UPDATES RELATED TO SORRENTI LAW PROFESSIONAL CORPORATION ("SORRENTI")

Below are links to items that may be of interest to viewers:

A link to a chart that summarizes the key terms of the various syndicated mortgage loans administered by Sorrenti including, among other things, the capital stack and the status of each of the projects as at the dates noted:

Project Analysis Summary (as at March 30, 2022)

A link to questions frequently posed to the Trustee regarding its mandate and Sorrenti:

Sorrenti Frequently Asked Questions (October 1, 2019)

COURT MATERIALS RELATED TO DEREK SORRENTI OR SORRENTI LAW PROFESSIONAL CORPORATION

On March 31, 2022, the Trustee served materials in connection with its motion returnable April 12, 2022 in support of its request for an Order (“Third Omnibus Order”), among other things:

  • Approving an amendment to paragraph 3 of the First Omnibus Order to replace all references to “50%” with “65%”, so that the Trustee shall be required to distribute 65% of any Realized Property obtained pro rata to the lnvestors entitled to such funds, whether received before or after the date of the Third Omnibus Order;
  • Authorizing a distribution to the applicable Investors in an amount equal to 65% of the Realized Property, whether received before or after the date of the Third Omnibus Order, including authorizing and directing the Trustee to distribute:
    • to the Progress Investors 65% of the residual proceeds received by the Trustee from the Progress Sale Transaction; and
    • to the Unionvillas Investors 65% of the initial distribution received by the Trustee from the Unionvillas Receiver; and
  • Approving the (i) Fourth Report and the Fifth Report and activities of the Trustee described therein; and (ii) Trustee’s fees and disbursements, including the fees and disbursements of its counsel, for the period from March 1, 2021 to February 28, 2022.

Copies of the materials filed on March 31, 2022, including the Trustee’s Fifth Report, are available below.

Trustee's Fifth Report dated March 31, 2022
Motion Record of FAAN Mortgage Administrators Inc. dated March 31, 2022

On April 12, 2022, the Court granted an Order (“Third Omnibus Order”):

  • Approving an amendment to paragraph 3 of the First Omnibus Order to replace all references to “50%” with “65%”, so that the Trustee shall be required to distribute 65% of any Realized Property obtained pro rata to the lnvestors entitled to such funds, whether received before or after the date of the Third Omnibus Order;
  • Authorizing a distribution to the applicable Investors in an amount equal to 65% of the Realized Property, whether received before or after the date of the Third Omnibus Order, including authorizing and directing the Trustee to distribute:
    • to the Progress Investors 65% of the residual proceeds received by the Trustee from the Progress Sale Transaction; and
    • to the Unionvillas Investors 65% of the initial distribution received by the Trustee from the Unionvillas Receiver; and
  • Approving the (i) Fourth Report and the Fifth Report and activities of the Trustee described therein; and (ii) Trustee’s fees and disbursements, including the fees and disbursements of its counsel, for the period from March 1, 2021 to February 28, 2022.

Copies of the Third Omnibus Order and the related endorsement are available below.

Issued and Entered Third Omnibus Order dated April 12, 2022
Endorsement of Justice Kimmel dated April 12, 2022

On Januray 14, 2022, Empire Pace (1088 Progress) Ltd., the Progress Project borrower (“Borrower”) served motion materials in connection with its motion returnable January 31, 2022 in support of its request for an Order (“Progress Approval and Vesting Order”) that, among other things:

  • Confirms and approves the Trustee and Olympia Trust Company discharging the Progress Mortgage in connection with the Sale Transaction upon receipt of the Sorrenti Discharge Payment;
  • Vests all of the Borrower’s right, title and interest in and to the Purchased Assets described in the agreement of purchase and sale in the Purchaser, free and clear of and from any and all claims; and
  • Seals certain confidential information concerning the Sale Transaction and the sale process, until further order of the Court.

The Borrower’s motion materials include, among other things, a report to Court from the Trustee in support of the Borrower’s request for the Progress Approval and Vesting Order. The Trustee’s report describes the following matters:

  • an overview of the Progress Project and the underlying Sorrenti syndicated mortgage loan pursuant to which certain of the Investors loaned money in respect of the Progress Project;
  • the details of the Progress Sale Transaction;
  • the details of the marketing process conducted for the Progress Property;
  • information that supports the Trustee’s recommendation to discharge the Progress Mortgage in connection with the Progress Sale Transaction upon receipt of the Sorrenti Discharge Payment, and to take any other steps necessary to facilitate the closing of the Progress Sale Transaction, in its sole discretion; and
  • a confidential appendix that includes an unredacted copy of the APS and provides, among other things, a summary of the offers received for the Progress Property, the financial details of the Progress Sale Transaction and the estimated Realized Property available for distribution to the Progress Individual Lenders.

Copies of the materials filed on January 14, 2022, including the Trustee’s Fourth Report, are available below.

Trustee's Fourth Report dated January 14, 2022
Motion Record of the Moving Party, Empire Pace (1088 Progress) Ltd., dated January 14, 2022

On January 31, 2022, the Court granted the Progress Approval and Vesting Order that, among other things, confirms and approves the Trustee and Olympia Trust Company discharging the Progress Mortgage and vests all of the Borrower’s right, title and interest in and to the Purchased Assets described in the agreement of purchase and sale in the Purchaser.

A copy of the Progress Approval and Vesting Order and the related endorsement is provided below.

Issued and Entered Progress Property Approval and Vesting Order dated January 31, 2022

On April 23, 2021, the Trustee served materials in connection with its motion returnable May 4, 2021, which provides, among other things, an update regarding the proceedings and a recommendation that the Court grant an order approving the Third Report of the Trustee dated April 23, 2021, as well as the Trustee’s activities described therein, and approving the Trustee’s fees and disbursements, including the fees and disbursements of its counsel, for the period from February 1, 2020 to February 28, 2021.

Copies of the materials filed on April 23, 2021, including the Trustee’s Third Report, are available below.

Trustee's Third Report dated April 23, 2021
Motion Record of FAAN Mortgage Administrators Inc. dated April 23, 2021

On May 4, 2021, the Court granted an order (“Second Omnibus Order”) approving the Third Report of the Trustee dated April 23, 2021, as well as the Trustee’s activities described therein, and the Trustee’s fees and disbursements, including the fees and disbursements of its counsel, for the period from February 1, 2020 to February 28, 2021.

A copy of the Second Omnibus Order and the related endorsement is provided below.

Issued and Entered Second Omnibus Order dated May 4, 2021
Endorsement of Justice Haney dated May 4, 2021

On October 7, 2020, FAAN Mortgage Administrators Inc., in its capacity as Trustee of Building & Development Mortgages Canada Inc. (“BDMC Trustee”), served materials in connection with its motion returnable October 15, 2020, in support of the BDMC Trustee’s request for an order (“Tax Opinions Order”) that:

  • Authorizes the Trustee to disseminate copies of the Tax Opinions, in accordance with the procedure set out in the proposed Tax Opinions Order, for use by an Investor in an ongoing or potential action or legal proceeding relating to a Fortress related real estate project to which the Tax Opinion(s) relate(s).

The Tax Opinions Order contains, among other things, a paragraph that orders that the Tax Opinions Order and the dissemination of copies of the Tax Opinions applies, with any necessary modifications, in the Sorrenti proceeding (Court File No: CV-19-628258-00CL).

Copies of the motion record filed on October 7, 2020, including the BDMC Trustee’s Twenty-Second Report, are available on the website for the BDMC proceedings at the following link:

BDMC Trustee's Motion Record dated October 7, 2020

On October 15, 2020, the Court granted an order approving the requests in respect of the Tax Opinions related to loans advanced by BDMC. The Tax Opinions Order contains, among other things, a paragraph that orders that the Tax Opinions Order applies, with any necessary modifications, in the Sorrenti proceeding.

A copy of the Tax Opinions Order and the related endorsement is provided below.

Issued and Entered Tax Opinions Order dated October 15, 2020
Endorsement of Justice Hainey dated October 15, 2020

On March 6, 2020, the Trustee served materials in connection with its motion returnable March 17, 2020, which provides, among other things, a recommendation that the Court grant an order:

  • approving certain amendments to the interim stabilization measures of the Appointment Order to:
    • authorize the Trustee to distribute 50% of the Realized Property to the applicable Investors, including, without limitation, authorizing and directing the Trustee to effect a distribution:
      • to Bayview Individual Investors in an amount equal to 50% of the Bayview Realized Property,
      • to Gotham Investors in an amount equal to 50% of the Gotham Realized Property; and
      • to the HVS Investors in an amount equal to 50% of the HVS Realized Property; and
    • authorize the Trustee to use the retained Realized Property as an administrative holdback to fund the cost of these proceedings, including to pay operating and professional costs associated with the SML Administration Business; and
  • approving the First Report of the Trustee dated January 22, 2020 and the Second Report dated March 6, 2020, as well as the Trustee’s activities described therein, and approving the Trustee’s fees and disbursements, including the fees and disbursements of its counsel, for the period from the date of the Appointment Order to January 31, 2020; and
  • directing the applicable Land Registry Office to, upon the filing by the Trustee of one or more certificate(s) with the Court, expunge and delete the Appointment Order from title to the property(ies) identified in such certificate(s).

Copies of the materials filed on March 6, 2020, including the Trustee’s Second Report, are available below.

Trustee's Second Report dated March 6, 2020
Motion Record of FAAN Mortgage Administrators Inc. dated March 6, 2020

On April 13, 2020, the Trustee served a Supplement to the Second Report of the Trustee dated March 6, 2020 in respect of a Claim to Certain Proceeds from the Harmony Village Project by Fortress Real Developments Inc.

The Trustee’s Supplemental report is available below.

Trustee's Supplement to Second Report dated April 13, 2020

On May 5, 2020, the Court granted an order (“Omnibus Order”):

  • approving certain amendments to the interim stabilization measures of the Appointment Order to:
    • authorize the Trustee to distribute 50% of the Realized Property to the applicable Investors, including, without limitation, authorizing and directing the Trustee to effect a distribution equal to 50% of the Bayview, Gotham, and HVS Realized Property; and
    • authorize the Trustee to use the retained Realized Property as an administrative holdback to fund the cost of these proceedings, including to pay operating and professional costs associated with the SML Administration Business; and
  • approving the First Report of the Trustee dated January 22, 2020, the Second Report dated March 6, 2020, the Supplement to the Second Report dated April 13, 2020, as well as the Trustee’s activities, the Trustee’s fees and disbursements, including the fees and disbursements of its counsel, for the period from the date of the Appointment Order to January 31, 2020.

The Court also granted a further order (the “LRO Direction Order”) which directs the applicable Land Registry Office to, upon the filing by the Trustee of one or more certificate(s) with the Court, expunge and delete the Appointment Order from title to the property(ies) identified in such certificate(s).

Copies of the Omnibus Order, the LRO Direction Order, and the related endorsement are provided below.

Issued and Entered Omnibus Order dated May 5, 2020
Issued and Entered LRO Direction Order dated May 5, 2020
Endorsement of Justice Hainey dated May 5, 2020

On January 22, 2020, the Trustee served materials in connection with its motion returnable January 30, 2020, which provides, among other things, a recommendation that the Court grant an order approving a settlement offer made by the Gotham borrower in respect of the Gotham loan advanced by Sorrenti.

Copies of the materials filed on January 22, 2020, including the Trustee’s First Report, are available below.

Trustees First Report dated January 22, 2020
Motion Record of FAAN Mortgage Administrators Inc. dated January 22, 2020

On January 30, 2020, the Court granted an order approving a settlement offer made by the Gotham borrower in respect of the Gotham loan advanced by Sorrenti.

A copy of the Gotham Settlement Approval Order and the related endorsement is provided below.

Issued and Entered Gotham Settlement Approval Order dated January 30, 2020
Endorsement of Justice Hainey dated January 30, 2020

On September 30, 2019, pursuant to an order of the Ontario Superior Court of Justice (Commercial List) (the “Appointment Order”), FAAN Mortgage Administrators Inc. (“FAAN Mortgage”) was appointed as trustee (“Trustee”) over all of the assets, undertakings and properties of Derek Sorrenti or Sorrenti Law Professional Corporation (collectively, “Sorrenti”) that relate to Sorrenti’s administration of syndicated mortgage loans (“SMLs”).  FAAN’s appointment was precipitated by an application made by the Law Society of Ontario under Section 49.47 of the Law Society Act, R.S.O. 1990. c. L.8, and section 101 of the Courts of Justice Act, as amended. The materials related to the Trustee’s appointment can be accessed at the following links:

Law Society of Ontario Application Record (Part 1)
Law Society of Ontario Application Record (Part 2)
Pre-filing Report of the Proposed Trustee dated September 29, 2019
Order of Justice Hainey dated September 30, 2019