Pinestone: a receiver that springs on September 14

The Pinestone is a resort, golf course, conference centre and event space on Haliburton County Road 21, in the United Townships of Dysart, Dudley, Harcourt, Guilford, Harburn, Bruton, Havelock, Eyre and Clyde. Its owner, 2476563 Ontario Inc., borrowed $5,250,000 from Cosman Mortgage Capital Corporation in August 2018 to pay out a first mortgage on the land, pay down a second, clear property tax arrears and fund capital repairs and environmental remediation. The loan was due on September 1, 2019, per the Affidavit of Cosman's president sworn March 17, 2025, paras. 7, 9–11, in Motion Record, Aug. 23, 2026, pp. 18–19. It was never repaid, and seven years on, the resort has a court-appointed receiver that is allowed to watch the business and not to run it.

On August 31, 2026, Justice C.M. Smith of the Superior Court of Justice at Peterborough, file CV-25-00000091-0000, granted on consent the orders Cosman had asked for to give the receiver, The Fuller Landau Group Inc., possession of the resort and the running of it. The orders do not take effect that day. By the terms of the endorsement they spring at 12:01 a.m. on September 14, 2026, and only "in the event the Potential Transaction is not completed by that date," the Potential Transaction being an agreement the respondents told the court they were near, "to repay the indebtedness owing to creditors, including Cosman, other secured creditors and the Receiver's fees, in full," per the Endorsement of Smith J., Aug. 31, 2026, paras. 2–3.

Seven years of extensions

The history of the loan is sworn by Cosman's president, in an affidavit of March 17, 2025. After the September 2019 maturity passed, Cosman extended the term four times, by letter agreements of September 16, 2019, March 12, 2020, March 16, 2021 and March 13, 2022, the last carrying it to March 15, 2023. It made a first demand on April 21, 2022, for $5,317,533.93, over defaults that included failing to show that property taxes were current and that insurance was in place. On October 20, 2022 it agreed to forbear until January 17, 2023, on terms that required the borrower to pay its HST arrears and get two Canada Revenue Agency liens, of $927,829 and $1,049,137, off title; amendments carried the forbearance to July 31, 2024. A condition of that forbearance was the appointment of Fuller Landau as monitor. Cosman says the borrower "failed to meet their obligations under the Original Forbearance Agreement, and every subsequent forbearance agreement," and that the monitor did not receive all the information it asked for, per the Affidavit of Cosman's president sworn March 17, 2025, paras. 16, 25–30, in Motion Record, Aug. 23, 2026, pp. 20–25.

The second demand, with notices under s. 244 of the BIA, went out on October 15, 2024, and put the debt at $5,394,547.58 as of September 23, 2024: $5,250,000 in principal, $80,672.60 in fees and $63,874.98 in interest, accruing at 14.0% a year. Cosman also sued on the covenants; the defendants served a notice of intent to defend on October 28, 2024 but, the affidavit says, no defence, per the Affidavit of Cosman's president sworn March 17, 2025, paras. 31–35, in Motion Record, Aug. 23, 2026, pp. 25–26. The borrower's obligations are guaranteed on a secured basis by two related companies, 9407472 Canada Inc. and Aurora Hotel Group Inc., both respondents. Fuller Landau's first report cites a mortgage discharge statement of August 20, 2026 putting the balance at $6,084,205.72, plus legal and professional costs, per the First Report of the Receiver, Aug. 21, 2026, para. 12, in Motion Record, Aug. 23, 2026, p. 40.

Cosman's $5,250,000 charge, registered September 11, 2018, is second in time on the land but first in rank: an individual lender's $1,500,000 charge from March 2017 is postponed to it. The two Crown liens are registered behind both. By November 2025 the borrower owed $865,796.36 in HST accrued since September 2021, the townships had registered a tax arrears certificate on title, and they advised Cosman that $555,173.85 in municipal taxes was past due as of October 1, 2025 and that, unpaid, the property would be eligible for tax sale by public tender in March 2026, per the Supplemental Affidavit of Cosman's president sworn November 6, 2025, paras. 4–7, in Motion Record, Aug. 23, 2026, p. 31. The receiver adds that the CRA told it in April 2026 that about $867,000 was owed for unremitted HST and that a further $230,000 may be owing for payroll taxes, subject to a trust examination, per the First Report of the Receiver, Aug. 21, 2026, para. 15, in Motion Record, Aug. 23, 2026, p. 40.

The first springing order

The application, first returnable April 3, 2025, was adjourned by consent to June 9 and then to November 10, 2025. Before it was heard, the lender and the borrower reached a compromise. Justice S. Woodley's order of January 26, 2026 appointed Fuller Landau receiver of all of the borrower's property but, as the receiver describes it, "limited the Receiver's powers to act as a monitor of the Business" while the borrower stayed responsible for daily management, and it was to take effect on March 2, 2026 unless the borrower produced evidence by February 27 that certain property tax arrears had been paid, per the First Report of the Receiver, Aug. 21, 2026, paras. 3–4, in Motion Record, Aug. 23, 2026, pp. 37–38. The order itself gives the receiver power to monitor receipts and disbursements, to pay municipal tax arrears, to market the property and to sell parts of it without court approval up to $75,000 a transaction and $250,000 in all, and to borrow up to $920,000 under a charge ranking behind only its own fee charge and the statutory priorities, per the Amended Receivership Order, Jan. 26, 2026, paras. 3–4, 23, 35.

It took effect on March 2. By August 19 the receiver had drawn $735,000 in advances and spent $678,520.84 of it on property taxes, per the Interim Statement of Receipts and Disbursements, Mar. 2 to Aug. 19, 2026, App. "G" to the First Report, in Motion Record, Aug. 23, 2026, p. 113.

What the monitor could not see

The first report, dated August 21, 2026, is mostly an account of requests. The receiver met the borrower's representatives at the group's Vaughan head office on March 3 and emailed the next day for four things: confirmation that the owners would keep funding the business, a cash-flow forecast, a creditor list and the details of Moneris accounts under CRA garnishment. A follow-up email noted that there was "a payroll tomorrow and not funds in the bank." The group's chief executive replied that the group's staff were working on the request and that "it takes us about 48 hours for us to collect the data," per the First Report of the Receiver, Aug. 21, 2026, paras. 17–20 and App. "B", in Motion Record, Aug. 23, 2026, pp. 41–42, 71–72. The creditor list and Moneris details arrived on March 9. A sale-process information request followed on March 12; on March 24 the borrower uploaded five documents and some utility invoices, which the receiver calls "a small fraction of what was requested," per the First Report of the Receiver, Aug. 21, 2026, paras. 22–27, in Motion Record, Aug. 23, 2026, pp. 42–43. Receiver's counsel wrote on March 27 setting a March 31 deadline. On June 8 the borrower sent an internal profit and loss statement for January to April 2026 and a writ for a $107,883 judgment obtained by a former employee, per the First Report of the Receiver, Aug. 21, 2026, paras. 29–31, in Motion Record, Aug. 23, 2026, p. 43.

"Since then, nothing further was provided to the Receiver by the Debtors. The Debtors have also advised that they have refinancing funds but no details have been provided to the Receiver," the report says, per the First Report of the Receiver, Aug. 21, 2026, para. 32, in Motion Record, Aug. 23, 2026, p. 43. On August 7 Hydro One sent the receiver disconnect notices for three accounts at the resort; the unpaid balance to July 23 was about $275,000, of which about $66,000 had accrued since the order. The receiver says it has been unable to monitor the business or begin soliciting listing proposals from realtors, per the First Report of the Receiver, Aug. 21, 2026, paras. 33–34, in Motion Record, Aug. 23, 2026, pp. 43–44.

The possessory order, and the manager waiting for it

The amended and restated order that springs on September 14 is a full possessory appointment: power to take possession of the property, change locks, manage and operate the business, collect receivables and terminate employees on the borrower's behalf, with the same $75,000 and $250,000 sale thresholds and a borrowing limit raised from $920,000 to $1,500,000, per the Amended and Restated Appointment Order, Aug. 31, 2026, paras. 3, 13, 21. The receiver asked for the higher limit because, although the resort was "heading into its high season," it had had no visibility into working capital, per the First Report of the Receiver, Aug. 21, 2026, paras. 46–47, in Motion Record, Aug. 23, 2026, pp. 46–47.

The companion order approves the first report, fees of $49,088.33 for the receiver from June 4, 2025 to May 31, 2026 and $24,632.91 for its counsel, Borden Ladner Gervais, from November 5, 2025 to March 31, 2026, and the receiver's retention of Freed Corp. to run the resort, per the Ancillary Relief Order, Aug. 31, 2026, paras. 2–5. The receiver approached six resort operators and received three proposals; it picked Freed for its familiarity with the Muskoka area and "one of the lower compensation structures." The management agreement pays $15,000 a month plus HST, falling to $5,000 if the receiver closes the property, plus 5% of operating profits, with a six-month minimum term, 60 days' notice of termination and a minimum total fee of $72,000, per the First Report of the Receiver, Aug. 21, 2026, paras. 36–41, in Motion Record, Aug. 23, 2026, pp. 44–45.

If the expanded powers take effect, the report sets out the plan: attend at the resort with Freed and take control of operations and banking, collect the sale information from staff, solicit broker proposals and "attempt to negotiate a stalking horse purchase agreement with Freed, who has indicated an interest in purchasing the Business by way of a stalking horse bid," then return to court for approval of a sale process, per the First Report of the Receiver, Aug. 21, 2026, para. 52, in Motion Record, Aug. 23, 2026, pp. 47–48.

How the orders fall away

The endorsement gives the respondents a mechanism. If the repayment has "closed in escrow," with every condition met except the receiver's discharge, to the receiver's satisfaction by the effective time, the receiver is to serve and file the certificate appended to each order, and on filing both orders "shall be vacated before they go into effect." The parties are to return on September 23, 2026 at 9:00 a.m. for a 15-minute hearing on the status of the transaction, at which, if the escrow closing has occurred and the certificates are filed, the court will hear the respondents' motion to vacate Justice Woodley's January order as well. If those conditions are not met, Cosman may vacate the return date, per the Endorsement of Smith J., Aug. 31, 2026, paras. 4–5.

Richard Epstein of Aird & Berlis appeared for Cosman, with Shaun Parsons on the record; Dillon Gohil appeared for the three respondents. The receiver's file is led by Adam Erlich, a vice-president and licensed insolvency trustee at Fuller Landau, per the Affidavit of A. Erlich sworn August 19, 2026, para. 1, App. "H" to the First Report, in Motion Record, Aug. 23, 2026, p. 115.