Published On: Sun, Apr 24th, 2016

Urbancorp files for bankruptcy in Canada

The application comes less than five months afte Urbancorp raised NIS 180 million ($48 million) in Tel Aviv. 

urbancorpreal Estate

 

Less than five months after raising NIS 180 million ($48 million) in Tel Aviv in a public bond offering, Canadian home builder company Urbancorp has announced restructuring proceedings, including the proposed sale of some assets, under the Bankruptcy and Insolvency Act.

The court process is designed to ensure Urbancorp can complete construction on 1, 050 homes in the next two years, according to a late Friday news release.

According to Israeli Globes Urbancorp filed its application under Canada’s Bankruptcy and Insolvency Act, even though it undertook in its offering prospectus and in the bond trust deed that disputes with bondholders would be resolved in the Israeli courts. In order to circumvent this problem, Urbancorp filed the application through six subsidiaries (project companies) and its operations management company. This represents a warning flag for bondholders in foreign real estate companies, who believed that they were protected by undertakings in bond trust deeds from proceedings that would force them to deal with legal disputes overseas.

CEO Alan Saskin said in a release: ““We determined, after much consideration and consultation, that a court-supervised process is the best way to deal with current cash flow issues. This will allow us to reduce debt in an efficient manner while continuing to focus on our core business, ” Urbancorp

Urbancorp was brought to Israel in late 2015 by underwriting firm Apex Issuances, which marketed it as “one of the ten most active and largest real estate developers in Canada.”

The agency that issues warranties for home builders in Ontario threatened to withdraw Urbancorp’s registration on 17 projects last month. The company’s three Israeli directors resigned last Wednesday, and its Israeli internal auditor resigned on Thursday, leading the Tel Aviv Stock Exchange to halt trading in its bonds.

The restructuring involves Urbancorp Group and management company and five subsidiaries: Urbancorp Downsview Park Developments Inc.; Urbancorp St. Clair Village Inc.; Urbancorp Lawrence Inc.; Urbancorp Mallow Inc., and Urbancorp Patricia Inc.

“The filing companies will work closely with the proposal trustee, KSV Kofman Inc. to stabilize operations, preserve and protect asset value for stakeholders and pursue the sale process, ” according to the release.

According to the site on Friday website noted that the restructuring impacts only the companies named in the release and that no condos were mentioned or included. “There is no immediate change or impact to the warranty process or coverage for Urbancorp customers, ”

 

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