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North End could seek $249,000 DIP

by Allison Collins | Published January 30, 2012 at 3:46 PM

North End United Housing Co-operative Ltd. could require postpetition financing to begin constructing a reorganization plan.

According to an affidavit filed by North End president Jonathan Hannam on Jan. 17, the Halifax nonprofit owner of 131 housing units might seek up to C$250,000 ($249,000) in debtor-in-possession financing to pay administrative fees and improve its units. Further documents filed in the Companies' Creditors Arrangement Act case, however, show North End and monitor Grant Thornton Ltd. have not agreed if a loan is necessary thus far.

North End did not appear to have sought approval of a DIP as of Monday, Jan. 30, from Justice Glen G. McDougall of the Nova Scotia Supreme Court.

CCAA monitor Daniel Rozon of Grant Thornton was not available for comment Monday.

North End filed for CCAA protection on Jan. 17 after it could not complete repairs on its co-op units or pay for all completed work.

Court papers show North End was formed on Sept. 18, 2009, through the amalgamation of four Halifax housing cooperatives containing 131 affordable housing apartments: Anathoth Housing Co-operative Ltd., Seaview Housing Co-operative Ltd., Charles Court Housing Co-operative Ltd. and Jim MacDonald Housing Co-operative Ltd.

Several of the cooperatives were experiencing financial difficulties, and the members thought one larger cooperative would be more economically viable, court papers show.

The cooperatives anticipated improving their finances through refinancing each of their mortgages into one mortgage for the new North End, according to court documents. Though the new nonprofit tried to consolidate and re-amortize its mortgages, it was unsuccessful, and its financial position therefore hasn't improved.

According to court documents, North End can only raise capital from the government, which forces it to rely on funding, budget allocations and loan programs.

Under its existing credit facilities, North End cannot fund further capital improvements or repairs, leaving it with units that cannot be rented because of their condition. A DIP would allow the financing of structural repairs.

North End owes Canada Mortgage and Housing Corp. about C$3.75 million and Nova Scotia Housing Development Corp. about C$5.24 million on various mortgages. North End hasn't made any payments on the NSHDC debt since June 2011, court papers show.

NSHDC also had been funding a renovation of North End's units, but work ceased in August 2010 when the debtor used up all the funding plus an additional C$1.04 million.

Rozon valued North End's assets at C$8.3 million and its liabilities at more than C$10 million in a Jan. 20 initial report.

The company's revenue comes from the charges it collects from cooperative memberships and provincial subsidies or provincial or municipal grants.

Tenants owe the debtor C$78,00 in unpaid rent, according to court documents, but North End was not optimistic about collecting all past-due rent -- some C$54,000 of the total -- more than 30 days old.

Rozon said property manager Pathways Housing Services would work with North End's board of directors to attempt to collect past due rent and improve collection in the future.

North End has 136 voting members and no employees.

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North End could seek $249,000 DIP

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