The future of Sault Ste. Marie’s largest shopping centre is in limbo after a judge ordered Station Mall into receivership yesterday, the culmination of a months-long court battle over an unpaid mortgage totalling more than $18 million.
Simply put, the ruling strips control of the property from SM International Holdings Ltd., the Markham-based company that has owned the downtown mall since 2022 — and paves the way for a newly appointed receiver to change the locks, manage the books and put the plaza back up for sale.
As SooToday first reported, SM International was slapped with a court-imposed 90-day deadline of Jan. 16 to pay the outstanding mortgage in full. In a sworn affidavit, company president Yeung Mou insisted he had “made arrangements to have family money” from China sent to Canada to cover the loan.
But on Wednesday morning — nearly a week after that deadline came and went — Ontario Court Justice Peter Osborne agreed to appoint a receiver, whose priority will be to ensure the mortgage provider recoups its losses.
In his written endorsement, obtained by SooToday, Justice Osborne notes that SM International continues to insist it is “on the verge of arranging take-out financing in the People’s Republic of China.” If that does happen, the judge wrote, the company will “presumably” advise the receiver. “I will address such relief as may be sought at that time,” he wrote.
The court-appointed receiver is B. Riley Farber Inc., an international business advisory firm with offices in Los Angeles, Toronto and other parts of Canada. It’s not clear what specific steps will be taken next, including whether a real-estate listing is imminent.
What is clear from the judge's order is that the receiver now has full control of Station Mall, effective yesterday morning. It can change security codes on the building, hire its own security, collect rent from tenants and take steps to sell the property "without interference from any other person."
The mortgage holder that launched the court action is Algoma Central Properties Inc., a subsidiary of Algoma Central Corporation, the company that built Station Mall in the early 1970s and owned the property for the next five decades.
As SooToday reported at the time, Algoma Central sold the mall to SM International in a deal that closed on June 30, 2022. The purchase price was $30 million: $12 million in cash and $18 million in what is known as a “vendor take-back mortgage” (VTB).
According to the terms of that mortgage, the full $18 million loan was to be repaid 24 months after the sale, with various interest payments to be made in the interim.
But this past November, Algoma Central made a brief mention of the overdue payment in a report to shareholders. “The loan is now in default and the Company has commenced legal action to collect the principal amount on the secured mortgage,” the document reads.
SooToday retrieved the court records from Toronto, where the action was launched on July 29. In its application, Algoma Central asked a judge to appoint a receiver “to take control over Station Mall and to market it for sale.”
“The Lender has lost confidence in Debtor’s ability to manage the Property and does not believe that the Debtor will be able to satisfy its obligations to the lender,” reads a factum filed by Algoma Central’s lawyers. “The lenders’ security is at risk of deteriorating. There is a need to stabilize and preserve the debtors’ business.”
In its responding court filings, SM International said there is no need to appoint a receiver because the mall is on solid financial ground. The company claims it has increased the number of tenants since taking over the shopping centre and has spent nearly $5 million on roof repairs, a new HVAC system, updated closed-circuit TV monitoring and other upgrades.
“The Mall is not a wasting or depreciating asset,” SM argued in its factum. “On the contrary, the Respondent has spent considerable sums improving the Mall, leasing space to new tenants, and thereby increasing its value.”
The judge ultimately agreed to a 90-day grace period, giving SM until Jan. 16 to come up with its supposed financing from China.
News of the litigation comes as the 50-year-old mall appears to be on the upswing, highlighted by extensive roof repairs and the addition of some high-profile retailers, including the cosmetics giant Sephora. Ownership had also repeatedly trumpeted a planned $60-million revamp of the property — including a 50,000 square-foot entertainment complex, a dining sports bar and even potential condo developments — but little of that has actually materialized.
John Russo, one of the lawyers representing Algoma Central, told SooToday he is “unable to comment on this matter beyond what is in the public record.” Lawyers for SM International have yet to reply to multiple requests for comment.