Coquitlam's Hoy Creek Housing Co-operative has been in
financial difficulty for years. Consisting of 97 apartments and 60
abandoned townhouses, the corporation owes the Canadian Mortgage
and Housing Corporation (CMHC) over $4.2 million, including
mortgage arrears of $300,000.
By August 2016, Hoy Creek had failed to pay in response to a
CMHC demand for repayment of the arrears. After fire broke out on
August 3, 2016 in one of the property's townhouses, CMHC jumped
into action and successfully petitioning Hoy Creek into interim
Urgency over the "most horrendous housing" in
Over the last two years, Hoy Creek had been planning to
subdivide its 157-unit property and sell the townhouse portion to a
developer. The aim was to free up some of the land's estimated
$20 million in value in order to pay off its total debt to CMHC and
make repairs to the still-inhabited apartment buildings.
But one day after the townhouse fires, Mayor Richard Stewart
emailed Hoy Creek, describing the co-op as the "most
horrendous housing" in Coquitlam, and expressing the
likelihood that the City could pass a resolution to demolish the
townhouses and place a charge on the property's title to cover
the associated costs.
That's when CMHC - alarmed that the charge to the
property's title would result in a loss of priority for its
mortgage security - acted to petition Hoy Creek into interim
receivership. Hoy Creek objected, taking the position that the
costs and delays associated with the action would effectively
impede its plans to sell the townhouse property and repay the $4.2
million dollar debt to CMHC.
In a bid to stave off the receivership, Hoy Creek offered to
immediately engage the services of a security company to keep watch
over the dilapidated townhouses. But for the judge, it was a case
of 'too little, too late'. Given the urgency of the
situation regarding the dilapidated townhouses, the judge granted
interim receivership and stated that the issue of full receivership
may need revisiting if Hoy Creek's efforts fail to prove timely
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The Canadian bankruptcy regime was designed with two key purposes in mind – provide options to ‘honest but unfortunate' debtors struggling with an unmanageable financial load and create an orderly means for creditors to recover amounts owed them.
The Court of Queen's Bench of Alberta authorized a disposition of a debtor's assets by a receiver immediately upon appointment and without being forced to conduct a marketing process within the receivership proceedings.
The Canadian government has recently changed how it defines
eligible financial contracts. For the derivatives industry, the
new definition appears to give deference to the
over-the-counter commodities market in determining what is an
eligible financial contract.
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