A group of southern Ontario companies notorious for buying up dozens of properties in the Sault — and leaving a number of them vacant and boarded up — has filed for creditor protection, saying they owe tens of millions of dollars to lenders.
The group includes a handful of corporations that own approximately 150 properties locally, including Happy Gilmore Inc., The Pink Flamingo Inc. and Balboa Inc., among others.
Another company listed in the insolvency documents, DSPLN Inc., made headlines this past November when it was fined $140,000 in Provincial Offences Court after being found guilty of six Ontario Fire Code offences identified at a multi-residential building in the Sault’s west end.
All told, the corporations are facing a “severe liquidity crisis,” according to court filings: Each one of the corporations has less than $100,000 in cash on hand — and debt totalling more than $144 million between them all.
The group of corporations believes that its current financial crisis, compounded by the potential for “devastating effects of a bankruptcy, liquidation or uncoordinated enforcement efforts,” has left it with no other option but to seek creditor protection — for the good of the corporations, their hundreds of lenders and approximately 1,000 tenants throughout Ontario.
“Given prevailing interest rates and the concentration of the Properties within small secondary and tertiary markets in Ontario, any such liquidation would be value destructive, result in the sale of the properties at depressed prices and likely take more than two years to complete,” the group said in its application for creditor protection.
Seeking creditor protection will allow the companies to “pursue their financing and restructuring objectives for the benefit of their stakeholders,” the companies say.
All of these corporations have a common thread: Court filings reveal they’re affiliated with SIDRWC Inc. — operating as SID Developments and SID Management Inc. — and 2707793 Ontario Inc., which operates as SID Renos. And all of the properties that have been purchased by the group are maintained by SID Renos and managed by SID Management.
As SooToday has previously reported, a property management company under the SID banner, RWC Management, has been causing headaches for tenants in Sault Ste. Marie who claim their rental units have fallen into disrepair since out-of-town landlords from other parts of Ontario began scooping up hundreds of properties locally during the COVID-19 pandemic.
In their application for creditor protection under the Companies' Creditors Arrangement Act (CCAA), the privately held corporations are identified as “part of a group of companies specializing in the acquisition, renovation and leasing of distressed residential real estate in undervalued markets throughout Ontario.”
All of the properties are located in smaller housing markets in Ontario with lower average costs of living, including Timmins, Sault Ste. Marie, Sudbury, Kirkland Lake, Capreol, Temiskaming Shores and Val Caron.
Collectively, the companies own 405 residential properties containing 631 rental units — 424 of which are occupied by tenants — as well as a single non-operating golf course.
According to an affidavit filed on behalf of SIDRWC Inc. President Robert Clark — who was a notable child actor in film and television prior to founding the SID group of companies and reinventing himself as an influencer on social media — the group of companies began exploring refinancing and sale opportunities in 2022 as it “struggled to generate sufficient free cash flow.”
That revelation is in stark contrast to a sponsored article that appeared in USA Today in 2021, where Clark proclaimed that SID's property portfolio consisted of more than $150 million in holdings across Ontario at the time.
In 2022 the group closed a sale of 223 properties to Core Development Group, which was subject to a holdback — or in layman’s terms, payment only after the buyer satisfied certain conditions — in the amount of $3.5 million.
Clark’s affidavit goes on to claim that the group of corporations was unable to find a refinancing solution, resulting in “substantial losses” over the past year-and-a-half. Those losses were “exacerbated by disputes arising in connection” with the $3.5 million holdback agreement with Core Development Group.
The affidavit also claims the holdback deprived the group of the funds required to complete unrenovated rental units, pay down its debts and make payments in the course of its day-to-day business.
On top of the hundreds of lenders impacted by the insolvency proceedings, the group of corporations also owe nearly $1.9 million in municipal tax arrears, more than $360,000 in corporate income tax arrears and nearly $533,000 in unpaid utilities.
The companies are also the target of 32 civil lawsuits filed in the Ontario Superior Court of Justice by lenders, demanding principal amounts, interest and certain fees — and in some cases, possession of properties.
Eight of those lawsuits have been filed in the Sault, naming DSPLN Inc., Happy Gilmore Inc. and Joint Captain Real Estate as defendants.
Aruba Butt of Burlington, Ont. is named as a director of all three of those corporations, as well as the majority of the corporations that have filed for creditor protection.
Butt also appears to be closely linked to the founder of the companies operating under the SID umbrella.
Robert Clark is listed on LinkedIn as managing partner in Paradisal Bliss — a cleaning company servicing both residential and commercial properties in the Greater Toronto Area since 2013 — which was founded by Butt.
Aruba Clark is listed as chief information officer for SID Developments, SID Management and SID Renos on the SID Developments website. A private Instagram account belonging to Aruba Clark contained a bio that simply reads ‘DSPLN’ and a link to the Paradisal Bliss website.
The letters ‘DSPLN’ and the link to Paradisal Bliss were subsequently removed from Clark’s Instagram account, sometime after SooToday revealed the corporation was smacked with $140,000 in fines stemming from multiple Ontario Fire Code offences.
But there’s no hiding the fact that a number of corporations tied to SID Developments are now faced with some major hurdles as they begin the process of restructuring after seeking protection from their creditors.
A court date had been set for Jan. 31 where the group of corporations will make a handful of requests, including the approval of what’s known as a debtor-in-possession credit facility that will essentially allow them to continue operating during the CCAA proceedings. The group will also request that its stay of proceedings — or the period in which it is protected from creditors — be extended to March 28.