Hazelton Development: the RVO waits, and the sureties dispute the $802,000 split

The sureties' factum begins in May 2026, when, in their telling, the Highlight of Mississauga proceeding "was on the precipice of failure": Hazelton Development Corporation had exhausted all available funding and could not continue construction, and there was not enough funding to complete the sale process under which the project was to be sold as is. To facilitate that process, Aviva Insurance Company of Canada and Westmount Guarantee Services Inc. agreed to fund a $350,000 interim facility, secured by a court-ordered charge "ranking only behind" the $400,000 First Administration Charge and Firm Capital Mortgage Fund Inc.'s $80 million Plan Sponsor's Charge, per the Factum of Aviva/Westmount, Oct. 1, 2026, Part I, paras. 1–2; the monitor's own list of the charges puts it third, after those two, per the Factum of the Monitor, Sept. 29, 2026, para. 17. The advance was fully funded by June 30, and as of October 1 none of it had been repaid, according to an affidavit sworn that day by Darren O'Sullivan, a senior claim specialist at Aviva, per the Affidavit of Darren O'Sullivan, Oct. 1, 2026, paras. 1, 16–17.

The sale process produced no binding offer. On September 21 the monitor, Grant Thornton Limited, signed a subscription agreement with Firm Capital instead, an agreement reported here on September 23. It carries $802,000 in cash, and the monitor proposes to pay all of it toward professional fees: $400,000 to the beneficiaries of the First Administration Charge and $402,000 to the monitor, its counsel and the transaction advisor, per the Factum of the Monitor, Sept. 29, 2026, paras. 3, 53. "Aviva/Westmount will receive nothing," the sureties' factum says (Factum of Aviva/Westmount, Oct. 1, 2026, Part I, para. 4). On October 1 the monitor's motion for an approval and reverse vesting order went before Justice Kimmel, who adjourned it to a 90-minute hearing beginning at 11:00 a.m. on October 22. "This has not been a straightforward restructuring proceeding," she wrote; various stakeholders had appeared "raising possible objections or concerns that could not be addressed in the time available," per the Endorsement of Justice Kimmel, Oct. 1, 2026, paras. 1, 3.

A stay that had already run out

The court was advised at the hearing that the stay of proceedings had expired the day before, on September 30, so the part of the motion seeking to extend it "had to be decided today." No stakeholder objected. After the hearing, the monitor confirmed that Firm Capital, as plan sponsor and purchaser, consented to extend to October 31 the Outside Date under the amended and restated subscription agreement of September 28, and agreed to fund the project's reasonable preservation costs up to and including that day. "With this," Justice Kimmel wrote, she was satisfied there was sufficient cash flow for the company to continue until the court decides the approval motion, and she extended the stay through October 31 under s. 11.02(2) of the CCAA, satisfied that the monitor continues to act in good faith and with due diligence. The endorsement records that the monitor is optimistic that, if the order is granted on October 22, the transaction could close by the end of October, within the extended stay, per the Endorsement of Justice Kimmel, Oct. 1, 2026, paras. 7–10.

She also sealed Confidential Appendix "1" to the monitor's report, a summary of all the bids received in the sale process, until the transaction closes. She accepted the monitor's grounds under the Sherman Estate test: if the deal does not close the monitor may have to re-market the project, and public disclosure of the prices and other economic terms previously offered would give prospective purchasers information that "could be used to formulate subsequent bids or negotiate against the estate, potentially establishing an artificial ceiling on value." The order extending the stay and sealing the appendix was signed that day, per the Endorsement of Justice Kimmel, Oct. 1, 2026, paras. 6, 11.

The counsel slip lists appearances for the monitor and Firm Capital; for Aviva and Westmount; for Tarion Warranty Corporation; for the pre-sale purchasers, through their court-appointed representative counsel; for Martino Contractors Ltd., Stellar Formwork Ltd. and Matrex Window System Inc.; and for lien claimant City Electric Inc., per the Endorsement of Justice Kimmel, Oct. 1, 2026, pp. 1–2. Martino and Matrex are among the trades that delivered lien notices after construction stopped in March, per the Monitor's Twenty-Eighth Report, Apr. 16, 2026, paras. 28, 30. The endorsement does not say which parties raised objections, or what the court's own questions are; it notes "certain aspects of the relief sought that the court may have questions about at the return of the motion," and gives the monitor until October 19 to serve any supplementary material. A stakeholder whose objection is still unresolved by October 20 must serve an aide-memoire of no more than two double-spaced pages and see that it is uploaded to the hearing bundle by 2:30 p.m. on October 21, per the Endorsement of Justice Kimmel, Oct. 1, 2026, paras. 4–5.

What Toronto-Dominion Bank changed

The agreement before the court on October 1 was an amended one. After signing the September 21 version, the monitor learned that Toronto-Dominion Bank held an interest in the indebtedness secured by the Plan Sponsor's Charge, and the bank objected to the "contemplated extinguishment of that indebtedness." Discussions among the monitor, Firm Capital and the bank produced an amended and restated agreement on September 28, under which the plan sponsor indebtedness "will instead remain with Hazelton as a Retained Liability," per the Factum of the Monitor, Sept. 29, 2026, para. 14.

The monitor's factum now describes the purchase price in three parts: the Plan Sponsor Indebtedness, approximately $73.5 million as of September 30 with interest, fees and other amounts to closing, "being a Retained Liability of Hazelton"; the $802,000 of cash, inclusive of HST; and an amount equal to the other retained liabilities, which now include, besides post-filing realty taxes, the plan sponsor indebtedness and other liabilities under the Plan Sponsor Agreement and its security. Firm Capital would still acquire 100% of the equity in Hazelton, per the Factum of the Monitor, Sept. 29, 2026, para. 15.

Feedback from bidders, the factum says, put the cost to complete the project at approximately $15 million to $30 million, with further uncertainty over remedial work on the windows and certain roof work, and no bidder would pay for the engineering and other due diligence a binding offer needed without first obtaining exclusivity, per the Factum of the Monitor, Sept. 29, 2026, para. 13. Firm Capital, the factum says, has provided evidence, an affidavit of Jonathan Mair sworn September 28, that an asset purchase through a new entity is not a reasonable alternative. Beyond about $5.1 million in tax-loss carry-forwards and about $1.47 million in land transfer tax, the factum adds, the reverse vesting structure is expected to keep about $1.3 million of fully cash-collateralized letters of credit and the project's permits, licences and other municipal and regulatory arrangements; with construction incomplete, replacing them in a new entity "would introduce considerable delay, cost and uncertainty," per the Factum of the Monitor, Sept. 29, 2026, para. 29.

The bargain the sureties describe

Westmount, a deposit insurer, provided the Highlight's bonding facilities before the filing as agent for a group of sureties including Aviva, Intact Insurance Company of Canada and Liberty Mutual Insurance Company of Canada, and holds a sixth-ranking $30 million charge for what the sureties advanced under them, per the Factum of Aviva/Westmount, Oct. 1, 2026, Part II, paras. 8–10.