Coromandel Properties Ltd. has submitted a petition to the Supreme Court of B.C. for relief under the Companies’ Creditors Arrangement Act.
Court documents show Coromandel owns 16 Vancouver real estate projects in various states of development, worth around $1 billion in total.
However, the company owes its lenders upwards of $700 million.
“If the court grants their request for protection, Coromandel will work towards restructuring its finances and advance its operations,” said the company in an emailed statement.
Court files show the company started operating in Vancouver in 2013.
Vancouver realtor Steven Saretsky says he’s watched the company through the years take a high-risk, high-reward approach to development.
“It works great in a rising market and when interest rates are falling, and obviously we’re in the opposite now,” Saretsky told CTV News.
“Prices are dropping, interest rates are up and so, you know, when the tide goes out, you see who’s swimming naked.”
Ron Rapp, CEO of Homebuilders Association Vancouver, says it’s too early to tell if Coromandel’s court filing is a sign of things to come for the industry.
“Overall, we’re not hearing any rumour that this is a systemic or endemic problem,” said Rapp. “We may see other instances of this nature, but this one is particularly significant given the number of properties involved.”
However, Rapp does say the cooling of the market has forced developers to adjust their strategy moving forward.
“I know that in the industry as a whole, most builders and developers are repositioning or re-evaluating their circumstances in the moment; taking cash flow into account,” he said.
Saretsky believes the news on Coromandel could shake up the industry.
“I think that other lenders are going to see this as a reminder, and especially in this environment, to maybe be a little more conservative,” he said.
Rapp says tight regulations on purchasing real estate mean any pre-sale buyers who placed a deposit should be protected if the company were to go bankrupt.
“Their investments and deposits should be secured because they are held in trusts and should the deal collapse or project collapse, they will probably get their money back, but I don’t know if there’s any extenuating circumstances on that because we’re not privy to those contracts,” Rapp said.
Coromandel declined to comment on its timeline of projects or any plans to refund deposits.
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