Groupe Finstar: 31 secured creditors, one sale process and a CCAA refused

Groupe Finstar has developed real estate since 2018, mainly around Sainte-Agathe-des-Monts in the Laurentians and Terrebonne in Lanaudière, and as a rule it kept what it built and rented it out. By April 2026 that came to 20 completed projects, among them 16 residential buildings with 201 units bringing in about $4 million a year in rent and the Auberge Lac-des-Sables, a 20-room inn, plus development projects with potential for more than 2,000 units, most of them raw or partly serviced land. The founder and ultimate shareholder is Simon Drouin; the group had 13 employees, per the Receiver's First Report, Apr. 27, 2026, paras. 2.1–2.4, 5.4, 5.10–5.11.

Early in 2025 Drouin was introduced to Carl Dumont, president of Groupe Dumont – Investissements Immobiliers, a company in the same field. Dumont, who testified that he is not a lender, made his loans to Finstar personally. The first, in February 2025, was $3.4 million for six months at 50% interest ($125,000 a month), with a $150,000 file fee, a pledge of the shares of key Finstar entities and Drouin's personal guarantee. "Surprisingly, the evidence shows that these financing terms were suggested by Drouin and not Dumont," Justice Luc Morin of the Superior Court of Québec later found [translation]; Drouin testified that he was looking for an emergency loan to counter pressure from another major creditor, Groupe Sennett. A second $3.4 million loan on the same terms followed in April, with hypothecs on some projects. Dumont then paid $15 million for an assignment of Groupe Sennett's hypothecary claims, which stood at about $18 million. By June 2025, on the court's account, he had put nearly $25 million into Finstar. The court found that he holds a hypothecary interest, through the pledged shares or hypothecs, in 38 of its 40 projects; Finstar had argued that his security covered less than half the portfolio, per the Judgment, Apr. 16, 2026, paras. 12–26, 74, 80.

On April 16, 2026, on Dumont's application, Morin J. appointed Raymond Chabot Inc. receiver under s. 243 of the Bankruptcy and Insolvency Act (Superior Court of Québec, Commercial Division, district of Terrebonne, No. 700-11-023067-269). The debtors are Groupe Finstar Inc., Finstar Capital, Finstar Commercial and Finstar Construction, a series of numbered companies and limited partnerships, and Drouin, named among the guarantors, per the Judgment, Apr. 16, 2026, paras. 196–197 and Annex A. On June 5 the same judge refused Dumont's request to continue the case under the CCAA, holding that receivership was "the right procedural chair" [translation], and approved one sale process for all of the debtors' real estate projects, per the Judgment, June 5, 2026, paras. 89, 151, 221–226.

"A meagre $1.5M"

In September 2025, days after Drouin sent Dumont what he called "a very simple plan over 90 days" [translation], the two signed the framework agreement at the centre of their dispute: a repayment plan for the roughly $28 million then owed, tied to announced sales of Finstar buildings. Of the repayments promised, the court found, "a meagre $1.5M was paid to Dumont" [translation]. Lawyers' letters and prior notices of hypothecary recourse followed, and in early February 2026 Dumont applied for an interim receiver, per the Judgment, Apr. 16, 2026, paras. 31–33, 40, 42–43.

Finstar called the application a disguised attempt to take control of its portfolio and ease its liquidation to Dumont's own benefit, said he had not honoured the framework agreement and, with Drouin, sought a safeguard order to hold him to it. Finstar admitted insolvency on a cash-flow basis but not on its books. The judge held that it was no arrangement suspending Dumont's rights: its article 7 called it administrative and kept his security and recourses in place, with priority. He found Finstar and Drouin both insolvent; Drouin did not dispute owing Dumont at least $25 million, per the Judgment, Apr. 16, 2026, paras. 6, 8, 10, 34–37, 72–73.

Since February, the judgment records, Revenu Québec had registered a legal hypothec, other creditors had served prior notices or withdrawn Finstar's authority to collect rents, and the Ville de Sainte-Agathe-des-Monts had registered a notice of sale for unpaid property taxes. Several key employees had resigned; the latest available financial statements, at August 31, 2024, showed an operating deficit. Drouin's sale process, run since December 2025, had led to nothing more, the court found, than a two-page offer signed hours before the hearing: $23 million, $3 million for the Finstar shares and $20 million for certain projects, conditional among other things on 30 days of due diligence and on the dismissal of Dumont's application. The judge found it could "hardly qualify as more than an expression of interest," and wrote that "the sale process put forward by Drouin is not a strategy, it is a call for help," while saying he did not question Drouin's good will [translation]. Both sides, he added, bore part of the blame for "the mess they find themselves in today" [translation]. The safeguard application was dismissed, per the Judgment, Apr. 16, 2026, paras. 44–45, 95, 103, 105, 111, 114, 116–117, 193, 200.

Dumont had also asked for a $250,000 administration charge covering the receiver, its counsel Dentons and his own lawyers, LCM Avocats. The judge granted none at that stage: no report from the proposed receiver supported the amount, and he read s. 243(6) of the BIA, consistently with art. 2762 of the Civil Code of Québec, as allowing such a charge only for the receiver's and its lawyers' fees. For the same missing report, and given the long list of secured creditors, he ordered "a comeback hearing similar to what would be ordered" in a CCAA restructuring [translation], per the Judgment, Apr. 16, 2026, paras. 164–165, 170–172, 177, 185–186.

A "corporate octopus"

The receiver's first report traced the difficulties to financing. The group had historically borrowed from institutional lenders, but rising rates, the market slowdown that followed, cost overruns and construction delays sent it to private lenders from 2021 for additional financing, usually on terms "markedly more onerous" than traditional lenders' [translation], ending in a liquidity crisis. Management's estimated sale prices totalled $130.314 million against $107.063 million of secured claims; the receiver cautioned that it had not independently verified the figures and that the price was not its opinion, recommendation or estimate. The secured creditors were seven institutions with first-ranking hypothecs on completed buildings and about 24 alternative or private lenders. The debtors had about $30,000 in the bank, per the Receiver's First Report, Apr. 27, 2026, paras. 2.5–2.6, 5.5, 5.12–5.13, 6.2.

On April 2, 2026, the report says, under rights conferred by a movable hypothec securing certain of Dumont's loans, in particular the transfer of the voting rights Drouin held in the pledged shares, a resolution was adopted removing Drouin as a director of Groupe Finstar inc. and Finstar Capital inc.; as of the report, neither had a director in place. The receiver sought a $500,000 administration charge, per the Receiver's First Report, Apr. 27, 2026, paras. 6.1, 7.10.

At the April 30 comeback hearing Jean Gagnon of Raymond Chabot testified. The May 1 reasons record his "corporate octopus" of a structure for some forty buildings generating about $4.5 million a year in rent, 31 secured creditors, and projected disbursements of $2.7 million over six months against $2.1 million of rent. Drouin and Finstar were "now in collaboration mode" [translation]. Over the objection of lenders who argued that a receivership stay should reach only the applicant's own collateral, the judge extended the stay to the debtors and all their property until May 21, though the order preserved several creditors' pending recourses. "The Receiver is, in a way, the genie that is difficult to force back into its bottle," he wrote [translation]. He granted the $500,000 charge, limited to the receiver and Dentons, and declined, for now, to add a power to terminate contracts, per the Judgment, May 1, 2026, paras. 9, 20–21, 52, 56–57.2, 57.6, 72, 84, 86, 93–94 and Annex A, para. 19. The receiver took possession on May 4, per the Receiver's Second Report, May 15, 2026, para. 2.7.