Moonlight Sonata: five bank statements before the leave hearing

During the development of Moonlight Sonata, a townhome project at 3588 Wayburne Drive in Burnaby, the debtors sent BTY Group, the project's independent cost consultant, monthly bank statements and other information for the reports it prepared each month, according to the monitor, which calls those reports the QS Reports. A primary purpose of those reports, the monitor says, was to give KingSett Mortgage Corporation, the construction lender, "comfort that funding advances were being used for their intended purpose," and so they included statements for a TD account ending in 9141, held by Symphony Homes (Wayburne) Ltd.: "the account from which Project expenses were purportedly being paid," per the Fifth Report of the Monitor, Oct. 19, 2026 (Response Book, Tab 3), s. 4.1, para. 1 and the Notice to Moonlight Sonata Purchasers, Oct. 14, 2026, p. 1. For November 2025, according to the monitor's table, the QS Reports put the account's closing balance at $2,040,796.00. The statement for the same month that the monitor obtained directly from TD shows $5,029.67, per the Fifth Report, s. 4.1, para. 2.

That comparison, made for five months of 2025, is the first of the "new findings" about the debtors' conduct in the Fifth Report of AlixPartners Restructuring, Inc., the court-appointed monitor, which the Vancouver registry stamped on October 19, per the Fifth Report, s. 1.1, para. 1(b); s. 4.0, para. 1. The same day it went to the Court of Appeal as Tab 3 of the monitor's response book on the petitioners' application for leave to appeal the order Justice Milman pronounced on July 29, per the Response Book on Application for Leave to Appeal, Oct. 19, 2026, cover page and p. iii. That order empowers the monitor to exercise the powers of the petitioners' boards and officers "to the exclusion of all other Persons, including the Petitioners' directors," per the Enhanced Powers and Stay Extension Order, July 29, 2026, para. 3. The leave application is scheduled to be heard on October 27, per the Fifth Report, s. 1.0, para. 3(e). "The proposed appeal has no merit and is a waste of judicial resources," the monitor's memorandum of argument says, per the Memorandum of Argument of the Monitor, Oct. 19, 2026 (Response Book, Tab 4), para. 2. The monitor's earlier findings, and the petitioners' answers to them, were reported here on September 11 and September 30.

What the monitor set side by side

The Fifth Report says the monitor recently compared several of the Wayburne account statements in the QS Reports against the corresponding statements it obtained directly from TD, and that "In every month reviewed, the statement provided by the Debtors to BTY overstated the closing balance of the Wayburne Account by approximately $970,000 to $2.04 million," per the Fifth Report, s. 4.1, para. 2. Its table gives each month by project draw:

The monitor says it has also obtained email correspondence between the debtors and BTY "which demonstrate that the falsified bank statements were being transmitted to BTY directly by the Debtors." It describes itself as "deeply concerned by this discovery," and writes that "in the absence of any evidence to the contrary," it "has no other option but to conclude that the Debtors were actively engaged in falsifying banking records in an effort to deceive KingSett and BTY," per the Fifth Report, s. 4.1, para. 3. The debtors' principal, according to the report, was included on certain of the email chains in which bank statements and other information concerning the QS Reports went from the debtors to BTY, per the Fifth Report, s. 4.1, para. 4. In its memorandum the monitor adds that the statements "were relied upon by BTY and KingSett for Project oversight and for the release of loan advances," per the Memorandum of Argument, para. 14(c).

"When confronted with this evidence," the report says, the debtors' counsel advised the monitor: "We have been told by [the principal] that he was completely unaware of these fraudulent bank statements and has relied on his CFO [name omitted] in regards to the financial reporting," per the Fifth Report, s. 4.1, para. 5. The monitor says it is following up with the debtors for more information, and that it contacted the officer counsel named but had received no response as of the report's date. It is considering how to investigate further, including by seeking to cross-examine the principal or that officer on the affidavits each has filed in the CCAA proceedings, per the Fifth Report, s. 4.1, paras. 6–7.

The case against leave

All six petitioners are appellants in Court of Appeal file CA51782, with KingSett and the monitor as respondents, per the Response Book, cover page. They filed their notice of appeal seeking leave on August 18 and have not obtained or sought to obtain a stay, so the order, the monitor says, remains in full force and effect, per the Fifth Report, s. 1.0, para. 3(e). Their application book, which the monitor's memorandum cites, is not in the record read for this piece. Nor is KingSett's memorandum, on which the monitor relies for the facts and for the test for leave, "the lack of merit in the proposed appeal, and the lack of significance to the practice," per the Memorandum of Argument, paras. 6, 17.