Hammer & Nails: Beckwith's sale is approved, and Maple's offers fell short

On May 16, 2025, a lender's application for a receiver over two new rental buildings in Smiths Falls, Ontario, came before Justice Osborne on the Commercial List, and counsel for the owners asked for three to four weeks "to finalize a sale of the properties with a view to paying out the Applicants in full." Late the day before, counsel said, the owners had obtained a commitment letter from a proposed purchaser, and that day they had received an offer for one of the buildings, the apartment block at 161 Beckwith Street North, which was emailed to the lender's counsel during the hearing, per the Endorsement of Justice Osborne, May 16, 2025, paras. 3–4.

Neither document was in the record. "There is no affidavit evidence on which I can evaluate the bona fides of either document, the ability of any counterparty to fund, the conditionality of the commitments, or the timing of the commitments to fund," Justice Osborne wrote. The lender, which had received the commitment letter the night before, told him that even if it were funded, it would not pay the lender out. Refusing the adjournment, he wrote: "The Applicants are not acting rashly or quickly." The loans had been in default since February 2025, he noted, and a formal demand and a notice under s. 244 of the Bankruptcy and Insolvency Act had been delivered on March 21, 2025. On the merits the owners did not oppose, and they confirmed the debt, the demands and their contractual consent to a receiver, per the Endorsement of Justice Osborne, May 16, 2025, paras. 4, 6–7.

He appointed TDB Restructuring Limited as receiver and manager of both properties that day, under s. 243(1) of the BIA and s. 101 of the Courts of Justice Act, and recorded that the owners would give the offer and the commitment letter to the receiver. "It may be that the receivership is short in duration and limited in scope," he wrote, for example if the receiver concluded the offers were valid and enough to pay out all the debt with interest and costs, and recommended them. "But first, Receiver has to preserve the assets and evaluate the offers as against what might be achieved in the market," per the Endorsement of Justice Osborne, May 16, 2025, paras. 19–20 and the Appointment Order, May 16, 2025, para. 2.

On July 24, 2026, fourteen months after the appointment, Justice Steele approved the receiver's sale of the Beckwith building, agreed after a first conditional sale fell through and the building went back on the market, at a price that remains under seal. The other building, a four-storey block at 7 Maple Avenue North, was not sold. None of the offers for it was acceptable to the receiver or to the lender, per the First Report of the Receiver, July 17, 2026, paras. 11, 32, 36–41.

A construction loan that reached the second building

The buildings belong to separate, related companies: Hammer & Nails Developments Ltd. (Maple Street) owns Maple, a four-storey mixed-use building, and Hammer & Nails Developments Ltd. (Beckwith Street) owns Beckwith, a 16-unit apartment building, per the First Report of the Receiver, July 17, 2026, paras. 1, 6, 11. The receiver's form of sale agreement describes Maple as ground-floor commercial space with 33 residential units, per the First Report of the Receiver, July 17, 2026, App. C, s. 1(ff).

The lender was First Source Financial Management Inc. and First Source Mortgage Corporation, of Toronto. The affidavit of Leonard Zaidener, president of both, sets out how the loan grew: a commitment letter of December 8, 2021 for land and construction financing on Maple, a first mortgage registered on March 17, 2022, a promissory note for $9,210,000, two increases in 2023 and, on August 26, 2024, an increase and extension to the lesser of $11,105,250 or 73.82% of Maple's "As-Complete" appraised value, per the Affidavit of Leonard Zaidener, Apr. 14, 2025, paras. 1, 4–5, 9–10, 12, 19.

In September 2024 First Source's security reached the second building. On September 11 the Maple company's promissory note was amended to $13,326,300, and on September 25 a second mortgage on Beckwith was registered in First Source's favour, behind a first charge in favour of Caisse Desjardins Ontario Credit Union Inc. registered on April 3, 2024. Beckwith, the affidavit says, "was fully constructed prior to the registration of the Beckwith Mortgage and is more or less fully tenanted." A default under any of the security was a default under all of it, per the Affidavit of Leonard Zaidener, Apr. 14, 2025, paras. 12(b), 12(h), 24, 33, 36(c).

The loan matured on February 8, 2025, "with no further renewal or extension," the affidavit says, and its rate became the higher of 18% or CIBC prime plus 11.30%. First Source's demand of March 21, 2025 put the debt at $11,892,760.64 as at March 20, plus $5,000 in legal costs and per diem interest of $5,476.56, rising to $5,622.60 a day from April 1. Among its reasons for a court-appointed receiver, the lender said it "has lost faith in the Borrowers' ability to repay the respective loan indebtedness," per the Affidavit of Leonard Zaidener, Apr. 14, 2025, paras. 20–21, 31, 38(c).

By then Maple was finished and partly tenanted, and four construction liens had been registered against it between February 7 and March 19, 2025, the largest for $186,466.28, per the Affidavit of Leonard Zaidener, Apr. 14, 2025, paras. 23, 36(a). The owners filed no responding material, and none of the filings read for this piece gives their account of how the loan came to default, per the Endorsement of Justice Osborne, May 16, 2025, para. 3.

Sixty-two confidentiality agreements

The receiver took listing proposals from three brokerages and chose CBRE Limited, in consultation with First Source, under a separate listing agreement for each building. The campaign ran on MLS, LoopNet and CBRE's site and by direct email to thousands of prospective investors. Sixty-two confidentiality agreements were signed, and several offers came in, some for both buildings together and some for one, per the First Report of the Receiver, July 17, 2026, paras. 24–28, 30.

Maple's offers did not clear its debt. For the offers that covered both buildings, "the purchase price allocations attributed to the Maple Property were significantly below the amount of the secured indebtedness registered against that property," the receiver wrote, and it decided "to continue repositioning the Maple Property prior to pursuing a sale transaction." It has substantially leased the residential component, leased both ground-floor commercial units and obtained a final occupancy permit, and its environmental consultants are working toward a Record of Site Condition. Those steps, the receiver believes, "may permit prospective purchasers to obtain CMHC financing, thereby expanding the pool of potential purchasers," per the First Report of the Receiver, July 17, 2026, paras. 17, 31–35. Maple owed the Town of Smiths Falls about $300,733.27 in property taxes as of April 30, 2026, which the receiver expects to pay from a future sale, per the First Report of the Receiver, July 17, 2026, para. 21.

Beckwith had gone under contract once before. After the initial marketing the receiver signed a conditional agreement, but that purchaser "ultimately did not waive its conditions within the prescribed timeframe and the agreement was terminated pursuant to the terms therein." The receiver consulted CBRE and Desjardins and, on CBRE's recommendation, marketed Beckwith with an asking price, going back to purchasers identified in the first round. By the time it sought approval it counted notice to more than 3,300 parties, 62 confidentiality agreements, six offers and about ten months on MLS, and it considered it "unlikely that exposing the Beckwith Property to the market for additional time will result in a superior transaction," per the First Report of the Receiver, July 17, 2026, paras. 37–40, 46–47.