Square Nine King George: the Belvedere's proceeds are cleared for its first mortgagees

On May 31, 2025, with its Surrey tower substantially complete since February, Square Nine King George Development Ltd. held a one-day, on-location "flash sale" at the Belvedere, offering 25% off listed prices. Manish Sharma, a director of both petitioners, counts 38 units sold, for sales proceeds of approximately $18,500,000, per the Affidavit #1 of Manish Sharma, Nov. 10, 2025, paras. 1–2, 23(a). Mr. Sharma attributes the companies' difficulties to a softening condominium market, in which the purchasers of 15 pre-sold units, with anticipated proceeds of approximately $11,000,000, failed to close, per the Affidavit #1 of Manish Sharma, Nov. 10, 2025, para. 13. The Belvedere has 275 units and stands in Surrey's Whalley neighbourhood, per the Reasons for Judgment, Dec. 4, 2025, para. 2.

The flash sale, which the court's reasons call Condo Day, became part of the first mortgagee's case against the company. Cameron Stephens Mortgage Capital Ltd. (CSMC) had advanced a $33.5 million first mortgage bridge and inventory demand loan, guaranteed by Square Nine Developments Inc. and Mr. Sharma, and was owed more than $18.6 million at August 18, 2025, with interest accruing at approximately $116,000 a month. CSMC alleged that Square Nine had failed to disclose third-party loans when CSMC advanced the loan, and had not disclosed Condo Day, at which, it said, Square Nine agreed to sell 26 units below the minimum purchase price the loan documents prescribed. It petitioned for a receiver; Square Nine denied misconduct and applied under the CCAA, per the Reasons for Judgment, Dec. 4, 2025, paras. 1–4, 11, 14.

Justice P. Walker heard both applications on November 13, 2025 and chose the CCAA, with FTI Consulting Canada Inc. as monitor. In reasons issued December 4 (2025 BCSC 2404), he called CSMC's evidence of its lost faith in management "thin"; he could "only infer" that Square Nine did not tell CSMC about the third-party loans when it applied for the loan, but "it appears that there is no prejudice to CSMC as its security is not affected," per the Reasons for Judgment, Dec. 4, 2025, paras. 20–22. Among his reasons was the Real Estate Development Marketing Act: a receivership would bring the delay of a new disclosure statement and new rescission rights for purchasers, while interest continued to accumulate at $116,000 a month. He adjourned the receivership petition with liberty to bring it back, and told the parties he could not, at that time, see a stay beyond the end of January 2026, when the sale of the building's commercial units was scheduled to close, per the Reasons for Judgment, Dec. 4, 2025, paras. 16, 30, 39–40.

The lender becomes the DIP lender

The initial order let the petitioners borrow up to $150,000 of a $700,000 interim facility from Pillar Capital Corp., at 14% a year plus a 3% fee on each advance, per the Pre-Filing Report of the Proposed Monitor, Nov. 13, 2025, para. 23 and the Third Report of the Monitor, Dec. 8, 2025, para. 5. The amended and restated order of November 20 empowered FTI to exercise any powers a board of directors could properly exercise and to control the petitioners' receipts and disbursements, and extended the stay to Square Nine Developments Inc. and Mr. Sharma in their capacities as guarantors, per the Amended and Restated Initial Order, Nov. 20, 2025, paras. 16, 25.

CSMC then told the petitioners and the monitor that its support for an extension was predicated on, among other things, Pillar being repaid in full and replaced. On December 2 the court authorized a replacement facility of up to $1.0 million from CSMC itself, at the greater of 7.95% and prime plus 2.25%, per the Second Report of the Monitor, Dec. 1, 2025, paras. 12, 14 and the Second Amended and Restated Initial Order, Dec. 2, 2025, para. 42. At the November hearing CSMC had proposed those rates for $2 million of borrowing inside a receivership, per the Reasons for Judgment, Dec. 4, 2025, para. 33.

The monitor also had to find Pillar's first advance. A net $128,000 reached Square Nine King George's account at the Royal Bank of Canada on November 20; RBC placed a hold, which the monitor was first told arose from a Canada Revenue Agency garnishment, and removed the balance of $127,978.93 on or about November 24. On December 2 the CRA told the monitor it had issued no enhanced requirement to pay. RBC had paid the money into court under a garnishing order made in an action by C3 GP Ltd. against Square Nine King George and others, which, the monitor reported, related only to obligations owed to two numbered co-defendants; in its view the funds "were incorrectly garnished," per the Third Report of the Monitor, Dec. 8, 2025, paras. 5, 7, 9, 11–14, 18. On December 9 Justice Walker, in the C3 action, ordered them paid out to FTI in trust, per the Order (Returned DIP), Dec. 9, 2025, para. 1.

Five shops and a play area

The five commercial retail units drew no offers in about two months of listing with NAI Commercial in 2025. Square Nine found three on its own: $10.6 million in June, which failed when the buyer could not remove subjects; $8.5 million in October, rejected because the buyer intended to pay partly with amounts owing under the subordinate mortgages; and $8.4 million from 1559924 B.C. Ltd., under a contract of September 19, 2025 with a $300,000 credit for improvements. The monitor called that offer the highest and best and reported that CSMC supported the sale, per the Fourth Report of the Monitor, Jan. 9, 2026, paras. 13–15, 17–18.

The subordinate lenders opposed it. AMRN Holding Ltd. and 1137571 B.C. Ltd., holders of the second-, third- and fourth-ranking mortgages, were owed $4,327,683.04 at January 13, 2026 and argued that the price did not reflect fair market value. On January 14, the day before the hearing, they offered $10,000,000: $5,672,316.96 in cash and a credit of $4,327,683.04 against their debt. Their response recounts the monitor's earlier reply to their concerns, that any proposal had to be all cash because of priority creditors and "a significant GST claim that might potentially rank ahead of the Secured Creditors' mortgages," per the Application Response of AMRN Holding Ltd. and 1137571 B.C. Ltd., Jan. 14, 2026, Part 4, paras. 1–2, 4–5, 14, 18. On January 15 Justice Walker approved the $8.4 million sale, the order stating that the contract "is commercially reasonable," per the Approval and Vesting Order, Jan. 15, 2026, para. 2; no reasons for the approval are in the record read for this piece. The sale closed on January 22 and brought in approximately $7.6 million after closing adjustments. The CSMC facility was then repaid, the repayment including approximately $200,000 in professional fees CSMC had incurred on the facility and the proceedings generally, per the Sixth Report of the Monitor, Mar. 18, 2026, paras. 6, 14(b), 26.

The same hearing corrected the strata plan. Strata Lot 5, one of the five units, is leased to a daycare, and in January the strata corporation took the position that the outdoor kids play area in the lease was common property, which the owner and tenant could not use exclusively or alter, by building a playground or otherwise, without its approval. The registered plan did classify it that way. The Belvedere's disclosure statement said it would be limited common property for Strata Lot 5, and a covenant with the City of Surrey required a permanent childcare centre in the development; Mr. Sharma told the monitor the classification was an inadvertent error, per the Fifth Report of the Monitor, Jan. 12, 2026, paras. 6–10. Justice Walker declared the plan in error under s. 14.12 of the Strata Property Regulation and directed the registrar of land titles to correct it, per the Order (Strata Rectification), Jan. 15, 2026, paras. 2–4.