, 2025, called for the rest of the second deposit by February 21, made carrying costs of approximately $129,922.36 an adjustment in the vendor's favour, and had the purchaser confirm that the deal was "firm and not conditional on any condition, including, but not limited to, a Phase 2 environmental site assessment, financing, title review, or review of the permitted encumbrances." The balance came in on February 21, per the Supplementary Report of the Receiver, Apr. 8, 2025, paras. 23–25, 28.

On March 20, three business days before closing, the purchaser's lawyers asked to extend to April 30, attaching an email in which Royal Bank of Canada, its lender, asked for time to review the Phase II environmental report; the receiver noted that the bank's email was dated March 14. After conferring with counsel for National Bank and for 243 and MS, it refused. Its reasons were the extensions already sought, "the apparent absence of urgency and timeliness" in the purchaser's communications, the uncertainty of the financing, "the high rate of interest that continues to accrue" on the 243 mortgage, and that 127 Canada, when it waived conditions in the agreement and again in the extension, "appears to have misrepresented 127 Canada's ability to close the Transaction," per the Supplementary Report of the Receiver, Apr. 8, 2025, paras. 26–27. On March 25 the receiver tendered its closing documents. WeirFoulds LLP, its counsel, wrote the same day that the purchaser "was unable to deliver executed closing documents or the balance of the purchase price due on closing," that the agreement was terminated, and that the two deposits totalling $500,000 were forfeited; the receiver later told the court it knew of no motion or protest against either, per the Supplementary Report of the Receiver, Apr. 8, 2025, paras. 29–30 and App. IX.

Eleven days before that, on March 14, 2025, BDO had assigned Chacon into bankruptcy under the authority of the appointment order and became trustee of the estate; the receiver reported that the Canada Revenue Agency's HST claim of $18,688.99 lost its priority as a result and became an unsecured claim. With nothing sold, the receiver dropped its request to distribute. The forfeited deposit, it said, "will be retained and applied to the carrying costs and the costs of these receivership proceedings," per the Supplementary Report of the Receiver, Apr. 8, 2025, paras. 51–52, 60–61. On April 15, 2025, Justice Andre approved the First and Supplementary Reports, the fees in the receiver's and counsel's affidavits, and the interim statement of receipts and disbursements to March 31, 2025, per the Order of Justice Andre, Apr. 15, 2025, paras. 1–3.

Four tenancies end

Kent, ordered on January 7, 2025 to pay the receiver $32,894.14 in rent arrears, did not pay, and its trustee in bankruptcy, Grant Thornton Limited, told the receiver on January 19 that it would not keep the lease, per the Ancillary Relief Order, Jan. 7, 2025, para. 1 and the Second Report of the Receiver, Sept. 16, 2026, para. 29. Jagir's rent cheques for November 2024 to January 2025 came back NSF, and Rio Sofa Upholstery Ltd. left its unit over a weekend in January; the receiver terminated both leases and retook the premises. Through the spring of 2025 English Prestige paid the receiver no rent, relying on an agreement under which, it said, it had prepaid $347,814 of rent by funding the building's second-floor buildout. The receiver said it had been unable to verify that claim, per the Supplementary Report of the Receiver, Apr. 8, 2025, paras. 34–44. The claimed prepayment ran to July 31, 2025. The receiver asked for post-dated cheques from August; notices of default followed on August 18 and September 3, the first cured and the second not, and on September 22, 2025 the receiver terminated the lease and took possession of the unit. ATL Adventure Services Ltd. is the only tenant left, per the Second Report of the Receiver, Sept. 16, 2026, paras. 38–42.

Cushman, and Ar-Rashaad

After the termination, 127 Canada's principal kept asking the receiver to revive the agreement, and the receiver concluded that 127 Canada "was not in a position to close on a purchase of the Real Property." BDO collected fresh listing proposals from the same four brokerages and, on June 5, 2025, listed the building with Cushman & Wakefield ULC at $12,000,000. Cushman brought multiple offers, among them, the report says, multiple low offers from 127 Canada's principal; they were "either too low for consideration" or the receiver and the offeror could not agree terms, per the Second Report of the Receiver, Sept. 16, 2026, paras. 43–49.

Ar-Rashaad Centre Inc. made its first offer on July 18, 2025, which the receiver found neither on its form of agreement nor "financially supportable." Numerous offers followed, and on October 24, 2025 the two signed a conditional purchase and sale agreement. Ar-Rashaad asked for seven business days rather than three to pay the first deposit, paid it on November 11, and on December 26 was given an extension of the conditional period to January 19, 2026, with the consent of National Bank, MS and 243. On January 20, conditions unwaived, it asked for ten more business days and sent a letter of intent setting out the terms on which it would go ahead. The receiver judged the request not viable, terminated the agreement and returned the deposit, per the Second Report of the Receiver, Sept. 16, 2026, paras. 50–55.

A second letter of intent from Ar-Rashaad came on April 22, 2026. By then National Bank "was no longer a stakeholder," and 243 and MS agreed that the receiver should try to negotiate a firm agreement. The salient terms were settled, but Ar-Rashaad "failed to execute drafts" of the agreement the receiver sent, and on August 17 WeirFoulds told its counsel that the receiver would not continue. On September 2 Cushman relayed that Ar-Rashaad wanted to move forward with a "firm" offer and did not want to lose the property. The receiver took that to 243 and MS, who, "given Ar-Rashaad's historical dealings," had no interest in further negotiation; the receiver suggested through Cushman that Ar-Rashaad present its offer, and none had arrived by the date of the report, per the Second Report of the Receiver, Sept. 16, 2026, paras. 56–60.

The lenders' motion

On April 22, 2026, National Bank's counsel told the receiver that the bank had assigned Chacon's debt and its charge on the building to 243, which now holds that charge alongside the second-ranking charge it shares with MS. The report calls 243 and MS "Chacon's now senior secured lender." WeirFoulds had given opinions that National Bank's security and the security of 243 and MS were valid and enforceable, the latter subordinate to the bank's; the receiver has sought no opinion on the later mortgages, per the Second Report of the Receiver, Sept. 16, 2026, paras. 4, 13(a), 66–69 and App. XIII.

Cushman's listing expired on July 1, 2026, and the receiver went to 243 and MS about next steps. They told it they would move to discharge the receivership, for three reasons the report records. The property "had been marketed for close to two years with no supportable offer(s) received, and continued marketing may be impacted as a result." The costs of the receivership were still accruing. And "Given the state of the Real Property, MS and 243 were in a position to become 'mortgagee in possession' and mitigate ongoing costs of realizing on their security." The receiver did not renew the listing, per the Second Report of the Receiver, Sept. 16, 2026, paras. 61–64.

What the estate holds

The receiver's interim statement of receipts and disbursements, as at September 8, 2026, records $918,956.00 in receipts, of which $500,000.00 is the forfeited deposit and $277,301.43 is rent. Real property taxes took $233,932.22, utilities $48,141.47 and repairs and maintenance $38,130.78, and the receiver's and its counsel's fees to March 31, 2025, with HST, took $113,792.41 and $144,766.86; $14,125.00 went to the bankruptcy. That left $260,212.70 in the estate. Against it the statement sets $22,990.70 of accrued and unpaid expenses, receiver's fees to September 7, 2026 of $163,962.65 and legal fees of $72,273.21, both with HST, and an estimated $28,250.00 in fees to close, with HST, for an estimated shortfall of $27,263.86, per the Second Report of the Receiver, Sept. 16, 2026, para. 70 and App. XIV.

The receiver asks the court to approve BDO's fees and disbursements of $207,822.06, with HST, for December 7, 2024 to September 7, 2026, covering 361 hours at an average of approximately $506.32, and WeirFoulds' fees and disbursements of $172,693.60 for December 1, 2024 to September 14, 2026, covering 270.4 hours at approximately $551.34. It also asks for a fee accrual of not more than $25,000, before disbursements and HST, for the work left: attending court on the lenders' motion, monitoring the building until discharge, filing HST returns and the final report with the Office of the Superintendent of Bankruptcy, and filing a discharge certificate. BDO asks the court to approve its conduct and the interim statement and to discharge and release it, the discharge to take effect when it files a certificate that the remaining work is done, per the Second Report of the Receiver, Sept. 16, 2026, paras. 13(c), 74–79.