Flato: they agreed to consent, and then opposed

About ten years ago, Flato began buying land in and around Dundalk, Ontario. The seven companies before Justice Dietrich on June 23 are the Flato entities holding some of those parcels — and there are other Flato entities holding others, which are not part of this receivership, per Endorsement of Dietrich J., June 23, 2026, paras. 6–7.

They owe Dorr Capital Corporation more than $29 million, and every loan is in default, per Endorsement of Dietrich J., June 23, 2026, para. 41.

What the land is

Four groups of property, at four very different stages, which is what makes the receivership arithmetic interesting.

Patterson — 241 Patterson Street North, Beeton: a single-family 1,370 square foot home on a 75 by 148 foot lot. Flato owns adjacent parcels that are not in this receivership and intends to assemble the surrounding properties for a future rezoning. In the broader development of which this forms part, Flato has roughly 100 homes under construction and has already sold and closed about 50. Secured by a first mortgage of $320,000 registered in August 2017, per Endorsement of Dietrich J., June 23, 2026, paras. 10–11.

Braemore — 381 and 421 Braemore Street West, Dundalk: two adjacent parcels totalling roughly 30 to 40 acres, each with a single-family detached home on it. Flato originally proposed larger single-family homes and, responding to market conditions, is revising the plan to townhomes, smaller homes and a rental apartment building in Phase 1. Loan of $4,930,000, first mortgage registered July 2022, per Endorsement of Dietrich J., June 23, 2026, paras. 12–14.

Melancthon — two adjacent agricultural parcels about 10 kilometres southeast of Dundalk, roughly 125 acres in total, each with a house. These were acquired as a long-term investment, and Mr. Rehmatullah anticipates it may take 10 to 15 years, or longer, to realise them. Loan of $2,250,000, per Endorsement of Dietrich J., June 23, 2026, paras. 18–20.

EcoPark — 772060 Highway 10, Dundalk: four lots totalling about 90 acres, of which 50 acres are the subject of a proposed development of 412 low-rise units — 226 single family dwellings, 146 townhouses and a 40-unit rental apartment. Zoning approval came about three years ago and the company is working toward draft plan approval. A developer has made an offer and is conducting due diligence on a portion. Loan of $5,000,000, per Endorsement of Dietrich J., June 23, 2026, paras. 21–22.

A house on a lot, two farms held for a decade or more, and a zoned 412-unit development with a live buyer — all cross-collateralised, and a default under any one DCC loan is a default under every one, per Endorsement of Dietrich J., June 23, 2026, para. 24.

The forbearance agreement, and what it promised

The defaults are not in dispute. As of March 17, 2026 the borrowers were in monetary default on every loan for unpaid interest; the EcoPark loan matured March 1 and the Braemore loan May 1, and neither was repaid. Demands and notices of intention to enforce security under s. 244(1) of the BIA went out on March 31, per Endorsement of Dietrich J., June 23, 2026, paras. 25, 27.

On or about the same day, the parties signed a forbearance agreement. DCC agreed to hold off enforcing until April 1, 2027 — a full year — on conditions: Flato Greens was to enter a sale agreement for part of the EcoPark lands; DCC would take an additional charge over EcoPark for interest arrears and fees; outstanding interest was not to exceed $1.2 million; no further subsequent charges were to be registered.

And the borrowers and guarantors agreed that they would consent to the appointment of a receiver if they defaulted under the forbearance agreement, per Endorsement of Dietrich J., June 23, 2026, paras. 28–29.

They defaulted, and admit it. What they said was that earnest efforts had been made to comply; that there is value in the security, as the potential EcoPark offer shows; and that they are actively working to raise the funds to clear the arrears and build an interest reserve. They asked that the appointment be delayed to September 30, 2026 to let that work continue, per Endorsement of Dietrich J., June 23, 2026, paras. 3, 32.

The two million that was said to be sitting somewhere

The most developed of the borrowers' arguments concerned $2 million.

Mr. Rehmatullah's position was that $2 million belonging to Maude Investments Corporation is held in RealAlt High Yield Mortgage Trust, a fund related to DCC; that Maude is related to Flato; that the money should have been repaid to Maude in July 2024 and was not; and that it is more than enough to offset the accrued interest.

DCC's position was that Maude is controlled by Mr. Rehmatullah's wife rather than by him or Flato, and that the funds are held under agreements with RealAlt and stand as security for other loans, per Endorsement of Dietrich J., June 23, 2026, para. 33.