Engagements

Hutchens et al

Background

Interim Receivership

On February 28, 2019 by Order (the “Interim Receiver Order”) of the Ontario Superior Court of Justice (Commercial List) (the “Court”), A. Farber & Partners Inc. (“Farber”) was appointed as interim receiver (the “Interim Receiver”), pursuant to section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, without security, of all of the assets, undertakings and properties of Sandy Hutchens, Tanya Hutchens and entities referred to in Schedule “A of the Interim Receiver Order (defined as the “Debtors”) including the real property attached in Schedule “B” acquired for, or used in relation to a business carried on by the Debtors, including all proceeds thereof (the “Property”).

Among other matters, the Interim Receiver’s powers were investigatory and monitoring in nature.

Receivership Status Updates

On March 18, 2019, Farber’s appointment as receiver (the “Receiver”) was confirmed to continue by Order of the Court (the “March 18 Order”).

The March 18 Order provided for, among other things, the authority and discretion to take possession of, and exercise control over, various real properties in the Greater Sudbury Area, Ontario and Innisfil, Ontario (the “Income Producing Property”).  Accordingly, all tenants of the Income Producing Property are required to forward all rents to the Receiver, or its duly authorized agent, from March 18, 2019 onward.

On June 7, 2019, the Court issued an Order (the “June 7 Order”) that provided for, among other things, the Receiver’s authority and discretion to take possession of, and exercise control over, various additional real properties located in the Greater Toronto Area and in Innisfil, Ontario (the “Additional Properties”).  Accordingly, all tenants of the Additional Properties are required to forward all rents to the Receiver, or its duly authorized agent, from June 7, 2019 onward.  Going forward, any references to the Income Producing Property shall include the Additional Properties.

Tenants may contact the Receiver at the coordinates listed below.

On July 5, 2019, the Court issued a Judgment (the “July 5 Judgment”) providing for, among other things, the declaration of certain judgments of the United States District Court for the Eastern District of Pennsylvania against Sandy Hutchens and Tanya Hutchens, jointly and severally in the amount of US$26,774,736.09 (the “US Judgments”), as recognized and enforceable in Ontario.

The July 5 Judgment also provided for, among other things, the continuation of the receivership administration and the stay of certain provisions of the July 5 Judgment until after certain appeals from the US Judgments have been decided by the United States Court of Appeals for the Third Circuit.

Income Producing Property Realization

On April 25, 2019, the Court issued an Order (the “April 25 Order”) providing for, among other things, the Receiver’s authorization to list and sell certain parcels of the Income Producing Property and an additional residential real property of the Debtors.

On June 7, 2019, the Court issued the June 7 Order which provided for, among other things: the approval and sale of the real property municipally known as 42 Clemow Avenue, Sudbury, Ontario (the “Clemow Property”); the vesting of the Clemow Property in the purchaser free and clear of all liens, encumbrances, etc.; and the approval of the proposed distribution of the proceeds from the sale of the Clemow Property.

On August 19, 2019, the Court issued an Order (the “Initial Innisfil Sales Approval Order”) which provided for, among other things:

  • the approval and sale of the real properties municipally known as 1889 Simcoe Boulevard, Innisfil, Ontario, 1779 Cross Street, Innisfil, Ontario and 1790 Cross Street, Innisfil, Ontario (collectively, the “Initial Innisfil Properties”), subject to the provisions of paragraph 10 of the Initial Innisfil Sales Approval Order, which outlines the authority and process for the Respondents’ to oppose the sale of any or all the Initial Innisfil Properties no later than August 27, 2019;
  • if the Respondents do not oppose the approval and sale of the Initial Innisfil Properties,
    • the vesting of the Initial Innisfil Properties in their respective purchasers free and clear of all liens, encumbrances, etc.; and
    • the approval of the proposed distribution of the proceeds from the sales of the Initial Innisfil Properties;
  • the requirement of Sandy Hutchens to vacate the real property municipally known as 1779 Cross Street, Innisfil, Ontario (the “1779 Cross Asset”) by no later than September 30, 2019, failing which the Receiver is authorized to issue a writ of possession in respect of the 1779 Cross Asset; and
  • the approval of the activities of the Receiver set out in its Fourth Report to Court.

On August 19, 2019, the Court issued a further Order (the “August 19 Order”) providing for, among other things: the Receiver’s authorization to list and sell the real properties municipally known as 1479 Maple Road, Innisfil, Ontario and 1573 Houston Avenue, Innisfil, Ontario (together, the “Secondary Innisfil Properties”); and the authorization for the Receiver to apply any proceeds of sale of the Secondary Innisfil Properties to acquire an assignment of the mortgages registered by Meridian Credit Union against title to other Income Producing Property and of the underlying debt obligations.

List of Real Properties Currently Subject to Court-Approved Sale Processes

Interested parties may contact the Receiver or its listing agent(s) to discuss particulars of the current real property sale offerings

On October 15, 2019 the Court issued an Order (the “October 15 Order”) providing for, among other things, that the sales transactions, of the properties municipally known as 1479 Maple Road, Innisfil, Ontario (the “1479 Maple Transaction”) and 1573 Houston Avenue, Innisfil, Ontario (the “1573 Houston Transaction”), the 1479 Maple Transaction and the 1573 Houston Transaction (collectively, the “Sales Transactions”) are hereby approved and the Receiver is authorized and directed to take an necessary additional steps for the completion of the Sales Transactions.

The October 15 Order also provided authorization and approval for the distribution of proceed from Sale Transactions as follows:

  1. from the proceeds of the Sales Transactions to the Town of Innisfil, in payment of outstanding property tax levies respectively;
  2. from the proceeds of any one or more of the Sales Transactions:
    • $200,000, plus accrued interest and fees, to Hillmount Capital Inc., in repayment of Receiver’s borrowing, authorized by Receivership Orders; and,
    •  $526,000, more or less to Meridian Credit Union Limited (“Meridian”) in exchange for Meridian’s assignment of its mortgage held against title to the real property municipally known as 33 Theodore Place, Thornhill (Vaughan), Ontario

The December 18, 2019 Endorsement of Justice Penny (“the December 18 Endorsement”) provided that the Receiver can continue to market and sell the Trust properties, however, are not to complete sale without consent of parties or Court Order.

The February 18, 2020 Endorsement of Justice Hainey (“the February 18 Endorsement”) adjourned the Motion to determine whether “legal advice and representation” in the July 5, 2019 judgment of Justice Penny includes legal advice and representation respecting the U.S. litigation. Adjournment date to be determined.

On a date to be determined, the Receiver will make a Motion seeking an Order, providing for, among other things:

  • approval of the sale of: 110-114 Pine Street; 367-369 Howey Street (set out in the Seventh Report) and 29 Laren, 3415 Errington and 3419 Errington (set out in the Eighth Report);
  • approval of the sealing the Confidential Appendices to the Seventh Report and the Eighth Report of the Receiver unless and until the Receiver files a certificate confirming that the Transactions have closed; and,
  • authorising the Receiver to distribute $200,000 more or less, from the proceeds of the Transactions, to the City of Greater Sudbury, in payment of outstanding municipal property taxes on the related properties.

Creditor or Tenant Inquiries

For creditor or tenant inquiries, please contact:

Noah Litwack
T: 416.496.3719
E: nlitwack@farbergroup.com

Paul Denton
T: 416.496.3773
E: pdenton@farbergroup.com

The case updates and court filed documents on this website are for information purposes only and you should consult your financial or legal adviser if you have any questions or concerns about your rights or obligations. Additional updates on the status of these proceedings may become available in the future.

Documents

Court Reports

Motion Materials

Application Materials

Court Orders & Endorsements

Service List