Dundurn Street condo owner is threatening bankruptcy
The owner of a beleaguered Dundurn Street condominium project is threatening bankruptcy if a refinancing proposal doesn't obtain court approval.
Dundurn Estates Inc., the new owner of the condo project at 220 Dundurn Street South, is trying to secure financing after failing to meet the lender's demand to repay the mortgage in full when it became due late last year.
Legal troubles have been piling up for the Dundurn project since December, when the planned transfer of condo units to purchasers was suddenly cancelled the day before the deals were to become official.
The building, used long ago to make silk stockings, was developed by Denis Vranich and converted into 124 condominium units.
Vranich and the tangled web of companies that own - or formerly owned - 220 Dundurn St. S. are now facing two lawsuits seeking a total of $8 million from a group of angry condo purchasers and a jilted real estate brokerage.
Vranich declined to comment because the matter is still before the court.
On my lawyer's advice, since the matter is in litigation, I am not to make any comments on the matter other than in court," Vranich said in a statement by email.
The story of 220 Dundurn's current legal woes is complicated.
In July 2019, a $26-million mortgage on the property came due and the holder of the mortgage, Timbercreek Mortgage Servicing, demanded payment in full.
Timbercreek agreed to give Vranich and his company, 220 Dundurn St. Inc., until Dec. 17 to pay off the mortgage.
The repayment wasn't made and six days later, on Dec. 23, Vranich sold the property to a numbered company without telling the mortgage holder, according to an allegation made in a court document filed by Timbercreek's vice-president.
The Timbercreek executive also alleges in his affidavit that the property could not be sold without the approval of the mortgage holder under the terms of the contract.
It's not clear if Vranich was an owner or part-owner of the numbered company that purchased 220 Dundurn and he has declined to comment.
In March, the numbered company amalgamated with another company to form Dundurn Estates Inc.
Vranich was originally listed as the sole officer and director of Dundurn Estates but a corporate search shows he no longer held those positions as of June 9. It's not clear if Vranich is an owner or part-owner of Dundurn Estates.
In May, Timbercreek again demanded full repayment of the mortgage. That's when it learned the property had been sold in December and that there had been a subsequent amalgamation, according to the vice-president's court filing.
The affidavit also alleges the owner of 220 Dundurn did not respond to Timbercreek's letter demanding payment in full.
In June, shortly after the repayment demand, Dundurn Estates went to court seeking an extension of time to put together a proposal to obtain new financing so it could pay Timbercreek.
If the extension requested is not granted, then the company will be deemed to have made an assignment in bankruptcy, which is not in the interests of the creditors," according to Dundurn Estates' court filing.
The law firm representing Dundurn Estates did not respond to a request for comment.
Through its lawyer, Timbercreek declined to comment because the matter is still before the court.
Vranich, the son of major Hamilton developer Darko Vranich, purchased the 1.6-hectare property in 2007 for $1.5 million.
Originally constructed in 1928 by National Hosiery Mills to manufacture silk stockings, the property near Main Street and Highway 403 was acquired by the Hamilton Board of Education in 1967 for use as a vocational training centre, storage and a film library and then declared surplus in 1996.
Over a number of years, Vranich developed the property into a 124-unit apartment building and a few years ago he decided to convert the property to a registered condominium and sell the units, according to the lawsuits' statements of claim.
A group of 32 individuals and corporations that purchased units at 220 Dundurn is seeking $6 million in damages from Vranich and three of his companies for breach of contract and acting in bad faith for allegedly terminating their sales agreements on Dec. 30, one day before the conditions on the deals were due to expire.
The purchasers' lawsuit alleges Vranich and his companies conspired to avoid their obligations under the agreements to complete the sales of the subject units to the plaintiffs in favour of a more lucrative deal."
The purchasers are also seeking three orders in their statement of claim - an order that their purchase agreements are firm and binding, an order setting aside the transfer of units between Vranich's companies, and an order that the transfer of units between the two companies is null and void.
None of the allegations have been proven in court.
Mint Realty, a Waterloo-based realtor operating as Condo Culture, is seeking $2.1 million in damages in a separate suit for sales commissions allegedly owed for units it sold at 220 Dundurn that weren't paid out because the agreements were terminated prior to closing.
Steve Buist is a Hamilton-based investigative reporter at The Spectator. Reach him via email: sbuist@thespec.com