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SATURDAY,FEBRUARY22,2020 | THEGLOBEANDMAIL O REPORTONBUSINESS| B3
A Toronto condo developer and
its former president are at odds
over the financial viability of four
high-rise projects under way in
Toronto.
A 33-page wrongful dismissal
complaint filed on Jan. 21 by Ma-
ria Athanasoulis alleges Cresford
Developments has a “cash crisis,”
and is failing to pay contractors
and incurring costly delays on its
projects. Ms. Athanasoulis had
also worked as a sales and mar-
keting leader before leaving the
company in January.
Cresford’s chairman, Daniel
Casey, a long-time developer in
Ontario who sits on the board of
Gerry Schwartz’s Onex Real Es-
tate Partners, is personally
named in Ms. Athanasoulis’s
claim. A statement of defence
and counterclaim – filed in Onta-
rio Superior Court on Friday by
Mr. Casey and Cresford’s counsel
Allan O’Brien of Nelligan O’Brien
Payne LLP – alleges that Ms. Ath-
anasoulis “exaggerated the size
and urgency of Cresford’s paya-
bles and cost overruns” and ac-
cuses her of breaching her fiduci-
ary duties to the developer.
Mr. Casey’s counterclaim ac-
knowledges that “there were cer-
tain financial issues that would
have to be dealt with, but Cres-
ford, based on [Ms. Athanasou-
lis’s] analysis, would have about
a year to resolve those issues” as
of August, 2019.
Ms. Athanasoulis claims she
was sidelined when she attempt-
ed to arrange a deal to restruc-
ture the company by selling off
some of its key real estate hold-
ings. Ms. Athanasoulis is seeking
close to $50-million in compen-
sation, saying she is owed 20 per
cent of as-yet-unrealized profits
from four condominium projects
in the city’s core.
In her lawsuit, Ms. Athanasou-
lis estimates that Cresford needs
close to $150-million to finish
construction on projects current-
ly under way. The filing allegesinstances where Cresford compa-
nies shifted construction funds
from previous projects in order
to pay bills on newer ones, leav-
ing both projects short of cash.
“In order to complete the Pro-
jects, Cresford must meet its obli-
gations to lenders, contractors
and other stakeholders. This re-
quires access to funding that
Cresford does not currently
have,” the lawsuit claims.The four active Cresford con-
dominium projects include: The
Clover on Yonge (170 Merton St.),
a 44-storey tower that has 523
units pre-sold; Halo Residences
(480 Yonge St.) a 38-storey pro-
ject with 414 presold units; 33
Yorkville Residences, a 41-storey
tower with 1,028 presold units,
and YSL Residences (383 Yonge
St.), a proposed 85-storey tower
that is projected to have more
than 1,100 units.
The filing describes escalating
construction costs for key inputssuch as steel and concrete begin-
ning in the fall of 2018. Ms. Atha-
nasoulis said the Clover project
was facing $50-million in extra
costs, at the same time the Halo
project faced overruns close to
$45-million. The lawsuit cites a
third-party review by cost con-
sultants CB Ross that is said to
show 33 Yorkville’s budget need-
ed another $65-million. Some of
those bills were paid, but others
remained outstanding.
“The only funds invested in
Clover, Halo, 33 Yorkville and YSL
were generated from earlier pro-
jects that Cresford completed but
these projects did not generate
nearly enough cash to satisfy the
requirements. But taking funds
from predecessor projects did
not solve the problem. Instead, it
caused the cash flow problem to
grow and spread,” the lawsuit
claims.
Cresford’s counterclaim alleg-
es that in the late summer and
early fall of 2019, Ms. Athanasou-
lis pitched a deal to sell the com-
pany to a third party for $125-mil-
lion. It also alleges she “breached
her fiduciary duties to Cresford
and Mr. Casey by: personally en-
tering into an undisclosed agree-
ment with the potential purchas-er which was in direct conflict
with her fiduciary duties to Cres-
ford and Casey,” and accuses her
of other actions “intended to cre-
ate a situation that would force
Casey to sell Cresford assets at
liquidation value to the purchas-
er of her choice.”
Cresford’s statement of de-
fence alleges that Mr. Casey never
finalized any compensation
agreement based on percentages
of sales commissions or project
profits. The defendants deny that
Ms. Athanasoulis was dismissed,
saying instead that she resigned
and was well-compensated. It is
seeking $17.5-million in damages
for her alleged mismanagement.
Throughout 2019, work was
continuing on the projects, but
Ms. Athanasoulis’s claim alleges
there is close to $20-million in
outstanding bills for construc-
tion and real estate commissions.
On Jan. 30, GLF Infrastructure
Inc. filed a lien against the title of
YSL Residences site (383 Yonge
St.) for shoring work that began
in June, 2019, saying it was owed
$3,746,724.19 out of a total bill of
$4.576-million.
None of the allegations by ei-
ther side has been tested in
court.FormerCresfordheadalleges‘cashcrisis’atcondofirm
Wrongfuldismissal
complaintsays
developerisfailing
topaycontractors
andincurringcostly
delaysonitsprojects
SHANEDINGMAN
REALESTATEREPORTER
[Maria]Athanasoulis
isseekingcloseto
$50-million in
compensation.