More details are emerging from the SOPA Square situation that has led to an interim receiver being named for the project.
Ernst & Young was named as the interim receiver on Dec. 27, and Senior Vice President Kevin Brennan says they will spend the 30-day window assessing the status of the project.
“(The) primary focus is what the completion costs are to complete phase 1, which is the commercial and office space,” he says.
“Figure out a leasing strategy and a preliminary evaluation, and then figure out what kind of capital will be needed to complete the entirety of the project, and then think through available sources for that capital.”
After those 30 days, Brennan says they will bring an application back to court with any new information, along with recommendations and a determination as to what they think should be done moving forward.
At that point, he believes the court will have only three options:
- Extend the interim receivers role to continue with a specific analysis.
- Appoint a new receiver to monetize the value of the project as it now stands.
- Discharge the interim receiver -- in which case the assets will be returned to the control of previous principles.
He believes the project was under capitalized from the start, noting substantial cost overruns with respect to certain aspects. As the months dragged on towards December, the project ran out of money and the second mortgage holder (Leslie & Irene Dube Foundation INC.) was being asked to invest additional capital to complete phase 1.
“(They) were not willing to provide without some semblance of control being placed over the project and some kind of independent assessment with regards to completion costs and other costs,” says Brennan.
“They weren’t willing to just write that cheque. So they initiated the process to complete that undertaking.”
While the cost issue has been brought up at various times in the past, it had not affected Greyback Construction, which took over the project in May 2013.
“We’ve been asked to cease work for now,” says project manager Michael Hilverink, who was at the site on Wednesday along with his site supervisor.
“Nothing was wrong, we were pushing extremely hard and trying to achieve occupancy on the base of the building. We were working weekends and longer hours to make that happen for the client. Even between Christmas the New Year’s we were working, until Dec. 30.”
That’s when he was informed by Ernst & Young that SOPA Square was under interim receivership, giving them 30 days to find additional capital for the project.
Hilverink expects to have follow-up meetings next week in order to find out what their next step will be, but says he has heard from the receiver that “things are looking relatively positive.”
“We were extremely surprised. You just follow up with the procedures instructed by the receiver at this point, work your way through everything, inform the trades and then go from there.”
He says this is the first time he has been involved in an Okanagan project that has entered interim receivership, but acknowledges that he has ran into this type of problem while working overseas.