Lenders behind troubled luxury condo One Bloor West (formerly The One) are suing paving tycoon Jenny Coco and real estate mogul Sam Mizrahi over allegations that they have defaulted as guarantors of the project’s loans.
KEB Hana Bank, acting as trustee of two South Korean private real estate funds, is demanding that Coco and Mizrahi repay $1.5 billion in outstanding principal, interest and fees, according to a notice of application filed in court on Aug. 19.
The filing states that Coco and Mizrahi are guarantors on the loans in a personal capacity, meaning their personal assets — including homes, incomes and bank accounts — could be on the hook if KEB Hana Bank’s application succeeds, according to real estate lawyers who read the document at the Star’s request.
“The guarantors agreed, on an unconditional and irrevocable basis, and jointly and severally as primary debtors and not merely as sureties, to guarantee the due and punctual payment and performance when due of, among other things, all amounts owing by the borrower to the secured parties,” the document reads, in part.
Coco declined to comment for this story through her lawyer, Nina Perfetto. Mizrahi did not respond to the Star’s requests for comment.
The application to sue is still in the early stages and none of the allegations have been tested in court.
As of Sept. 4, the respondents, Coco and Mizrahi, had not filed responses to the application, according to the commercial list office at the Ontario Superior Court of Justice.
The Star could not reach the lawyers at Osler, Hoskin & Harcourt LLP representing KEB Hana Bank, except for Mark Sheeley, who declined to comment for this story.
KEB Hana Bank also alleges that Coco and Mizrahi are “jointly and severally” responsible for payment of the guarantee. This means that they could each be pursued for the full amount owed of $1.5 billion until the lenders are made whole, said Toronto real estate lawyer Bob Aaron, who is also a columnist for the Star.
“It looks to me like there is a lot of evidence of money owing and a lot of evidence of them (Coco and Mizrahi) being in default,” said Aaron, who is not involved in the lawsuit.
Property records show that Mizrahi owns three houses side-by-side in Toronto’s wealthy Forest Hill neighbourhood and another home near Ontario’s Blue Mountain ski resort.
Records show Coco was once registered as co-owner of a home on Warren Road, also in Forest Hill, but the title is now solely under her husband’s name, Michael Visocchi.
As of Aug. 19, the date of the application, portions of the outstanding loans will continue to be applied annual interest rates as high as 25 per cent.
One Bloor West (formerly The One) was placed into receivership in October 2023 following “numerous and mounting scheduling delays, budget overruns, and discord among key stakeholders on the project,” according to court filings. At the time, Mizrahi’s company was the skyscraper’s developer.
By late 2024, receiver Alvarez & Marsal selected Tridel as new development manager after it forced Mizrahi Developments out of the project.
Upon selecting Tridel, Alvarez & Marsal also announced it would be transitioning the receivership proceedings to proceedings under the Companies’ Creditors Arrangement Act (CCAA).
Meanwhile, litigation spanning several years has revealed a toxic dynamic between Coco and Mizrahi. In an affidavit filed as part of the receivership, their relationship was described as “increasingly acrimonious and dysfunctional.”
One lawyer working for a large corporate law firm, who asked to not be identified due to their involvement in a related proceeding, told the Star that it is possible KEB Hana Bank could reach a settlement agreement with Coco and Mizrahi before going to court.
The application to sue could also be a sign that the bank is not confident that it will recover its funds through the CCAA proceeding.
“It’s possible that the guarantee route may be faster than waiting for the CCAA to conclude and for the project to be finished and purchasers to pay for condo units and for all that to get worked out,” the lawyer said.
As of Sept. 4, a date for a hearing had not been set yet, according to the commercial list office. A case conference is scheduled for Sept. 25.
