Versante Hotel: six-month money, and the loan that carried it into receivership

The loan agreement describes the collateral the way a brochure would: a full-service, 14-storey hotel of approximately 94,415 square feet, 100 guest rooms, a roof-top patio lounge and swimming pool, and, on the ground floor of the complex's north tower, a 3,164-square-foot whisky bar called Cask, with a tasting room and private whisky lockers, all to form part of a private membership club known as Club Versante. It is dated for reference June 14, 2021, the same day it expected the hotel's occupancy permit, and the completed hotel, it says, "will be known as Opus Hotel Versante," operated by Hotel Versante Ltd. through Trilogy Hotel Management (Richmond) Ltd., an Opus Hotels Corporation affiliate, per Affidavit #1 of W. Wang, Jan. 22, 2024, Ex. A (Senior B Loan Agreement), ss. 5.1(d)–(e), (h), (j)–(k).

The money did not build any of it. The Senior B Loan Agreement advanced $35,849,266.69 in four tranches, and every stated use of proceeds retired debt the borrowers already carried or paid the lenders: Romspen Investment Corporation's construction loan, a bridge facility owed to Fox Island Development Ltd., $3,000,000 off a third mortgage, the lender's own processing fee of $1,668,677.07 — and, in each tranche, an interest reserve the lenders deducted from the advance itself. The new senior lender was the old junior one: Fox Island's earlier bridge had run to as much as $23,600,000, per Affidavit #1 of W. Wang, Jan. 22, 2024, Ex. A, recitals A–B, ss. 1(aa), 2.1–2.2, 2.8.

Three of the four tranches matured on December 28, 2021, and the fourth on March 21, 2022. Interest ran at 15% a year and then stepped to 30% — on December 15, 2021 for three tranches, on March 8, 2022 for the fourth — "in all cases, calculated daily and compounded monthly, not in advance … both before and after default, demand, maturity and judgment," per Affidavit #1 of W. Wang, Jan. 22, 2024, Ex. A, ss. 2.3–2.4.

The security reached a long way past Richmond. The same agreement charged the Union Bay lands on Vancouver Island — some 789 acres projected to hold roughly 3,000 residential units, two hotels, a college and a marina — along with a spa property on Lansdowne Road in Richmond held by Mo Yeung Properties Ltd. and a residential penthouse at River Park Place owned personally by Mo Yeung Ching, also known as Michael Ching. Ching was the sole shareholder of four of the borrower and guarantor companies, International Trade Center Properties Ltd. ("ITCP") and Hotel Versante Ltd. among them, and the sole limited partner of the Union Bay owner, whose general partner belonged to his daughter, Linda Ching, per Affidavit #1 of W. Wang, Jan. 22, 2024, Ex. A, ss. 3.5, 5.2(c), 5.6, 5.8.

Ching's own account of the loan does not match the agreement's. "The purpose of the Senior B Loan Agreement was to finance the development and construction of the Hotel Versante hotel in Richmond, British Columbia," he affirmed fourteen months into the enforcement proceedings, describing himself as a developer who immigrated to Canada in 2000, per Affidavit #1 of M. Ching, Apr. 10, 2025, paras. 2, 5. What his affidavit does not address — and what no filed instrument in this record addresses — is why the payments stopped.

One payment

Wen Yong Wang, the director of Fox Island with "primary responsibility for the administration of the loans," affirmed the lenders' first affidavit on January 22, 2024, in Mandarin, through an interpreter who was also the petitioners' solicitor at Norton Rose Fulbright Canada LLP. It runs 357 pages, four of them sworn text and the rest the loan file, exhibit by exhibit. The narrative sits in one paragraph above the jurat: "the only repayment the petitioners have received from the Loan B Borrowers is $6,481,759.26, which was paid on or about March 29, 2023 in respect of the Loan B Forbearance Agreement." One payment, fifteen months after the first tranches matured, under a forbearance agreement already extended twice. Demand letters and notices of intention to enforce security went to the borrowers and the guarantors on December 7, 2023, per Affidavit #1 of W. Wang, Jan. 22, 2024, paras. 14–18.

The petition was filed on January 24, 2024 in the Supreme Court of British Columbia at Vancouver, No. S-240493. It seeks a declaration that $75,867,149.52 was due under the Loan B security as of December 31, 2023, and pleads, as of that same date, that the total owing under the loan agreement, the security and the forbearance agreements "was $78,867,149.52, plus interest at the rate of 30% per annum, compounded monthly" — two totals for one date, three million dollars apart, per Petition to the Court, Jan. 24, 2024, paras. 9, 21.

An order nisi of foreclosure followed on February 29, 2024, and for thirteen months the file stayed a foreclosure. Fox Island signed a six-month exclusive listing with Avison Young Commercial Real Estate Services, LP on March 13, 2024, later extended to November 3; the process produced one bid, in September 2024, terminated that November when the offeror could not secure financing. In January 2025 Hotel Versante terminated Trilogy's management agreement and the hotel's general manager, Sanjeet Sadana, resigned; Ching took over as acting general manager himself, per Receiver's First Report, Mar. 31, 2025, paras. 3, 25–26, 31–32.

The appointment

On February 25, 2025 Wang affirmed a second affidavit, and on March 4 Madam Justice Fitzpatrick appointed Deloitte Restructuring Inc. receiver and manager, without security, under s. 243(1) of the BIA and s. 39 of the Law and Equity Act. The appointment covered the "Hotel Property" rather than the respondent group at large — the air space parcel holding the hotel, the remainder parcel beneath it, and the assets of the Versante Hotel business at 8499 Bridgeport Road — and carried the standard machinery: power to manage and carry on the business; a stay of proceedings and remedies against the debtors and the property, with no expiry date; a first-ranking Receiver's Charge; and borrowings capped at $200,000, per Order Made After Application (Receivership Order), Mar. 4, 2025, paras. 1, 2(c), 8–10, 20, 23.

On March 24, twenty days in, Ching advised the receiver he would no longer serve as acting general manager. The hotel he stepped away from had 41 full-time and nine part-time employees, all retained by Deloitte; books the receiver found "well organized and up to date"; and, on the receiver's reading, breakeven performance in March, per Receiver's First Report, Mar. 31, 2025, paras. 22, 24, 26, 70.

Title to the hotel lands never moved from ITCP. The receiver's first report disclosed that on or about September 29, 2021 — the day the lenders' mortgage was registered against the land — ITCP had sold the beneficial interest in the hotel, its buildings, its personal property and the hotel lease to RCC Holdings Ltd. ("RCC") for $73 million, payable by a demand promissory note, and that "it remains unclear whether demand has been made by ITCP for payment of the Purchase Price." The receiver also found a 12-year monitoring agreement letting 1036524 B.C. Ltd., owner of the "Versante Hotel" trademark, approve any change to the hotel's name, its senior officers' compensation or its material contracts — an arrangement whose consideration and purpose the receiver said were unclear, per Receiver's First Report, Mar. 31, 2025, paras. 37(b), 52–55.

The liabilities at appointment ran to GST arrears of approximately $404,313; unpaid property taxes of $119,443 for 2023 and $209,693 for 2024, inclusive of accrued interest; a $4.8-million second mortgage in favour of Heung Kei Sung; and the lenders' debt, approximately $80.0 million as of February 29, 2024. The 2025 BC Assessment valued the hotel land and buildings at $26.2 million, per Receiver's First Report, Mar. 31, 2025, paras. 4, 62–64, 75.