A failed rent-to-own company was "in chaos" during its final months and now owes more than $27 million to creditors, a court-appointed receiver revealed today in an Ottawa courtroom.
J.C. Lacasse, the president of Golden Oaks Enterprises, began to shift from rent-to-own housing to promissory notes where he guaranteed returns to investors as high as 300 per cent, the court heard Thursday.
Brian Doyle of Doyle Salewski Inc. spoke before a judge to detail the financial situation of Golden Oaks. He said there were 134 promissary notes in all worth $12.4 million, plus millions more owed to other creditors.
Lacasse, who did not attend court, said he would file for bankruptcy on behalf of himself and his company. He also filed for bankruptcy twice in the early 1990s for other business ventures. CBC News earlier reported.
'Looking for work'
Doyle also told the court that Lacasse says he has no assets, is living with family and friends and is "looking for work."
- MAP | 48 properties owned by Golden Oaks Enterprises in Ottawa
- IN DEPTH | Embattled rent-to-own company facing heavy scrutiny
- INTERACTIVE | How Golden Oaks rent-to-own worked, who it affected
The receiver did say he thought rent-to-own tenants, who are owed money themselves, should be allowed to keep renting their homes for the present. That will ultimately require the agreement of mortgage holders, who would then have to wait to recover their own investment.
The hearing continues Thursday afternoon.
Golden Oaks and Lacasse are facing at least 10 lawsuits and complaints from multiple tenants, contractors and investors. Lacasse has also been evicted from his office space.
Former tenant doesn't expect to see any money
Former tenants said Lacasse entered into rental agreements with the promise the tenants could eventually own the property.
Chantal Scott's family of eight moved into one home under a rent-to-own deal only to be given days to move out by an investor with a second mortgage on the home.
Scott doesn't hold out much hope that she'll see any of her money back.
"The investors and the banks will all get their money first. I know my chances of having mine are very slim," said Scott.
Many unsecured creditors
Investors may not be as safe as Scott imagines, however, as many have promissory notes, putting them with tenants and contractors in the pool of unsecured creditors.
"Many of the people have invested their life savings … So it's really devastating." —Justin Fogarty, note-holders' lawyer
Justin Fogarty, the lawyer for the note-holders, met with them privately Wednesday night with some coming in from Toronto.
"Everybody's in a state of complete disbelief and anger," said Fogarty.
"A lot of people are also extremely worried because many of the people have invested their life savings and they're trying to figure out how they're going to be able to recover, substantially, their retirement income. So it's really devastating."
Golden Oaks bought most of its Ottawa homes in the last year with large mortgages and a flurry of second mortgages this spring.