Toronto firm Romspen Investment Corp. is taking B.C. developers to court for more than $191 million over a mortgage for a troubled seven-tower project proposed in Richmond.
Romspen has named Alderbridge Way LP, along with 0989705 B.C. Ltd. and Alderbridge Way GP Ltd., as the debtors in a mortgage agreement for the Atmosphere project at 5333 No. 3 Road in Richmond.
The lawsuit further names Gatland Development Corp., REV Investments Inc., REV Holdings Ltd., South Street (Alderbridge) LP, South Street Development Managers Ltd., Samuel David Hanson and Brent Taylor Hanson as guarantors of the debt.
According to Romspen’s legal filings, the investment firm initially provided $143.6 million in mortgage loans for the project in 2019, while other firms provided another $120 million in financing.
The project has been in trouble for some time – no “substantive” work has been done at the site since 2020, and the debtors were granted insolvency in April 2022, according to the lawsuit – with the owners seeking court oversight over a process to find new buyers or restructure its financing.
But the process to sell the site was delayed as the owners sought late last year to get a building permit to make the site development-ready for any new owners.
“The project currently remains in its preliminary stages and is essentially an excavated and shored hole in the ground,” Romspen noted in its notice of civil claim.
According to the lawsuit, the defendants first failed to pay its monthly interest rates in March 2020, but Romspen, rather than beginning enforcement proceedings on the loan, “instead emphasized to the defendants that it was prepared to discuss with the defendants options, including continuing to look for other lenders or investors to participate in the construction facility.”
But it required the defendants to “raise additional equity or look for other sources of capital.”
By February 2021, Romspen claims, the debtors were unable to refinance or find further investors, and the investment firm sent them a default notice. That month, Romspen said, the firm sent a demand for $158 million owing immediately.
That figure has now grown to more than $191 million, and that continues to grow with interest, at a rate of about $1.6 million per month, according to the lawsuit.
A response to the lawsuit has not been filed as of press time.
