Mizrahi’s Ottawa insolvency case highlights perils of secret real estate loans

A recent court judgment against a company controlled by Toronto-area real estate developer Sam Mizrahi over a $12.9-million loan made against an Ottawa condominium project includes allegations of secret loans not initially disclosed to other lenders.

The ruling from Justice Charles Hackland rejected claims by Mr. Mizrahi that one of his lenders, V2 Investment Holdings Inc., had acted in “bad faith” in attempting to register a previously unsecured loan against a development property. Justice Hackland found in favour of V2 and affirmed that the $12.9-million debt had accrued another $1.4-million in interest since it had first been taken out in 2019.