Developer Harry Stinson Puts Businesses in Bankruptcy (Update1)
By Joe Schneider
Sept. 20 (Bloomberg) -- Harry Stinson, the Toronto real- estate developer who was in competition with Donald Trump to build the city's highest residential building, placed four of his businesses in bankruptcy and, according to the receiver running the operations, violated a court order by doing so.
``It's going to create more chaos,'' Joseph Latham, lawyer for the receiver, Ira Smith Trustee & Receiver Inc., told Ontario Superior Judge Sarah Pepall at a hearing in Toronto today. He urged the judge to annul the bankruptcies.
Stinson operated The Suites at 1 King West, a luxury condominium-hotel, through his company Stinson Hospitality Inc., one of the four companies placed in bankruptcy yesterday. He had also proposed to build twin towers, the highest at 81 stories, surpassing a 70-story condominium Trump had planned a block away.
Trump's tower proposal has been scaled down to 57 stories, while Stinson's Sapphire Tower has been shelved, with Sapphire Tower Development Corp. having been placed in bankruptcy protection July 20.
At today's hearing, Latham also asked the judge to order Stinson to return financial statements and computer drives taken from 1 King West. He said Stinson removed two computers Aug. 24 and a box of documents on Labor Day, material that should have stayed in the possession of the receiver.
The receiver is reviewing security tapes to see if Stinson was caught on camera removing the material, Latham said.
``There is one exit that's not covered by security cameras,'' Latham said. ``He'd know that.''
Pepall ordered the return of the material, although she allowed opposing lawyers time to agree on how to determine what Stinson may be allowed to retain if it's privileged information covered by a lawyer-client confidentiality.
She said she would rule tomorrow on the legality of Stinson's bankruptcy filings and the appointment of a trustee.
Stinson was allowed to file for bankruptcy because, as the sole director of the four companies, he retained power over the corporations and wasn't expressly forbidden from taking the action in the receivership order, Christopher Reed, lawyer for Mel Zweig, the bankruptcy trustee, said.
``What's wrong with Mr. Stinson throwing up his hands and saying, `I don't want to have anything more to do with this mess?''' Reed asked.
That's not what Stinson may have in mind though, according to a lawyer representing some of the owners at 1 King West, who observed today's proceedings.
Stinson wants to maintain control of the property and can do so by appointing a trustee who reports to him, Thomas Richards said in an interview.
The bankruptcy filing is an ``attempt to take an end run around your order,'' Patricia Conway, a lawyer for Ed Mirvish Enterprises Ltd., told the judge. Mirvish sued Stinson and forced his company into receivership after Stinson failed to pay an $11.8 million debt to the company.
The case is Between Ed Mirvish Enterprises Ltd. and Stinson Hospitality Inc., 07-cl-006913, Ontario Superior Court of Justice (Toronto).
Odd moves in battle for 1 King West
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Sep 21, 2007 04:30 AM
"This is becoming a bit too melodramatic," says Harry Stinson, by way of email.
And here we thought we had entered a period of relative calm in the Stinson-Mirvish war. But no.
In the latest murderous volley across the battleground known as 1 King West, Stinson has driven the four pieces of the condo hotel once under his control into bankruptcy.
Yes, let's all get confused together.
Did not David Mirvish successfully push Harry Stinson out of 1 King? He did. And is 1 King now being run by a court-appointed receiver? Right again.
Yet, on Tuesday, Stinson attempted an end run around the receivership by getting his very own bankruptcy trustee to assign the Dominion Club, Stinson Hospitality Inc., the Suites at 1 King and a numbered company that controls the hotel's housekeeping operations into bankruptcy.
Yesterday, Mirvish's lawyers marched right over to the courthouse on University Ave. seeking an emergency motion to put an end to any such action, arguing Stinson had no such authority.
The clearest explanation as to why Stinson is doing what he's doing comes from the developer's staunchest ally, Bob Verdun, who says that a bankruptcy would trigger the right of the residential condominium corporation, of which he is president, to take over the hotel business.
Well, at least the numbers behind the story are coming clearer.
Court filings reveal a long list of unsecured Stinson Hospitality creditors, including investors like Bob Ellison of St. Albert, Alta., who does not want to talk about why he invested $250,000 and what he expected to reap in return.
That big law firm Blakes is on the list and on the hook for $263,000.
National Post: $28,000.
Harry Stinson Realty: $178,000.
Plus various and sundry individual investors who had initially invested in Stinson's Sapphire Tower but then had those funds transferred into a promised 15 per cent Stinson Hospitality Bond. The tally of unsecured creditors totals $6.8 million.
Over at the Dominion Club, we see a panoply of unpaid trades, from carpenters to painters to electricians, for total unsecured claims of $6.4 million.
Just to further confuse matters, the other two companies at issue are not actually insolvent.
Fortunately, there are many high-priced lawyers involved to figure out how solvent companies can be declared bankrupt and whether a director of a corporation (Stinson) can file an assignment in bankruptcy given the presence of a court-appointed receiver.
No wonder many of them, including Madam Justice Sarah Pepall, have taken to carting around the tome-like 2007 Annotated Bankruptcy and Insolvency Act.
Of course, every chapter in the Stinson saga is not complete without the latest rumoured Stinson shenanigans.
Outside the courtroom yesterday one of Stinson's own lawyers could be heard discussing a "security video," and the "removal of a box of documents" from 1 King West, an alleged incident that has had the condo abuzz since Labour Day.
The Star reports this morning that Stinson's move to place the companies in bankruptcy has been annulled. Reasons will be forthcoming next week.
Interesting little twist in this tale with Stinson doing an end around a court order and, it is claimed, taking property, including hard drives from the building. Dude is asking for some serious trouble here.
My advice to Harry? These ain't stupid banks with no vision and foolish investors with money to lend, this is the court and the consequences are a little more severe than a busted ego.
New Album Hits Canadian Stores on November 13th!
Corb and the Hurtin' Albertans have returned from Nashville where they finished recording their new album titled "Horse Soldier! Horse Soldier!". The album is scheduled for release on November 13th in Canada via Stony Plain Records and Warner Music Canada.
"Horse Soldier! Horse Soldier!" features 13 songs written by Corb Lund and was once again produced by Harry Stinson.
The album's first single and video for "I Wanna Be In the Cavalry" has been released to radio and CMT Canada. You can listen to the song on the band's myspace page and see the video on YouTube.
The album's track listing has been posted on the discography page.