Moonlight Sonata: the monitor lines up a builder, and a guarantor asks out

Gurmel Singh Kainth built his first single-family house in 1978, grew the Symphony group through the 1980s and into the early 2000s, and saw his son, Gurdeep, take over its management in 2006; he calls the group "the embodiment of my life's work in the construction industry," per his Affidavit No. 1 of Gurmel Singh Kainth, July 28, 2026, paras. 3–6. The group's Moonlight Sonata community was planned as 130 three- and four-bedroom townhomes and garden flats on 2.87 acres at 3588 Wayburne Drive in Burnaby, with Symphony Homes Limited, a group company, as construction manager, according to the Affidavit #1 of Gurdeep Singh Kainth, June 4, 2026, paras. 6, 20, 22. On August 4, 2026, the court-appointed monitor disclaimed that construction management contract, a CCDC-5B dated March 1, 2022. On September 2 it signed a limited site stabilization agreement with another builder, Townline Construction Inc., which has begun preparing the first phase for remobilization, per the Third Report of the Monitor, Sept. 4, 2026, s. 3.1, paras. 5, 13–15.

The petitioners are Symphony Homes (Moonlight Sonata) Limited, which holds title to the lands as nominee; 1168386 B.C. Ltd., 1197030 B.C. Ltd. and 1197062 B.C. Ltd., the beneficial owners; 663466 B.C. Ltd., a corporate guarantor; and Symphony Homes (Wayburne) Ltd., added at the comeback hearing. Their CCAA proceeding in the Supreme Court of British Columbia began on June 17, 2026, with AlixPartners Restructuring, Inc. as monitor and KingSett Mortgage Corporation, the senior secured lender, as interim lender under a facility of up to $27,900,000 on which borrowing was capped at $500,000 by the initial order and at $1,000,000 by the amended and restated initial order, per the Third Report of the Monitor, Sept. 4, 2026, s. 1.0, paras. 1, 3. Since July 29 the monitor has exercised the powers of the petitioners' boards. On September 10, on the monitor's application, Justice Milman extended the stay of proceedings to 11:59 p.m. on October 9, per the Order Made After Application, Sept. 10, 2026, para. 2. The petitioners, meanwhile, are asking the court to release 663466 B.C. Ltd. from the proceeding altogether.

How the monitor came to hold the board's powers

The petitioners' account of the insolvency is a dispute with their lender. KingSett committed two facilities totalling $95,300,000 under a commitment letter of September 27, 2024, amended April 15, 2025; on December 18, 2025, the borrowers learned it would suspend further draws, and on May 4, 2026 it demanded $59,121,710.51 and delivered a notice of intention to enforce security under section 244 of the Bankruptcy and Insolvency Act, per the Affidavit #1 of Gurdeep Singh Kainth, June 4, 2026, paras. 31, 34, 37, 59. The petitioners say KingSett also withdrew the loan's entire interest reserve on or around August 31, 2025 — its own July 31 statement had shown $6,572,991.04 — and that by their calculation the balance owing is $52,500,000, per their Notice of Application, July 28, 2026, Part 2, paras. 32, 36–37.

KingSett moved first, petitioning on June 1 for a creditor-led CCAA with an enhanced-powers monitor. Its affiant, Daniel Pollack, deposed that the lender had lost confidence over payment defaults, cost overruns, builders liens and "what appear to be improper withdrawals and misuse of holdback trust funds for personal and non-project-related expenses," per the Second Report of the Monitor, July 21, 2026, App. "A" (Affidavit #1 of Daniel Pollack), para. 4. The debtor-led proceeding that followed gave the monitor control of the bank accounts and required its approval for any disbursement above $10,000 in a single transaction, or $25,000 in the aggregate, per the same Second Report, s. 1.0, para. 2(c); s. 3.3, paras. 1–3.

Five weeks in, the monitor's Second Report set out what it had found. The debtors had given it a statement for the Wayburne account they said held the Builders Lien Act holdback, showing $1,228,086.21 on June 30, 2026; the statement AlixPartners obtained from TD showed an overdraft on that date and a balance that never exceeded about $20,000. The funds later wired to the monitor as holdback came through the account of Symphony Syndicate Corporation, a non-petitioner; the day after the monitor pressed for an explanation, its counsel was told that McEwan Partners had withdrawn as the debtors' counsel. The sale agreements required $4,170,155 in purchaser deposits; Dominion Law Group held $2,795,895 in trust, an apparent shortfall of $1,374,260. Two sale agreements KingSett had received in October 2025 did not appear in the debtors' ledgers. And in the TD statements for 663466 B.C. Ltd., the monitor found transfers above the approval threshold made without its knowledge, among them $150,000 on June 29, 2026, per the Second Report, ss. 4.1–4.3.

The petitioners answered on July 28. The inaccurate bank statement, they said, came from a person to whom day-to-day banking had been delegated while Gurdeep Kainth was away, acting without his knowledge and since removed; the holdback was "never deficient"; the 663466 account serves Gurmel Kainth's personal and business expenses, and he had not known the threshold applied to it. They asked the court to replace AlixPartners with Doane Grant Thornton LLP or, in the alternatives, to delete the monitor's banking and approval powers or move them to Doane Grant Thornton, to exempt 663466 from the approval threshold and to raise that threshold to $150,000, per the Notice of Application, July 28, 2026, Part 1, para. 1(f)–(i); Part 2, paras. 56–61. The monitor replied that nothing in those materials caused it to reconsider, and that "many of the explanations offered by the Petitioners reinforce the concerns previously identified by the Monitor," per the Supplement to the Second Report of the Monitor, July 29, 2026, s. 1.0, para. 4.

On July 29 Justice Milman granted KingSett's application; no order disposing of the petitioners' competing application appears on the docket. The monitor may now exercise "any powers the Monitor deems appropriate which may be properly exercised by the board of directors or any officers of the Petitioners," exclusively and "to the exclusion of all other Persons, including the Petitioners' directors," and may pay up to $500,000 of pre-filing debts to suppliers critical to construction, per the Enhanced Powers and Stay Extension Order, July 29, 2026, paras. 3, 5. Two days later the monitor wrote to the pre-sale purchasers: "You should not seek or act on instructions from the principals, directors, officers, management or other representatives of Symphony in respect of the Project," per its Notice to Moonlight Sonata Purchasers, July 31, 2026, p. 1. On August 18 the petitioners filed a notice of appeal seeking leave to appeal the order; they have not sought a stay of it, per the Third Report, s. 1.0, para. 3(d).

Six weeks at the controls

The Third Report describes a site that has been substantially inactive since the fourth quarter of 2025. Only Phase 1A, 51 for-sale townhomes that management had put at about 78% complete, is under development; 26 are sold, 25 are not, and the sale agreements let purchasers rescind if their units are not finished by May 2027, which the monitor calls "a matter of material importance to the Debtors' stakeholders." KingSett was owed approximately $59.6 million on May 31, 2026, before interim advances; 25 lien claimants had registered approximately $7.5 million against the lands, and the books showed approximately $2.3 million in unsecured debt. The monitor is still reviewing the deposit shortfall, the two missing sales and the related-party transactions, per the Third Report, s. 2.0, paras. 4–8.