Mortise Scott Road: a strip mall sold by reverse vesting order

The building at 8140 120th Street in Surrey stands on about 3.11 acres on the east side of "120th Street / Scott Road," south of 82nd Avenue, as an appraisal the owners put in evidence describes the site, per the Affidavit No. 1 of Navjeet Gill, June 16, 2025, para. 22, Ex. B. It is a two-storey commercial mall with 35,858 square feet of net rental area, leased mostly to food and service businesses. When Alvarez & Marsal Canada Inc. took it over as receiver in July 2025, 9 of its 13 units were let and bringing in approximately $74,000 a month, net of GST, and the tenant of the largest unit was in an arbitration with the owners over fair market rent, since stayed by the receivership. The companies that owned it had been formed with respect to its potential redevelopment, per the First Report of the Receiver, Feb. 4, 2026, paras. 3.5–3.8.

On February 4, 2026, A&M asked the Supreme Court of British Columbia to approve a $21.5 million sale of the property by reverse vesting order. Under the heading "Why is the RVO necessary?", its first report gave the reason first: the RVO "allows for a share transaction, which allows the Purchaser to acquire the Property without triggering property transfer tax," per the First Report of the Receiver, Feb. 4, 2026, paras. 1.2, 6.18(a). Madam Justice Wilkinson granted the order on February 13, the sale closed on March 12, and on July 29, 2026 she discharged the receiver, per the Second Report of the Receiver, July 13, 2026, paras. 1.6–1.7 and the Discharge Order, July 29, 2026, para. 8.

Two sale contracts and a second mortgage

Institutional Mortgage Capital Canada Inc., as general partner of IMC Limited Partnership, agreed to lend $19.5 million against the property under a commitment letter of July 7, 2022, amended and restated twice that autumn. Legal title sat with three nominees, Mortise (Scott Road Residential) Holdings Ltd., Mortise (Scott Road Office) Holdings Ltd. and Mortise (Scott Road Commercial) Holdings Ltd.; the beneficial owner was 1048799 B.C. Ltd. IMC took a mortgage and assignment of rents, an equitable mortgage, a general security agreement, and a full-recourse guarantee from 104 and its director, Baljit Singh Johal. The loan matured on February 1, 2025, per the First Report of the Receiver, Feb. 4, 2026, paras. 3.1–3.3, 3.10–3.11, 3.13.

IMC's petition says Mortise (Scott Road Residential) Holdings Ltd. contracted in February 2024 to sell the lands with a November 30, 2024 completion date and took a $3,400,000 deposit; that on or about November 4, 2024 the borrowers granted a second mortgage securing a $9,250,000 loan from Bancorp Balanced Mortgage Fund II Ltd., Bancorp Growth Mortgage Fund II Ltd., Bancorp Financial Services Inc. and Mandate Management Corporation, the money used to repay a private second mortgage and for a development project unrelated to the lands; and that when the sale collapsed, the deposit went to another project, per the Petition to the Court, May 14, 2025, Part 2, paras. 11–13. Navjeet Gill, chief financial officer of the Mortise Group, swore that the price was $32 million and the deposit $3.2 million, and that Mortise was entitled to the deposit and had no agreement to pay it to IMC, per his Affidavit No. 1 of Navjeet Gill, June 16, 2025, paras. 1, 5, 12–13. Bancorp's response describes its loan as made to two other numbered companies, with the three nominees and 104 as guarantors and the mortgage as collateral security, per the Response to Petition (Bancorp Parties), June 27, 2025, Part 4, paras. 4–5.

What IMC knew, and when, is disputed. The petition says IMC first learned of the Bancorp loan on or around October 29, 2024, from a signed copy of the commitment letter, and never consented to the mortgage, per the Petition to the Court, May 14, 2025, Part 2, para. 16. Gill swore, on information from the broker who arranged the Bancorp loan, that the broker had kept IMC's managing director informed of the application, per his Affidavit No. 1 of Navjeet Gill, June 16, 2025, paras. 7–8. Bancorp's response says IMC "was aware of the Bancorp Mortgage prior to it being registered" and raised no objection before or after, per the Response to Petition (Bancorp Parties), June 27, 2025, Part 4, para. 6.

The debtors say their last renewal meeting with IMC, on January 15, 2025, ended with IMC saying it would give its decision shortly, and that what came instead was a demand dated February 5, four days after maturity, per the Response to Petition (Mortise respondents), June 16, 2025, Part 4, paras. 9–10. IMC's petition says it denied the renewal request, and that under a forbearance agreement dated for reference March 7, 2025 and running to May 30, the March 31 interest payment was late and two $500,000 payments due in April were not made. It put the debt at $19,555,812.02 as at May 1, 2025, monthly interest at approximately $190,000, and the estimated 2025 rent at $114,386.56 a month. A second sale contract, entered into on or about February 19, 2025 with a group of eight companies, had a May 12, 2025 completion date and was conditional on a separate transaction, per the Petition to the Court, May 14, 2025, Part 2, paras. 14, 19–22, 28. Gill put that price at $34 million and swore that, as a result of the petition, the buyer sought a price reduction that Mortise did not agree to, per his Affidavit No. 1 of Navjeet Gill, June 16, 2025, paras. 17–18.

A contested appointment

The Mortise respondents and Bancorp both opposed a receiver and pressed for the six-month redemption period usual in foreclosure. The debtors' response said IMC sought "to circumvent a foreclosure proceeding" and that the lands held significant equity: an appraised value of $34 million and a BC assessed value of $27.8 million, which they said left $14.44 million or $8.24 million of equity over IMC's debt, per the Response to Petition (Mortise respondents), June 16, 2025, Part 4, paras. 2–5; Part 5, paras. 18–19. Bancorp adopted the debtors' legal basis, cited a $34,000,000 appraisal, and objected that the receiver's charges and borrowings would rank ahead of its mortgage, per the Response to Petition (Bancorp Parties), June 27, 2025, Part 4, paras. 8, 12–16; Part 5, para. 1.

Justice Wilkinson heard the petition on July 11 and 14, 2025, reserved judgment, and on July 23 appointed A&M receiver of all the assets, undertakings and property of the three nominees and 104. The application, as the order recites it, sought an appointment under s. 243(1) of the Bankruptcy and Insolvency Act and s. 39 of the Law and Equity Act; the appointing paragraph rests on s. 39 of the LEA, per the Receivership Order, July 23, 2025, p. 1 and para. 1. As at July 23, 2025, the debtors' records showed approximately $29.1 million in secured liabilities, $19,555,812 of it owed to IMC and $9,250,000 to Bancorp, per the First Report of the Receiver, Feb. 4, 2026, para. 3.15.

A buyer before the listing

The purchaser, 0952653 B.C. Ltd., approached the receiver shortly after A&M called for proposals from marketing agents. It was, the receiver reports, "the Purchaser's initial preference for the Receiver to enter into a purchase agreement with the Purchaser, absent a marketing process being conducted." As negotiated, the purchaser agreed that A&M could sign an exclusive listing agreement with CBRE Limited while advancing the sale agreement. A&M retained CBRE on October 1, 2025 and, by its account, signed with the purchaser on October 20; CBRE's process began the next day. CBRE contacted over 1,600 parties, 27 of which signed non-disclosure agreements, and conducted seven tours; three interested parties sent non-binding letters of intent. The receiver "was not in a position to respond to the LOIs due to the Sale Agreement being in place," but noted that all three offered less than $21.5 million, per the First Report of the Receiver, Feb. 4, 2026, paras. 6.3–6.7.