Phillips Square: the permits that could not move

A construction permit is not an asset in any sense a purchaser can carry away. It attaches to the entity the City issued it to, and if that entity is sold out from under its own permits — assets vested into a new company, the old shell left behind — the buyer of a half-finished tower owns a hole in the ground and an appointment at the permit counter. That is the fact around which the exit from Brivia's downtown Montréal developments was built, and the Monitor states it plainly: a reverse vesting structure was necessary because the permits and municipal authorizations required to finish Phillips Square Phase II and Mansfield Condos "would not survive or transfer in the context of a conventional asset sale," and a traditional vesting order would have sent the purchaser back to the City of Montréal to apply again, per Eighth Report of the Monitor, July 24, 2026, para. 6.19.

On July 28, 2026, Justice Michel A. Pinsonnault issued three approval orders over the same development, in two different structures, and the difference between them is that reasoning applied component by component.

A creditor's application

The proceeding did not begin with the debtors. On January 13, 2026, Bank of Montreal — in its capacity as secured creditor, lender and hypothecary representative for several lending syndicates — notified an application for an initial order, an amended and restated initial order, and a bidding procedures order. The Court granted the initial order the following day, declared the CCAA applicable to four corporate debtors and the limited partnerships behind them, and appointed Raymond Chabot Inc. as monitor with extended powers. Four Brivia entities that are not debtors at all — Brivia Family Investments Inc., Brivia Service Holdings Inc., Brivia Management Inc. and BVA Construction Inc., the head-office companies — were impleaded and brought inside the stay, per Eighth Report of the Monitor, July 24, 2026, paras. 1.1–1.3.4.

The initial order also ratified two chief restructuring officers, André Fortin and Martin D'Aoust, designated by Synergie3, with charges securing them; approved interim financing from BMO and certain of the lenders behind four separate interim financing charges; and granted super-priority administration charges securing counsel to BMO, the Monitor and its counsel, and counsel to the CCAA parties. It stayed the rights of third parties against the general contractors and their direct subcontractors — an extended stay reaching parties who were not in the proceeding, framed around the construction work itself, per Eighth Report of the Monitor, July 24, 2026, paras. 1.3.5–1.3.10.

That order has been amended and restated five times since — on January 26, March 12, April 29, June 2 and June 11, 2026, per Claims Procedure Order (PSQ2 and Mansfield), July 28, 2026, recitals. Sale and investment solicitation processes ran under the January 14 bidding procedures order, and on May 22, 2026 the Monitor selected successful bids for all three projects, per Eighth Report of the Monitor, July 24, 2026, para. 5.8.9.

Two towers, subscribed rather than sold

For Phillips Square Phase II and Mansfield, the buyer does not take the assets. It takes the companies.

The subscriber is Les Placements Rivière Gatineau Incorporée, acting for itself and for designated subscribers, part of the Heafey Group — a commercial and residential real estate firm founded in Gatineau in 1987 which the Monitor's report describes as holding a portfolio of assets exceeding $2 billion in Canada and the United States. Under each subscription agreement the subscriber takes newly issued units and shares of the relevant Mansfield and PSQ2 entities and, with them, control of the companies that will continue to own, develop and complete the projects. Excluded assets, contracts and liabilities are vested out into residual entities; retained assets, contracts and liabilities stay with the issuers. Existing equity interests are cancelled without consideration, and the existing directors and officers are deemed to resign at closing, per Eighth Report of the Monitor, July 24, 2026, paras. 6.4–6.7 and Approval and Reverse Vesting Order (Mansfield), July 28, 2026, paras. 12–17.

The subscription price is under seal. Schedule E to the Monitor's report carries it, and what the public record discloses is its composition rather than its size: a cash base price, amounts relating to pre-closing hard costs, designated cure costs, and a ticker fee payable after condominium units under contract close, calculated on a price per square foot. The sale is on an "as is, where is" basis without legal warranty, and the designated cure costs expressly exclude costs associated with the preliminary contracts, with Magil and its subcontractors, and with the condominiums under contract, per Eighth Report of the Monitor, July 24, 2026, paras. 6.10, 6.14.

Closing was expected in or around early August 2026, subject to a short list of conditions: the construction permits in force and in good standing, the reverse vesting orders issued and unstayed, the pre-closing reorganization completed in the prescribed order, no breach amounting to a material adverse effect, and approval under the Competition Act if required, per Eighth Report of the Monitor, July 24, 2026, paras. 6.9, 6.15.

The hotel went the ordinary way

The third component did not need the companies preserved, and it was not sold that way. Phillips Square Phase III went out under a conventional approval and vesting order: 1201-1215 Phillips Square Development Limited Partnership as vendor, and Okto Investments Inc. together with New Castle Hotels LLC as purchaser, with the vendor's rights in the purchased assets vesting in the buyer on the terms of the purchase and sale agreement, per Approval and Vesting Order (Okto), July 28, 2026, paras. 7, 13–14. A hotel operator buying a hotel asset has no permit problem of the kind that shaped the other two orders.

Three components of one development, then, and three answers: subscribe into the entity where the entitlement is the value, vest the asset where it is not.

Where the construction claims go

The reverse vesting orders establish a Construction Holdback Trust Reserve and make it the sole recourse of contractors, subcontractors and suppliers for pre-closing construction holdbacks — isolating those claims from the retained business and the post-closing structure. That isolation is why a claims process had to follow it, and Justice Pinsonnault issued one the same day, per Eighth Report of the Monitor, July 24, 2026, paras. 6.11–6.12.

The claims order sets a determination date of March 31, 2026 and reaches only work performed and services rendered to that date, because the subscriber assumes construction costs from April 1, 2026 onward and subtrades and suppliers are being paid in the ordinary course in the meantime. The order names its second purpose as well, and it is the one a construction lawyer will read first: to avoid the potential publication of legal hypothecs of construction, per Claims Procedure Order (PSQ2 and Mansfield), July 28, 2026, recitals and paras. 5.11 ["Date de détermination"]. The Monitor's view is that the reserve is sufficient to satisfy the potential claims, subject to review, and that the process prejudices no claimant, per Eighth Report of the Monitor, July 24, 2026, para. 6.13.

The people who paid deposits

Behind all of it sit the promissory purchasers — the individuals who signed preliminary contracts and paid deposits on units in towers that were not finished.

For those whose units can be delivered, the route is a closing. When the Ipso Facto approval and vesting order issued over the PSQ1 component in June, a notice went to the promissory purchasers whose units were affected, telling them to contact the project notary by a stated deadline if they wished to proceed, and telling them what happens if they do not: the deposit is retained in accordance with the applicable terms, per Eighth Report of the Monitor, July 24, 2026, paras. 3.1–3.3.

For the rest, the Monitor is working toward a reallocation, and the reason it will be done by proportion rather than by unit is a detail worth pausing on. Part of the deposits collected earlier remains held, and the releases that were made came out on what the Monitor calls a random basis — not tied to the progress of construction on any particular purchaser's unit. Having no principled way to match money already released to units actually advanced, the Monitor considers it appropriate, for fairness, to distribute to promissory purchasers in the PSQ1, PSQ2 and Mansfield projects on a pro rata basis measured by their initial deposits. That application had not been presented when the Eighth Report was signed; the Monitor said it would come in due time, per Eighth Report of the Monitor, July 24, 2026, paras. 4.1–4.4. A notice to the promissory purchasers of PSQ2 and Mansfield was to follow the July 28 orders, per Eighth Report of the Monitor, July 24, 2026, para. 3.5.

Discharge orders for the Okto and PSQ2 components issued on July 28 as well, alongside a rectified discharge order for the Ipso Facto component that had been sought the day before, per Discharge Order (PSQ2), July 28, 2026. Six and a half months after a lender walked into the Commercial Division asking the Court to take four of its borrowers into CCAA, the buildings have owners who intend to finish them, and the permits never left the room.