Developer Sam Mizrahi given creditor protection for luxury Wellington St. West condo

Article content

A judge has granted creditor protection to Mizrahi Development Group, the company behind a “landmark” condo tower in Wellington West, as the developer struggles to complete its luxury 1451 Wellington St. W high rise.

Superior Court Justice Stanley J. Kershman granted the order under the Companies’ Creditors Arrangement Act on Oct. 15. The order doesn’t mean bankruptcy or receivership, but buys time for developer Sam Mizrahi and his company, WellingtonCo, to get the project at the corner of Island Park Drive and Wellington Street West back on track.

Article content

The court granted Mizrahi Development Group a 10-day reprieve from its creditors — a stay that Mizrahi is expected to ask to be extended — and frees up cash to continue work on the project. The court appointed MNP Ltd., a licensed insolvency trustee, as overseer of the company’s finances.

In an email to this newspaper, Mizrahi said the court protection “ensures the company has the resources and time to achieve its original vision for the project with utmost precision and quality.”

Mizrahi said he hopes the building will be completed in May 2025.

“Mizrahi Development Group is committed to ensuring all its projects and developments consistently exceed customer expectations without compromising standards and quality,” Mizrahi said in the emailed statement. “We don’t compromise on our values, and we will always stay true to this vision.”

In its submissions, the monitor, MNP Ltd., said the creditor protection offers “the most viable path” to complete the project, “which is a substantial asset with significant potential value.”

“Its completion is paramount to realizing this value, which will benefit all stakeholders involved.”

Article content

Article content

The 1451 Wellington condo is a 12-storey high rise with 93 high-end individual suites, more than 5,200 square feet of street-level retail space and a 130-spot underground parking garage. Seventy-two of the suites have already been sold, according to the court documents.

Construction is more than a year behind schedule. Many of its windows are covered with plywood or tarp and wooden railings are still in place on the upper floor balconies. The court documents say the building was 85 per cent complete as of October.

“Despite making significant progress, the Project has suffered certain setbacks, including cost overruns and extended construction delays,” according to a factum filed by Mizrahi’s lawyers. The company finds itself in “a liquidity crisis” and without additional funds “is not able to meet its obligations as they become due,” it says.

The court documents include a list of creditors that includes 30 business and individuals owed more than $103 million. The amounts range from $81 million owed TTC Mortgage Holdings and $13.3 million owed V2 Investments Holdings, to two individuals who are owed $1 each.

Article content

Among those owed money are Alfredo Giannuzzi, Mario Giannuzzi and Eugenio Milito, who sold their Bella Bistro restaurant property in return for some 2,000 square feet of commercial space in 1451 Wellington. The three men are owed $2,995,000, according to the court documents.

Another 30 trades and subcontractors are owed money by Mizrahi Inc., the subcontractor on the project, but are not part of the court order for Mizrahi Development Group.

The project, also known as The Residences at Island Park, has been in the works for more than a decade. Mizrahi was forced to go to the Ontario Municipal Board, as it was then known, to get permission to exceed the maximum nine-storey height allowed in zoning bylaws at the time.

Mizrahi won that approval by agreeing to top the building with a tapered bronze and copper roof that he said reflected the iconic architecture of Ottawa’s Parliamentary Precinct and that the OMB agreed added an “element of wow” to the project.

Units at 1451 Wellington are still for sale on Ottawa’s MLS listings, ranging from $709,000 for a unit with “578 square feet of open concept living with luxurious finishes” to $3.6 million for a 1,889 square foot two-bedroom that “offers one of the most desirable sunset and panoramic views in the building.”

Article content

The building was supposed to have been completed in November 2023.

The conflict and frustration surrounding the project is apparent in a series of text messages between Mizrahi and Henry Wolfond, president of V2 Investments. Mizrahi, “in his personal capacity” borrowed $12.9 million from V2 investments in October 2019. The court documents include more than 40 pages of text messages between the two men.

“You’ve made promises to pay for over two years and then don’t,” Wolfond says in a text message on April 17, 2024. “You’re living a billionaire lifestyle on my money. Friends honour their promises.”

On May 1, Wolfond texted: “You owe me $13M and continue to fly private and live like a king on my largess. Some friend.”

Mizrahi responded with a denial that he flies private and said he considers Wolfond “one of my closest friends and allies.”

“I’m sorry you feel I hurt you. That was never my intention,” Mizrahi texted. “I did not string you along and I made good on our agreements throughout the years and cured with you any issues throughout the time line that presented itself…. All I have tried to do during this time period is to keep everything together from collapse and to get to the finish line in Ottawa to deliver on all my commitments. Most would have failed years ago if they were in my shoes and had to deal with the enemies I had to deal with. I have not and have fought my way with your support to get through.”

The 1451 Wellington project is the latest setback for Mizrahi, whose 85-storey Toronto skyscraper at the corner of Yonge and Bloor streets, The One, went into receivership in 2023. This year, Mizrahi was forced out of the still incomplete project by his lenders. At the time of its receivership, The One was more than $1.6 billion in debt.

Article content