The Court of Appeal overturns the Supreme Court’s decision on a luxury condo project – .

The Court of Appeal overturns the Supreme Court’s decision on a luxury condo project – .

The much-vaunted Terrace House sold pre-sales in 2017 and completed 20% of construction when it cited cost overruns and a lack of capital and filed for insolvency protection.

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The British Columbia Court of Appeal overturned a decision regarding the developer to handle a luxury condominium project in downtown Vancouver that has been highly prized for its location in Coal Harbor, its award-winning architecture and its aspirations to be the tallest hybrid wood structure in the world.

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This means the project, which was embarked on a prime location on West Hastings between Bute and Jervis, is perhaps one more step towards a reboot, though there are still plenty of questions about additional funding.

Vancouver developer PortLiving sold pre-sales contracts for the 19-story Terrace House in 2017 and had completed construction of the parking lot when, in May 2020, its main lender halted its funding stream after cost overruns.

At the time, the project had spent about $ 8 million of the $ 16 million it had from pre-sale deposits made for 17 residential units and two business units, according to the Court of Appeal ruling. The project also owed $ 41 million to secured and unsecured creditors and its insurer.

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The British Columbia Supreme Court placed the project under judicial protection and initiated a process under the Companies’ Creditors Arrangement Act to find a new buyer or investor.

Artist’s rendering of the layout of Terrace House in Coal Harbor. Photo by document /PNG

Three companies made offers. Vancouver developers Landa Global Properties and Solterra Development Corp. submitted proposals to take over and sell the assets. A new company formed by PortLiving CEO Tobi Reyes offered to refinance and continue the project with new investors, including Domain Mortgage Company, which was willing to contribute $ 14.7 million.

In June 2021, the British Columbia Supreme Court ruled in favor of Solterra.

Judge Shelley Fitzpatrick said that while the proposal from Reyes’ new company, 1296371 BC Ltd., “made sense” from a business standpoint, “she criticized it for several reasons, including” crucially “, there was no suggestion … of a plan, arrangement or compromise, ”according to court documents.

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Citing a 2008 case, she said “the proposal did not meet the ‘suitability’ test.”

But this week, Court of Appeal Judge Mary Newbury, writing on behalf of a panel of five, said the lower court “erred in focusing its relevance analysis on the” single factor. “The absence of a contemplated compromise”, and that the primary objective of the Companies’ Creditors Arrangement Act is to avoid social and economic losses resulting from the winding-up of an insolvent company.

She gave less weight to the older case, noting that Reyes’ new company refinancing proposal had the backing of two secured creditors.

“The fact that the other creditors are ‘out of the money’ is just a reality that had to be accepted,” she wrote, noting that this would also be the case under the Landa and Solterra offers.

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The decision regarding Reyes’ new company also means that presale buyers will retain the right to purchase their units if construction is complete. A sale to Solterra would have meant that half of presale buyers would have lost their right to purchase units.

The move comes as the downtown luxury condo market rebounded from a sharp drop at the start of the pandemic.

Postmedia was unable to reach Reyes.

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