Wednesday, November 11, 2009

Ontario Property Owners Now Have Liens on the Properties due to Skypower Bankruptcy

About 150 properties that make up the Byran wind energy project, part of the failed Skypower Corporation in the northeast corner of Prince Edward County, have had construction liens placed upon their land and registered on title by a creditor to whom Skypower owes a quarter million dollars. Construction liens are legal claims on a project to ensure a builder, tradesperson or consultant gets paid for his or her work.

Worse for the property owners, these construction liens have been perfected through a special court order that was granted last Thursday.

At best this means the property owners will be limited, until the liens are discharged, as to what they can do with their encumbered property. It may be difficult or impossible to refinance mortgages, borrow money using the land as collateral, finance new buildings on the property or even purchase seed and fertilizer for the property as long as the liens remain in place.

At worst the landowners could be on the hook to pay Skypower’s creditor, Jacques Whitford Stantec, the $265,000 it says it is owed by Skypower.

The liens offer a cautionary lesson to those who choose to enter land agreements with developers. But, perhaps the most surprising information to come to light in court docuemnts obtained by the Times is that one of the landowner that appears to be caught up in the bankruptcy of Skypower is the County of Prince Edward. Three properties registered to the municipality are included in the list of properties covered by the construction liens.

The apparent participation of the County in Skypower’s project raises many serious questions: What deal was made between the municipality and Skypower? Why wasn’t this arrangement made public? Who knew about this? When did they know it? What were the financial terms? Are there other deals with other wind energy developers?

And if the municipality is a stakeholder in the Byran project, even in a marginal way, how can it be objective as to the appropriateness of industrial wind energy development in this County? Most County residents believed their municipality to be acting in good faith when it a held a public meeting into wind energy development at the end of September.

Councillor Peter Mertens said he has no knowledge that any municipal property had been optioned, leased or sold to Skypower or to any wind developer. Mayor Leo Finnegan was unavailable for comment. Chief Administrative Officer Dick Shannon did not respond to the Times inquiries by deadline.


Skypower first came to local prominence in the summer of 2007. They had been busy for months earlier acquiring options and leases on land primarily north of Picton up to Big Island, as well as around Milford. Until then, much of the wind energy interest had been focused in South Marysburgh. But Skypower’s strategy was to attempt to lock up the electricity transmission capacity by locating close to the largest transmission station in the County. Skypower had high-powered partners including an investment arm of Lehman Brothers, a large U.S. investment bank. When Lehman’s collapsed last fall, Skypower had not only lost a critical financial backer. The subsequent freeze on credit worldwide left the Toronto wind energy prospector in the same boat as its competitors—no capital, no credit but burning cash at a rapid rate.


Pretending otherwise, Skypower continued to contract services from Jacques Whitford, an engineering consultancy that would soon merge with Edmonton-based Stantec, to advance the status of the Byran project in Prince Edward County. It had hoped to get the project to such a state of preparedness that it could either be sold or possibly financed.

So it was that on Aug. 11, Skypower public relations representatives were in Picton pitching their project to the local community. They gave no hint as to the company’s troubles. Meanwhile, back in Toronto, Skypower management was busy preparing documents to file for creditor protection. The next morning a court granted them an initial order putting creditors on hold until the business could be refinanced or sold.


Since then a sales process has been underway, dismantling the company into bits and pieces. Skypower’s half-share of the Stone Mills solar array north of Napanee has been sold to a real estate developer, CIM Group, based in Los Angeles.

Twenty-two bids were received for various parts of Skypower’s development business including its leases and options that comprise the Byran project. But none of the bids received are for all of Skypower’s development projects.

So in September Jacques Whitford Stantec registered construction liens against Skypower’s interest in 150 properties in Prince Edward County to ensure it will get paid.

Last week those liens were perfected to establish its priority claim. This is required to validate and extend the claim. Aperfected lien is valid against bona fide purchasers of property, and even against a trustee in bankruptcy.

In effect, these manoeuvres make the purchase price for Skypower’s Byran project higher than it might fetch otherwise. This raises the prospect that Jacques Whitford Stantec may end up as owners of the County wind energy prospect.

Most troubling for landowners is that they may not know their land is encumbered with a lien until they try to sell part or all of it, or erect a new building or use it for collateral on a loan. Even renewing a mortgage may be made more complicated by the presence of the lien. At least one landowner with an agreement with Skypower was unaware of the lien on his property until contacted by the Times last week. Planning Commissioner Gerry Murphy was also unaware of the liens placed on County properties.

If you suspect your land may be encumbered by a Jacques Whitford Stantec lien you can check your property title at the Land Registry Office, 1 Pitt Street, Picton. Online you may visit the Wellington Times website for a link to the list of Stantec Construction Lien Properties.

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