The past few years have seen an unprecedented
boom in real estate development. However, that boom
phase took a definite pause during the credit crunch.
Driving through the city of Toronto, it was easy to
spot the many condominium projects which have not
broken ground due to the recession having intervened.
In addition, some real estate projects that had already been commenced ran into trouble, leaving stakeholders in the lurch. While many industries have been facing such difficulties, the unique aspect of a real estate development insolvency is that often the debtor companies involved are incorporated for the single purpose of completing the real estate development.
Unlike many other types of businesses where the
business will continue on indefinitely, such as manufacturing
or retail operations, real estate development
projects have a finite lifespan and unique challenges, which may alter the approaches that the various stakeholders will choose to take when approaching the insolvency of an unfinished real estate project. For these reasons, these insolvencies provide for some interesting legal and practical issues, even though the difficulties facing developers may have abated.
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