News   May 13, 2022
 4.2K     7 
News   May 13, 2022
 6.3K     4 
News   May 13, 2022
 628     0 

Stinson files for bankruptcy protection

B

blixa442

Guest
Harry Stinson in $11.8M feud with David Mirvish over 1 King West

Mar 09, 2007 04:30 AM
tony wong
business reporter

Flamboyant Toronto condominium developer Harry Stinson has filed for bankruptcy protection in a high-profile dust-up with his business partner, prominent theatre producer David Mirvish.

The battle pits two of the city's most enigmatic personalities against each over the historic 1 King West condominium and hotel development, while threatening the move of one of Canada's oldest and most prestigious Bay St. clubs.

Stinson, a veteran developer and one of the pioneers of the condo-hotel boom in the city, has filed under the Companies' Creditors Arrangement Act at the Superior Court of Justice for two of his companies that are involved in that project, in a case adjourned to later this month.

The move is not considered bankruptcy, but allows troubled corporations to restructure their financial affairs. CCAA presents an opportunity for companies to restructure under a formal plan of arrangement overseen by a federal court and allows creditors to receive some form of payment.

Considered an innovator by many in the industry, Stinson is well known from his late night television ads touting his projects, while Mirvish is Toronto's biggest theatre impresario whose family operates the Royal Alexandra and Princess of Wales theatres.

"It has been humiliating to have to do this. But I would very much like to see a resolution. We don't want the operations of the project jeopardized by a business squabble that should have been fixed," said Stinson in an interview, sitting in the former Dominion Bank vault in the heart of the city's financial district.

David Mirvish was in New York yesterday, but in a statement to the Star, he said:

"This matter took us completely by surprise. As by far the biggest creditor of this group of debtors we were surprised and disappointed not to have been consulted and we stated that position to the Court."

According to documents obtained by the Star, Stinson's two companies, Stinson Hospitality Inc., and Dominion Club of Canada Corp., owe more than $20 million. The main secured creditor is Ed Mirvish Enterprises Inc. for $11.8 million. Unsecured creditors include debenture holders for $5.25 million.

What is perhaps more remarkable, is the fight perhaps wasn't more public. Both men have put on a chummy public face in the past. But that has apparently come to an end. Stinson says he hasn't had a lengthy sit down meeting with Mirvish to discuss the problems at the project "in years."

While Stinson was the visionary behind 1 King West, which includes the refurbishment of the historic Dominion Bank building with an elegantly slim 51-storey hotel and condo tower behind, Mirvish was the money backing it.

The units in the complex are typically owned by individual investors who have the option of pooling their units into the hotel operation if they don't happen to live there.

The hotel was open for business in 2005, and 540 units have been sold, with 32 units still owned by the Mirvish Group. Three of the units are penthouses, with an asking price of about $6.5 million each.

Stinson Hospitality Inc. owns public areas of 1 King West, such as the front desk, the valet service, the elevator and other operational components. Stinson's Dominion Club of Canada Corp. owns the second floor former grand hall of the bank, and the bank vault area downstairs. Together, the two companies comprise about 42,000 square feet of space in the project.

The financial deal between Stinson and Mirvish meant Stinson would get compensated through hotel and leasing operations, while Mirvish would receive the proceeds of condo sales, said the affidavit.

"The condominium unit purchasers expected to receive a deluxe condo/hotel property, and I ... expected to receive a turnkey facility," said Stinson in his filing.

In an interview, Stinson argues that the valuation of the amount owed to Mirvish should be closer to $2 million or $3 million, since he claims Mirvish did not finish the project to acceptable standards. He said he applied for CCAA reluctantly, and only as a last resort. The action was triggered because Mirvish had demanded the $11.8 million, which was overdue, said Stinson.

"We really think this should be fairly looked at," said Stinson. "I really didn't want to do this. But what we need is someone to take the both of us by the scruff of our necks to sit down and talk this out objectively."

Meanwhile, the fallout has kneecapped one of the country's most historic clubs.

The Ontario Club, founded in 1909, with many of the country's movers and shakers as members, may have to look for a new home – again.

It currently occupies a full floor in the Commerce Court office complex in the financial district, but was supposed to move to 1 King W. on March 1. The move had been jeopardized, says Stinson in his affidavit because "representatives of the Mirvish interest have steadfastly interfered and threatened the Ontario Club's representatives with legal action."

Robert Clark, chair of the Ontario Club, said in an interview that the club reluctantly called off the move as of yesterday.

"There were a number of complexities that we were completely not aware of before we got involved and we'd like to see that cleared up," said Clark.

As a result, the club will be homeless as its lease expires at the end of March, although a number of other private clubs have offered their facilities in the meantime for the club's 1,200 members, Clark said.

A fixture on the Toronto development scene, Stinson has long been ahead of the curve – perhaps too far for some of his backers – in real estate development.

He was the first to market lofts on a big scale in Toronto with the Candy Factory when it wasn't fashionable to do so, and he was one of the first in the city to jump on mixed-use condominium and hotel developments.

Mirvish, who has been known to have a major interest in art and architecture, and was responsible for making Toronto one of the top spots in North America for live theatre, also happens to be the son of Toronto icon Ed Mirvish, of Honest Ed's fame.

Meanwhile, Mirvish may also have another issue on his hands in the future, with a lawsuit being threatened by the condominium's board of directors, on which Stinson was recently elected as a director.

The condominium corporation is arguing that 1 King West did not finish the building to acceptable standards and it may cost up to $20 million to fix the problems.

"We are dying the death of a thousand cuts. It's an amazing building, but there are a heck of a lot of little things that need to be done," said Bob Verdun, chair of the board, and a well-known shareholder rights activist.

Brian Smith, the vice-president of the condo board, and a former associate press secretary for Pierre Trudeau, said the building needs serious work including better insulation and windows, which could cost millions.

"I think there is a reasonable expectation that, when you purchase a condo for $500 a square foot, you don't find the wind blaring through your windows," Smith said.

Despite the problems, ironically the hotel side of the business is actually doing well, said Stinson.

During this week's mining convention for example, the hotel was full, and it has maintained a healthy occupancy rate over the last year.

The squabble also does not affect his Sapphire Tower development on Temperance St. that started selling last month, Stinson said.

Stinson's lawyer Arthur Jacques stresses that his client isn't bankrupt, but simply wants to make the project work.

"It's about restructuring the company. Unfortunately what you have are two men who are visionaries who came together and couldn't come to terms in the end."
 
S

spmarshall

Guest
I wonder what advice he will give with Trump et al. at the Learning Annex get rich "seminar".

Related article from the Star:

Ontario Club's deal collapses

Mar 09, 2007 04:30 AM
Tony Wong
business reporter

The Ontario Club, one of Canada's most prestigious and historic institutions and a favourite meeting spot for diplomats and Bay Street executives, is without a new home.

The club had a deal to move into the former Dominion Bank building at 1 King West on March 1, but that deal fell through yesterday, leaving club members without facilities after March, club chair Robert Clark said in an interview with the Toronto Star.

"We're in a state of flux right now because our landlord wants us out at the end of the month," Clark said. "We are trying to make alternative arrangements."

The club, founded in 1909, currently occupies the entire fifth floor of Commerce Court South in the heart of Toronto's business district.

Clark said he backed out of a lease with Harry Stinson's Dominion Club of Canada Corp., because of "a number of complexities that we were completely not aware of," regarding the site.

Stinson said yesterday that he has filed for protection under the Companies' Creditors Arrangement Act for two of his companies in that project.

The high-profile condo developer is at odds with his business partner, theatre producer David Mirvish, who wants Stinson to pay $11.8 million owed on the project. Stinson is arguing, among other things, that his assets are devalued because Mirvish did not build the premises to an acceptable standard.

In an affidavit before the Superior Court of Justice, Stinson says the move was jeopardized by "representatives of the Mirvish interest" who have "steadfastly interfered and threatened the Ontario Club's representatives" with legal action.

The high-profile squabble has left the Ontario Club out in the cold. Clark said two other downtown clubs have offered his members the use of their facilities while they try to find new quarters.

"All these complexities have to be worked out so we don't have this kind of uncertainty for our members," Clark said.

"The Ontario Club already had art hanging on the walls that they had to pull off," Stinson said in an interview. "This has been incredibly disruptive for everyone."

Leather bucket chairs belonging to the club could still be seen in the former bank vault at 1 King St. W. yesterday. Clark said the bulk of the club's furniture would be placed in storage until it can find a new home.

The club also has a significant collection of Canadian art that will have to be stored.

In 1968, the club sold its premises to the Canadian Imperial Bank of Commerce, so Commerce Court could be built on the site.

A favourite with Liberal politicians, including many senators and cabinet ministers going back to pre-World War II, the ribbon-cutting ceremony at its first permanent home on Wellington St. was attended by Sir Wilfrid Laurier, Canada's sixth prime minister.

The club still plays host to the local diplomatic community, including the American Club, which uses its facilities. It also houses the Engineer's Club and the Toronto Press Club.

Now the club will have to find a new place after March when new tenants move in, Clark said.

"We are going to have to determine where we go from here. If one door closes, then a window sometimes opens someplace else," Clark said.

"This has just been an unfortunate event."
 
A

AndrewJM3D

Guest
I wonder what advice he will give with Trump et al. at the Learning Annex get rich "seminar".

Heh I've been thinking the same thing.
 
C

Canuck 36

Guest
Didn't Trump file for bankrupcy for some of his businesses as well?
 
O

Observer Walt

Guest
His name has been absent from the advertising for the Learning Annex seminar, for the past three or four days. Richard Branson has been added to the program, and I'm assuming Stinson has been dropped.
 
A

alklay

Guest
All the fawning by some (a few) on this board over this guy (a 'genius') was a bit hard to take. And the press didn't help. Heck, even in bankruptcy, they have dubbed him the 'condo king.' Why in heck does he deserve that title (in relation to so many other developers who actually make money selling so many more condos)?

In addition, there were many, many, many signs that he was headed toward financial hardship (ruin?).
 
A

andomano52

Guest
So does this kill the sapphire tower then? we could really use this tower to give our downtown a renewed look
 
A

andreapalladio

Guest
It ranks right up there with "sun rises in the east" as unsurprising news.
 
B

beaconer

Guest
-On top of that, 1KW hotel workers want to unionize..

www.cnw.ca/fr/releases/ar...c8675.html


Rally Demands Harry Stinson Respect Hotel Workers' Rights
Support rally outside 1 King West for workers voting to unionize on
International Women's Day

TORONTO, March 8 /CNW/ -

WHAT: Hundreds of Toronto area hotel Workers rally outside Toronto's
well-known 1 King West hotel/condo to demand condo-developer Harry Stinson
respect the rights of the hotel workers, mostly women, to form a union.

WHO: UNITE HERE Local 75 members joined by community allies

WHERE: 1 King West

WHEN: est. 6:15 pm to 7 pm

BACKGROUND: Workers at the Toronto hotel/condo development, 1 King West,
cast their ballots in an Ontario Labour Relations Board vote today to be
represented by UNITE HERE, Toronto's hotel workers' union.
Hotel Workers from across Toronto, will leave their International Women's
Day Rally at Toronto City Hall, to march to the hotel and demand well-known
Toronto condo-developer, Harry Stinson, respect the rights of 1 King West's
workers to decide for themselves to be represented by a union.
The rally and march is part of the ongoing Hotel Workers' Rising Campaign
to highlight the needs of vulnerable service workers, especially women and
immigrants, across North America.
 
B

Bogtrotter

Guest
All the fawning by some (a few) on this board over this guy (a 'genius') was a bit hard to take."

I don't recall anyone calling him a genius. But even so, at the end of today, Stinson was successful in building the tallest and most striking residential tower in Canada.
 
E

elook

Guest
Successful? Condo board pres. Bob Verdun suggests as much as $20 million might be needed to complete the building to proper standards. 36 units including three penthouses remain unsold. Harry owes $11.8 million to David Mirvish, plus more to other creditors. The Dominion Club was a dismal failure, and the space is now empty once again after a failed attempt to lease it to the Ontario Club. I've read the parking system has substantial problems as well. Tax assessment problems are going to be an ongoing problem going forward.

The front of the building still has exposed concrete pillars where the failed restaurant (or supposed Starbucks) was supposed to be. Parts of the roof fell off the building requiring scaffolding to be setup while repairs are being made.

Tallest I'll give you (for now) but most striking is certainly up for debate. Vancouver's Wall Centre is more striking IMO, and Harry's tower was finished off on the cheap inside and out (and that's according to Stinson himself).

Just one more in a string of failures for the Harry. There is absolutely no way Sapphire is getting off the ground - no one in their right mind would invest a penny given the example set by Stinson in 1 King.

Sad? Yes. Surprised it took this long? Yes.
 
G

ganjavih

Guest
But even so, at the end of today, Stinson was successful in building the tallest and most striking residential tower in Canada.

And most disappointing considering its potential.

The news is not surprising, of course. Harry probably bit off more than he could chew. I'm no fan of his but I hope he can get it back together.
 
A

alklay

Guest
I feel for the present owners of the condos. With continuing problems and expenses it would be difficult, if not impossible, to sell a unit.

In addition, any needed repairs and completions will add heavily to the common expenses (which already are probably high).

I am not sure what value one received for $500 a square foot.
 

Top