Pride Group: the Holiday Inn closes and Mitsubishi is refused leave

The sale of the Holiday Inn in Liverpool, New York closed on October 28, 2026. Once Bank of America's mortgage, the amounts owing to IHG and statutory priority claims had been paid, US$2,602,007.35 was wired to the Bank of America account of Maplewood Inn, LLC, which owned the hotel, according to the Forty-Eighth Report of Ernst & Young Inc., the Monitor in Pride Group's CCAA proceedings, dated November 10. Two holdbacks, the Monitor says, "will potentially increase" that figure: US$300,000 the bank is keeping as an indemnity reserve, and US$350,000 that Commonwealth Land Title Insurance Corporation, the title company and escrow agent, retained against a New York State tax warrant (Forty-Eighth Report of the Monitor, Nov. 10, 2026, paras. 43–46; Forty-Seventh Report of the Monitor, Sept. 21, 2026, para. 21).

Of the two motions for leave to appeal pending when this case was last reported here in September, the Court of Appeal for Ontario decided one on October 27. It dismissed Mitsubishi HC Capital Canada, Inc.'s motion against the May 6 order that sent the net proceeds of a factoring transaction to the DIP agent, saying it did not view the motion judge as having decided whether marshalling or subrogation might be appropriate: the motion judge had "deferred that issue to the costs allocation process" (Forty-Eighth Report of the Monitor, Nov. 10, 2026, para. 55, App. "F" (Court of Appeal endorsement, released Oct. 27, 2026)). And on November 16 the Pride Entities ask the court to approve the sale of a property in College Park, Georgia for US$2,645,000, cut from the buyer's first offer of US$3,145,000, after the buyer the court approved in April failed to close (Notice of Motion (Motion Record, Vol. I), Nov. 9, 2026, paras. 1, 11, 14–15).

The account and the two holdbacks

Sweet Home Hospitality L.P., one of the Pride Entities, holds 49% of Maplewood, and an individual holds the rest (Forty-First Report of the Monitor, Jun. 4, 2026, paras. 13, 16 n. 2). The account the money went into is the one paragraph 12.1 of the Sweet Home order, as amended and restated on August 24, governs: until the Outside Date, disbursements from it may be made only for the hotel's operating costs and other expenses of its operation or wind-down. On September 29, on consent, Justice Cavanagh moved that date to December 31, 2026 (Second A&R Sweet Home Production and Investigation Order, Aug. 24, 2026, para. 12.1; Sweet Home Amendment Order, Sept. 29, 2026, para. 3; Endorsement of Cavanagh, J., Sept. 29, 2026, paras. 1–3).

Bank of America's US$300,000 comes back only on conditions. The agreement under which the bank holds it, entered into as of October 28 among the bank, Maplewood and two other obligors and acknowledged by Sweet Home, the Monitor and the chief restructuring officer, RC Benson Consulting Inc., recites that the bank required the reserve "as a condition to the Bank's issuance of the Payoff Letter." As the Monitor summarizes the release terms, up to US$50,000 comes back once certain conditions are met, among them that Maplewood provide an environmental site assessment satisfactory to the bank, and up to US$250,000 once the Monitor and the CRO have signed a written release satisfactory to the bank, the Ontario court has approved it and the U.S. court has enforced that approval, each by a final, non-appealable order. Maplewood's counsel sent a Phase I assessment on November 2 and asked for the US$50,000. If either set of conditions has not been fully satisfied within a year of October 28, s. 5.3 of the agreement entitles the bank, "at its option and in its sole and absolute discretion," to apply and retain what remains, though it must comply with a court's final, non-appealable order directing payment (Forty-Eighth Report of the Monitor, Nov. 10, 2026, paras. 44–45, App. "D" (Indemnity and Release Agreement), recitals, s. 5.3).

The Monitor does not believe the bank holds anything more about Maplewood's account that will assist its investigation, and it is "not aware of any claims" that it, Sweet Home or the CRO would have against the bank that the release would give up. Its counsel has prepared a form of claims release agreement, and the Pride Entities intend to move for its approval "at the earliest opportunity" (Forty-Eighth Report of the Monitor, Nov. 10, 2026, paras. 49–51).

Commonwealth's US$350,000 was retained "as security to ensure the release of a filed New York State tax warrant." On November 4, Maplewood's counsel confirmed that the warrant had been paid and asked for the money to be released (Forty-Eighth Report of the Monitor, Nov. 10, 2026, para. 46).

Letters to the recipients

With the hotel sold, the Monitor writes, it and the Pride Entities plan to advance discussions with Maplewood and its other owner before the December 31 Outside Date; the rest of the update concerns three of the parties it calls the Identified Transaction Recipients: Mann's Truck Sales & Leasing Inc., Multi Truck Sales and an individual. As at November 10, the individual's counsel had given no substantive response to the Monitor's August 12 letter, despite follow-ups on September 28 and October 8. The Monitor's counsel sought clarification from Multi Truck Sales of partially redacted bank statements on September 28, and it was provided on October 5 (Forty-Eighth Report of the Monitor, Nov. 10, 2026, paras. 48, 52–53).

Mann's counsel had written on September 18, as the Monitor's reply quotes it, that the transactions "formed part of a larger cross-border transfer of funds," with Mann's acting "as an intermediary." The reply, dated September 23, asked Mann's and an individual it names to deliver by October 9, under the Sweet Home order, the names of anyone who asked them to receive funds from Maplewood or to move funds from the United States into Canada, the accounts and beneficiaries to which they transferred the funds, how and when each transfer was made, and the related records (Forty-Eighth Report of the Monitor, Nov. 10, 2026, App. "E" (letter of Sept. 23, 2026)). As at November 10 no response had come. "The Monitor and the CRO are considering next steps with respect to each of the Identified Transaction Recipients and will be engaging with stakeholders in respect of same," the report says (Forty-Eighth Report of the Monitor, Nov. 10, 2026, para. 54).

Leave refused

Justice Osborne's distribution order of May 6, 2026 had authorized and directed the Monitor to pay the net proceeds of the 2024 sale of a factoring portfolio to Royal Bank of Canada as DIP agent, up to the outstanding balance secured by the DIP lenders' charge, "subject to any future Court-ordered marshaling or allocation (excluding any marshaling that may be determined by the Court to be res judicata at a subsequent hearing)" (Distribution Order (JD Factoring Transaction), May 6, 2026, recitals, para. 3).

Justices Rouleau, Coroza and Gomery decided Mitsubishi's motion in writing. "Even accepting that the moving party's proposed grounds of appeal are not frivolous," their endorsement says, the other factors traditionally considered under s. 13 of the CCAA did not support it. On marshalling the panel wrote: "The motion judge's decision not to apply the doctrines of marshalling and subrogation was fundamentally discretionary and fact-specific, based on his finding that to do so at this stage would be premature and prejudicial to other creditors. It follows that we do not view the motion judge as having decided the ultimate issue of whether marshalling or subrogation might be appropriate regarding the contested proceeds of sale. Rather, the motion judge deferred that issue to the costs allocation process." "We are also not persuaded that the appeal would not prejudice the ongoing proceeding," the panel wrote, "notwithstanding the fact that the debtors are being wound down rather than restructured as a going concern." And: "In this case, an appeal would inevitably disrupt the costs allocation process, increasing administrative costs and reducing creditors' potential recovery." The motion was dismissed, with costs of $5,000, inclusive of disbursements and taxes, to Royal Bank of Canada as administrative and DIP agent (Forty-Eighth Report of the Monitor, Nov. 10, 2026, App. "F" (Court of Appeal endorsement, COA-26-OM-0266)).