Mortgage lender UMC Financial is suing a company that started construction on a luxury hotel in St. Albert and that cross-guaranteed the repayment of a $65 million loan for Careadon Village, a seniors apartment complex whose original owner went bankrupt.
UMC Financial has also been granted a receivership order over Chalton Hotel (St. Albert) Ltd.’s assets, according to court documents.
The Chalton Hotel near Century Casino broke ground in June 2018. It was billed as a state-of-the-art, seven-storey luxury hotel, with digital kiosks for check-in, 141 suites, a large convention room, a swimming pool and an exercise room.
The expected completion date of the 4.5 star hotel was 2019. By September 2019, the construction site had been serviced and over 100 piles drilled into the ground, but the bones of the structure had not materialized.
At the time, Dave Dyrbye, CFO of Kota Contracting Inc., the construction company building the hotel, told the Gazette the Chalton would be complete by the end of 2020.
UMC loaned Chalton roughly $2.2 million on the condition the money be repaid by Sept. 30, 2023, according to a statement of claim.
Chalton was also one of a group of companies that cross-guaranteed payment for money loaned to each of the companies by UMC. Included in the group was Careadon Corp., Careadon Village’s original owner.
In April 2021, Citiport Developments Ltd., Chalton and Artisan Residences Ltd., the company behind an Edmonton apartment building that was also being built by Kota Contracting Inc. and is now on hold, guaranteed “prompt and complete payment” to UMC for Careadon, the document says.
The statement of claim also lists an unnamed company, referred to only as 1097016 B.C. Ltd., as cross-guaranteeing payment for each of the companies’ loans from UMC.
In March 2022, the companies agreed to pay off Careadon’s debts to UMC, according the statement of claim.
Careadon Village was originally slated for completion by 2018, but was plagued with delays. Construction paused completely last summer when Careadon Corp. went into receivership.
Last November, Careadon Corp. was declared bankrupt. UMC took control of Careadon and received seven offers for the property, but deemed the offers too low and decided to purchase and complete the building itself.
Each of the companies listed in the statement of claim failed to pay the money owed to UMC by the Sept. 30, 2023 deadline, UMC alleges.
“On or around November 3, 2023, UMC issued demands to the Defendants, demanding payment of all amounts owing to UMC,” the statement of claim says. “To date, the Defendants have failed, neglected, or refused to pay all amounts owing to UMC.”
The claim demands that each company pay back money owed to UMC, including interest. For Chalton, as of Nov. 1 2023, that amounted to $3.3 million. Some $11.5 million was owed by Citiport, over $5 million by Artisan, roughly $28 million by a numbered B.C. company and over $71 million by Careadon, UMC alleges in the document. In total UMC alleges that the companies owe $119 million.
The claim lists as potential remedies the foreclosure of each of the companies’ properties and the appointment of a receiver.
