Receivership Ordered for Ashcroft Following Creditor Opposition to CCAA Proceedings

On February 24, 2025, the Ontario Superior Court of Justice appointed KSV Restructuring Inc. as receiver over the assets, undertakings and properties of each of Ashcroft Urban Developments Inc. (“Ashcroft”) and Ashcroft Homes - Capital Hall Inc. (“Capital Hall”).

Ashcroft and Capital Hall had defaulted on their respective obligations to CMLS Financial Ltd. (“CMLS”) and Equitable Bank (“EQ Bank”), their secured creditors, with aggregate secured debt exceeding $75 million. The court determined that the test for the appointment of a receiver was met.

Previously, on December 20, 2024, the Ontario Superior Court of Justice granted a motion to appoint an interim receiver for Ashcroft, Capital Hall and certain other affiliated entities (the “Ashcroft Group”). The proceedings, initiated under the Companies’ Creditors Arrangement Act (“CCAA”), were met with strong opposition from secured creditors representing more than 80% of the Ashcroft Group’s secured debt. The secured creditors instead supported a co-ordinated receivership as the most effective path forward.

The Ashcroft Group had obtained an initial order under the CCAA on December 5, 2024, without notice to its major secured creditors. At the comeback hearing seven days later, the secured creditors, having only just learned of the CCAA proceedings, sought the appointment of an interim receiver and the dismissal of the CCAA proceedings. The court agreed, granting the relief sought by the secured creditors.

The Ashcroft Group, a significant developer in Ottawa’s housing market, has faced ongoing liquidity challenges due to rising interest rates and declining occupancy levels. Attempts to restructure through forbearance agreements and asset sales proved insufficient, prompting creditors to pursue a receivership to safeguard their investments and expedite asset realization.

Aird & Berlis represented CMLS Financial Ltd. and Equitable Bank in this matter, with a team led by Robb English and including Sanjeev Mitra and Calvin Horsten (Financial Services).