A small group of landlords who own hundreds of rental properties across the province have run out of money, owe over $144 million in unpaid loans and face dozens of lawsuits from creditors, according to documents filed with the Ontario Superior Court of Justice.
Dylan Suitor, Ryan Molony and Aruba Butt are behind 11 now-insolvent corporations that face a “liquidity crisis” with only $100,000 in the bank, the documents say.
The landlords and their corporations are based in the Hamilton area, but specialize in buying, renovating and in some cases relisting “distressed residential real estate in undervalued markets,” said a court factum.
Those markets are in Timmins, Sault Ste. Marie and Sudbury, as well as smaller communities, including Kirkland Lake, Temiskaming Shores and Val Caron.
Create a company, making sure that personal assets are insulated from corporate liabilities.
As a corporation, raise funding through equity and debt to support investing in offices, staff, etc, as needed to operate a new venture. Lenders assess the business to determine if it’s a good credit risk, making money if the business succeeds and taking a potential loss if it doesn’t.
Company goes bankrupt.
Company assets are liquidated and disbursed to debt holders (who knew the risks going in) to minimize their losses while owners and employees are insulated from personal liability.
Why? To encourage entrepreneurship: who would want to start a restaurant or coffee shop if they knew they would be personally liable if the business failed?
Is it possible to misuse limited liability corporations for nefarious purposes? Of course. But it’s absurd to imply they don’t serve an important social purpose.
I guess I did heavily imply that the concept of limited liability companies is evil by design. That’s on me. My intention was to call out the egregious misuse of them.
I’m not even so much concerned that the system is possible to abuse as that it not seen as abuse by too many.
You are not logged in. However you can subscribe from another Fediverse account, for example Lemmy or Mastodon. To do this, paste the following into the search field of your instance: !canada@lemmy.ca
It’s all in the framing:
Why? To encourage entrepreneurship: who would want to start a restaurant or coffee shop if they knew they would be personally liable if the business failed?
Is it possible to misuse limited liability corporations for nefarious purposes? Of course. But it’s absurd to imply they don’t serve an important social purpose.
I guess I did heavily imply that the concept of limited liability companies is evil by design. That’s on me. My intention was to call out the egregious misuse of them.
I’m not even so much concerned that the system is possible to abuse as that it not seen as abuse by too many.