Kainos: a lender's CCAA gives FTI a board's powers over Amaji 2

On November 9, 2026, Justice Blake of the Supreme Court of British Columbia granted an initial order under the CCAA over two companies of the Kainos Development group, 1035638 B.C. Ltd. and Kainos Building Group Ltd., on the petition of their lender, National Bank of Canada. The order appoints FTI Consulting Canada Inc. as monitor and authorizes it, "but not obligated," to exercise any powers that may properly be exercised by the companies' board of directors or officers, and to do so exclusively, "to the exclusion of all other Persons," the debtors and their past or present directors, officers and shareholders included, per the Initial Order, Nov. 9, 2026, paras. 4, 6–7. 1035638 B.C. Ltd., which the record calls 103, owns Amaji 2: a seven-storey steel-frame building at 38044 Second Avenue in Squamish with 38 residential units and two commercial units, where, the bank's affiant says, "construction has largely stalled," per National Bank affidavit #1, Sept. 29, 2026, paras. 4–6.

The reason for coming to court this way takes two sentences of the bank's affidavit, affirmed on September 29: "National Bank is unwilling to advance additional funds to 103. National Bank is willing to advance funds to a Monitor with enhanced powers in the context of a proceeding under the CCAA." The enhanced powers, it adds, "are a condition of National Bank agreeing to provide the Interim Financing," per National Bank affidavit #1, Sept. 29, 2026, paras. 8, 71.

Seven storeys in steel

According to the affidavit, after the development permit was approved in November 2020 the borrowers sought approval of an alternative solution to build the seven storeys in wood frame, which the affiant understands is generally limited to six storeys for residential buildings in the province. The District took nearly one year to review it and did not approve the wood-frame design, "requiring the project to be redesigned and constructed using a steel frame." The building permit was issued in August 2023 and construction began that December. The borrowers first estimated substantial completion by December 31, 2025, then revised it to December 31, 2026, a date the affiant says is unlikely to be met, per National Bank affidavit #1, Sept. 29, 2026, paras. 6, 37–38.

The general contractor, VPAC Construction Group Ltd., had been general contractor on Kainos Development's Amaji 1 project, a six-storey wood-frame building across the street. Management told the bank that the District took about two years to approve the off-site servicing agreement and its engineering design, and that the long approval added to the delay and cost overruns through the re-pricing of related contracts, per National Bank affidavit #1, Sept. 29, 2026, paras. 39–40.

The bank advanced under its construction loan up to the December 2025 progress draw, paid in early February 2026, and then suspended advances because of the defaults it alleges. Subtrades began leaving the site in or around mid-March, and VPAC demobilized in mid-May; the affidavit puts the stall down to "delays, cost overruns, lack of funding, and non-payment of the construction participants." VPAC "reportedly had not been paid since January 2026," and on May 6 it registered a claim of builders lien against the Amaji lands for $2,725,189.47. The affiant says the borrowers' financial information puts the amount owing to VPAC at approximately $2.0 million, but that "the accuracy of the Borrower's financial information is unknown" and the monitor will need to investigate. The site is without power because about $98,000 is owing to BC Hydro, mostly for underground servicing work, per National Bank affidavit #1, Sept. 29, 2026, paras. 41–43, 50.

On the affiant's own visit, on or about May 27, 2026, the structural steel frame and roof appeared substantially complete, the building appeared to have reached the "lock-up" stage, rough-ins appeared substantially advanced, and drywall had been delivered. Based on BTY Group's latest quantity survey report, for the period ended May 31, 2026, the affidavit puts the project at 76% complete on a cost-to-complete basis. The cost to complete is not in the affidavit, and the affiant says why: "In the interest of avoiding potential impairment of a future sales process, and because I lack confidence in the reliability of the estimates, I do not relate the estimated cost to complete figures in this affidavit," per National Bank affidavit #1, Sept. 29, 2026, paras. 45, 47.

Of the 38 residential units, 22 are under pre-sale contracts, as is one of the two commercial units. On the bank's and its advisor's review of the contracts the borrowers provided, the purchase prices total approximately $18.1 million, excluding GST. The deposit protection insurance loan, for a contemplated $1,445,000, has not been advanced because certain conditions remain unsatisfied, and the pre-sale deposits total only $1,278,140, per National Bank affidavit #1, Sept. 29, 2026, paras. 54–55.

Two loans, both matured

The construction loan to 103, an uncommitted, demand, non-revolving facility of up to $19,900,000, matured as extended on March 18, 2026, and was not repaid. The affidavit lists other defaults, among them unpaid property taxes, late reporting, a subordinate charge registered without consent, a "failure to inject equity to meet cost overruns," and a failure to ensure that trust deposits and lien holdback funds were held with the bank. On September 15, 2026, the bank says, 103 owed it $16,600,045.72, exclusive of legal costs: $15,608,798.96 on the construction loan, $258,916.23 on a swingline and $732,330.53 on a letter-of-credit facility. The debt is secured by, among other things, a first mortgage on the Amaji lands, general security agreements, and unlimited guarantees from 1343504 B.C. Ltd., Kainos Development by Design Ltd., Viceroy Management Ltd. and three individuals, per National Bank affidavit #1, Sept. 29, 2026, paras. 11, 16, 27, 32 and Ex. "28".

Kainos Building Group owns the lots at 1358, 1362 and 1366 Main Street, about 300 metres away, bought in 2021, it told the bank, for one or two six- to seven-storey mixed-use buildings; they remain undeveloped and serve as the project's staging area. Its $3,906,500 mortgage loan matured after an extension on February 28, 2026, and was not repaid; the bank puts the debt at $4,067,126.68 on September 15, exclusive of legal costs, secured by, among other things, a first mortgage on the Main Street lands and limited guarantees from Kainos Development by Design Ltd. and the same three individuals. The bank demanded repayment from both borrowers on August 7, 2026, with notices of intention to enforce security, per National Bank affidavit #1, Sept. 29, 2026, paras. 9–10, 20, 23, 28–29, 34 and Ex. "29".

Behind the bank on the Amaji lands, Bancorp Balanced Mortgage Fund II Ltd., Bancorp Growth Mortgage Fund II Ltd. and Bancorp Financial Services Inc. hold a second mortgage, which on information given to the bank secured approximately $3,449,000 as of July 17, 2026. Property taxes of $61,552.60 are owing on the Amaji lands and $41,233.33 on the Main Street lands, per National Bank affidavit #1, Sept. 29, 2026, paras. 48–49.