January 21, 2005

Construction lien claimants owed $1.2M

Battle over Minaki Lodge proceeds will be resolved by end of April

MINAKI, Ont.

A judge will decide whether a mortgage company or a group of construction lien claimants is first entitled to proceeds of the sale of Minaki Lodge Resort 2002 Inc.

A lawyer representing Calgary real estate developer Phil Archer told Superior Court Justice Erwin Stach Monday the bankruptcy trus tee appointed by the court to sell the property “can’t make the determination.”

“The priority issue must be addressed by the court,” Rod Johansen said.

The issue will be resolved by the end of April in a week-long trial or a statement of facts agreed to by Johansen and lawyers for the construction lien cl- aimants.

Until then, the lodge in this northwestern Ontario town about 45 minutes north of Kenora won’t be sold.

Johansen said bankruptcy trustee Ernst and Young received 39 requests for information on the property when it went up for sale on Sept. 30, 2004, and 10 offers to purchase by the Nov. 19 deadline.

“One offer was superior to the balance,” Johansen said, without naming the party.

Rumours about

Rumours have circulated that Archer is trying to buy back the lodge, which burn- ed to the ground on Oct. 12, 2003.

Johansen said the “superior offer” came with “a number of conditions.”

The first condition concerned an application Archer had made to register part of the property as a condominium, an application that was being reviewed by the Ministry of Municipal Affairs and Housing, he said.

The second condition was that $140,000 would be paid to the lien claimants, Johansen said.

The mortgage holder, Archer has said, is his own company Celestine Mortgage Corp. that is owed $5.9 million. The construction lien claimants are owed $1.2 million.

James Hook, a lawyer re- presenting some of the lien claimants, said the $140,000 the potential purchaser wants to pay the lien cl- aimants is based on 10 per cent of the value of work done over seven or eight mo- nths rather than over two years.

A more realistic figure, he said, is between $350,000 and $360,000.

Hook added there was “ample evidence” Celestine Mortgage Corp. wasn’t a mortgage holder but an “alter ego for Phil Archer, president of Minaki Lodge Resort 2002 Inc.”

The Canadian Press

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