Ottawa’s Ashcroft Homes has received court-ordered protection from its creditors, as it owes banks and other lenders $284.5 million.
Ontario Superior Court Justice Graham Mew approved creditor protection for Ashcroft Homes and its related properties under the Companies’ Creditors Arrangement Act on Dec. 5, and appointed Grant Thornton Limited to monitor the assets, business and affairs of the company.
Ashcroft Homes was founded by David Choo in 1992 and has built homes and developments across the city. Ashcroft employs more than 500 people.
“Despite a history of generating significant revenues, and also significant net equity holdings, in recent years various members of the Ashcroft Homes Group have encountered liquidity issues related to rising interest rates and a decline in occupancy rates,” says documents filed with the Ontario Superior Court of Justice.
“While both of these challenges are being addressed – in the guise of declining interest rates and the development and implementation of various marketing programs to increase occupancy rates – it has left the Applicants in a position of insufficient liquidity to meet their current debt obligations.”
Ashcroft Homes has engaged with Hawco Peters and Associates to “assist in the sourcing and securing of additional capital for refinancing and restructuring efforts,” the documents state.
The court documents say Ashcroft Homes began working with its lenders in early 2023 to “address the developing liquidity shortfalls.”
“While many of the discussions have been successful, others have not,” the documents state, adding pressure from “existing lenders for more are also stressing the projects.”
In a sworn affidavit filed with the court, Choo said, “In recent months, however, we have received increasing numbers of demands from our lenders that make private, individual arrangements increasingly difficult to achieve.”
Ashcroft Homes has $284.5 million in secured debt, including $45 million on Ravines Senior, $39 million on Ravines Retirement and $57 million on Envie 1 and $24 million on Envie II, a student housing community in Little Italy. The value of Ashcroft Homes’ real estate property is $460 million.
The developer says the court order will allow it to continue to operate the business, adding it is in “good position to attract refinancing given the significant equity in each property.”
“I firmly believe that the root causes of the current liquidity shortfalls can be addressed in the longer term: occupancy declines are being addressed now and going forward through enhanced marketing and sales initiatives; the problem of higher interest rates on current loans is being addressed by refinancing efforts undertaken now, in a period of lower interest rates,” Choo says in the documents.
The company is scheduled to return to court on Thursday, Dec. 12.
Choo says in the documents that three other Ashcroft Homes Group’s projects are in some stages of receivership proceedings, including Ravines Retirement.
CTV News Ottawa has reached out to Ashcroft Homes for comment.