Smiling Simba: the claims the lenders would not fund

The two-storey building at 13209 Evanspark Boulevard NW in Calgary was designed and zoned for a single use, as a day care centre, and its owner, Smiling Simba Learning Academy Inc., at one point intended to run the daycare itself. It was unable to obtain the licensing, the receiver understands, and by the time the company went into receivership the whole building was leased to a numbered company, 2497453 Alberta Ltd., which was operating a daycare there and continues to, per the First Report to the Court of the Receiver, Feb. 19, 2026, paras. 5–6. The receiver's statutory notice gives the company's principal line of business as "Landowner/Landlord" and lists the creditors holding registered security on the building: The Bank of Nova Scotia, owed an estimated $10,170,652.26; 1967262 Alberta Ltd., $900,000; MortgageQuote Canada Corp., $200,000; and the City of Calgary, $366,258.41 in property taxes. "Note that as Receiver, despite our requests, we have very limited information from the Company at the time of issuing this notice," it adds, per the Notice of Statement of the Receiver, Jan. 17, 2025, paras. 4(b)–(f).

The bank held a general security agreement and a collateral mortgage over the real property, and on its application Justice Marion of the Court of King's Bench of Alberta appointed Hudson & Company Insolvency Trustees Inc. receiver and manager on January 10, 2025, under s. 243(1) of the Bankruptcy and Insolvency Act and s. 13(2) of the Judicature Act, per the Receivership Order, Jan. 10, 2025, para. 2 and the First Report to the Court, Feb. 19, 2026, paras. 1–2. Nineteen months later the building has been sold and the bank has received an interim distribution, and the receiver's third interim report is about the claims that remain and the creditors who have declined to pay for pursuing them.

The receiver as landlord

The property was not insured when the receiver took it over; the receiver placed coverage and pays the premiums from estate funds. About $366,000 in property taxes was outstanding with interest and penalties accruing, and a further $149,000 fell due for 2025. The receiver paid approximately $351,000 from the rent it collected, and the bank paid approximately $176,000 directly to the City, which brought the taxes current to the end of December 2025, per the First Report to the Court, Feb. 19, 2026, paras. 10, 12. The outdoor elevator stalled during a monthly inspection on February 28, 2025. After heavy rain that July its pit began accumulating water, and the contractor found that the sump pump at the bottom of the pit had never been connected to a power source when it was installed; the elevator was cleared to operate again on November 20, 2025, after approximately $75,000 in trades and repairs. Fire alarm deficiencies found in May 2025 were corrected by late August, and the City issued a certificate of compliance that September, per the First Report to the Court, Feb. 19, 2026, paras. 19–21.

When the bank applied for the receivership, the receiver notes, it had expressed concern about "the potential misappropriation of rent payments that had been collected in the year leading up to the court date." The receiver reviewed the rent history and determined that between February 2024 and January 2025, rent payments totalling approximately $796,000 were paid directly to the company's director, per the First Report to the Court, Feb. 19, 2026, paras. 14–15. It also understands that the tenant paid a $200,000 security deposit under the lease to a law firm, which a representative of the tenant told the receiver was to remain in trust for the duration of the lease; on the accounting the receiver was given, "it appears that the Deposit was disbursed at the direction of" the director within approximately one month of being paid, per the First Report to the Court, Feb. 19, 2026, para. 16. The receiver sent demands for the return of both sums on February 25, 2025 and, by February 2026, had received no response. Its own calculation of the rent payable under the lease, it added, did not align with what the tenant had historically remitted or was remitting, per the First Report to the Court, Feb. 19, 2026, paras. 13, 15, 17–18.

Two listings

The first 60-day listing, posted March 20, 2025, produced eight non-disclosure agreements and two offers. The first was rejected for a very low price, and the second bidder, an individual, withdrew after the receiver countered. Shortly afterward the receiver was contacted anonymously with allegations that the financial terms of both offers had been disclosed to other bidders. The receiver says it does not know the source, but "The accuracy and detail provided to the Receiver, in respect of the alleged leakage of confidential information, indicated the allegation was accurate," and it was told another party expected to bid marginally above the existing floor. It concluded that the sale process to that point was "potentially unreliable," ended the listing on June 25, 2025, and called for best and final offers by July 28; none was acceptable, per the First Report to the Court, Feb. 19, 2026, paras. 23–29(j).

On August 8, 2025, the individual bidder, who had meanwhile made two further offers the receiver did not accept, told the receiver of a different structure: the bidder had arranged to acquire a portion of the tenant's company, and one of the terms was that the bidder would buy the building. The lease required the landlord's written consent to that kind of transfer, and the receiver, which regarded the lease as "a core aspect of the value for the Property," said it would consider the share deal only if the same buyer bought the building, per the First Report to the Court, Feb. 19, 2026, para. 29(g)–(q). According to a September 15, 2025 letter from the receiver's counsel, the bidder had alleged that the receiver was not acting in good faith and was "intentionally sabotaging" the tenant. Counsel called the assertions "unfounded, untrue," pointed out that the share purchase agreements themselves made acquiring the building a condition of acquiring the shares, and said the agreements carried risks the receiver would not place on its only tenant in the middle of a sale process, among them "a purported million dollar penalty" for breach of covenant and an outside date in December 2026, per the First Report to the Court, Feb. 19, 2026, App. 3, pp. 1–3. The same day, the bidder acknowledged that the receiver should re-list, per the First Report to the Court, Feb. 19, 2026, para. 29(t)–(u).