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Legacy seeks to boost DIP

by Kelsey Butler  |  Published January 18, 2012 at 2:45 PM
Legacy-seeks-to-boost-DIP227.jpgReal estate developer Legacy Communities Inc. looks to stave off a liquidation with additional postpetition funding.

According to a monitor's report filed Monday, Jan. 16, the Calgary, Alberta, debtor hopes to tap an additional C$475,000 ($468,000) in financing from secured lender Harvest Capital Management Inc. Specifically, Legacy would receive an additional C$275,000 in financing, while affiliates Airdrie Capital Corp. and Airdrie Country Estates Inc. would jointly receive C$200,000.

The company previously secured a total of C$400,000 in postpetition financing from Harvest Capital, court papers show. Ron Aitkens, the sole owner of the debtors, also owns nonbankrupt Harvest Capital.

Legacy asserted that without the debtor-in-possession loan increase, the company would be forced to liquidate its assets, which would not maximize recoveries to creditors.

Judge Barbara Romaine of the Court of Queen's Bench in Calgary is set to consider the request on Thursday, court papers show.

At the hearing, the judge also will weigh a request from Legacy to extend the company's protection under the Companies' Creditors Arrangement Act through April 17.

Romaine on Dec. 21 signed an order granting Legacy CCAA protection through Jan. 20.

Legacy and affiliates ACC and ACE filed for CCAA protection on Dec. 21. Legacy blamed its financial troubles on a number of delays and setbacks at its planned real estate developments, coupled with deteriorating real estate market conditions.

The company said it had been unable to secure municipal permits to begin developing its properties. Water and sewage servicing issues at one of its properties further set the company back. The company said the delays had left the company insolvent and unable to pay a total of C$68.96 million in debt due Dec. 31.

Legacy and ACC owe a combined C$55.69 million to bondholders, which was set to mature on Dec. 31. A C$13.27 million loan from ACC to ACE was also due on that date, court papers show.

Legacy first issued its bonds in July 2005 and made a second offering in September 2006, court papers said. ACC originally issued C$14.74 million in bonds in September 2006.

Legacy owns a total of 500 acres located four miles west of the Calgary city limits, court papers said. The Airdrie entities own a total of 160 acres near Calgary used for agricultural purposes.

Legacy said in court papers it planned to restructure its business around its real estate, which it hoped to eventually develop and sell.

In court papers, Legacy said when its undeveloped land was first appraised on March 22, 2006, it had an estimated value of C$6.3 million.

Debtor counsel Robyn Gurofsky of Borden Ladner Gervais LLP couldn't immediately be reached for comment.

Ernst & Young is monitor in the case.
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Tags: Airdrie Capital Corp. | Airdrie Country Estates Inc. | Borden Ladner Gervais LLP | Companies' Creditors Arrangement Act | Court of Queen's Bench in Calgary | Ernst & Young | Harvest Capital Management Inc. | Judge Barbara Romaine | Legacy Communities Inc. | Robyn Gurofsky | Ron Aitkens

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