This is an interesting transaction because it highlights how the complexity of a deal can totally change the deal itself and the need for the financial advisor to be nimble and to be able to see and structure the correct solution.
CORFinancial was originally engaged to provide bridge funding to a company (the “Buyer”) who had entered into a joint venture with the owner of a development site (the “Seller”) to complete a multi-purpose development in Ottawa.
CORFinancial obtained a financing offer for the Buyer which required the Buyer to provide financial disclosure and proof of funds to complete the financing. When CORFinancial presented the offer we discovered that the Buyer had defaulted on the joint venture agreement when it failed to pay the deposit to the Seller as stipulated in the joint venture agreement and that they had no financial resources to complete the transaction…simply put, their plan was to use the joint venture agreement to take control of the property from the Seller without putting up any money and then to leverage the equity in the property to raise capital for their own use.
CORFinancial terminated its engagement and notified all parties, triggering the following:
With the support of the 1st mortgagee who agreed to give CORFinancial time to work through its plan, we were able to complete a plan that resulted in full recovery for both the 1st and 2nd mortgagee’s and recovery of some of the Seller’s equity:
This transaction hi-lights the need for financial consultants, lenders, mortgage brokers, etc. to ensure that they:
The reason for CORFinancial’s successful track record is that we PRACTICE WHAT WE PREACH!