A company engaged in construction and real estate development was subject to a bitter shareholder’s dispute resulting in the incurrence of substantial professional fees without a resolution, and ultimately, the operations coming to a standstill. As a result of the situation, and despite the fact that the company was not insolvent, its bankers had made demand for repayment of its loans.
After significant negotiations amongst the parties, an Order pursuant to the Ontario Business Corporations Act and the Courts of Justice Act was crafted to appoint Rosen Goldberg Inc. as Interim Receiver.
Upon its appointment, the Receiver took steps to stabilize the business by communicating with key suppliers, taking control of the bank accounts and working with management to ensure that the operations would no longer be impacted by the dispute.
The Receiver was able to negotiate an extension with the bank and ultimately sourced a new lender.
The Receiver commissioned various appraisals and valuations in respect of the company’s assets and developed a purchase price and proposed transaction whereby one shareholder would buy out the other.
Although the Receiver’s proposed transaction was not completed, it was the impetus to an ultimate settlement between the parties.
The appointment of the Receiver assisted in stabilizing the business and the preservation of its overall value.
The presence of an independent court officer was helpful in maintaining the business’s value and in assisting in a settlement and ending what had been years of litigation. Had this remedy not been implemented, it is possible that there would have been a significant erosion of the overall asset values.