Quest University’s biggest lender is suing the school after declaring that it’s allegedly owed $23.4 million.
This claim has been filed despite the fact the courts recently granted Quest financial protection under the Companies' Creditors Arrangement Act, or CCAA, in January.
On Feb. 13, the Vanchorverve Foundation filed a lawsuit against Quest in the Supreme Court in Vancouver.
PriceWaterHouse Coopers, or PWC, the independent monitor for Quest’s financial proceedings, previously filed a report to court identifying Vanchorverve as an entity managed by Blake Bromley, one of the key figures in Quest’s founding.
Bromley is the president of Benefic Group, which specializes in strategic donation strategies and manages various foundations, the report says.
The CCAA financial protection will prevent the school from going into bankruptcy or receivership until May 29, 2020.
Quest sought the protection earlier this year after Vanchorverve called in its debt. The civil claim filed by Vanchorverve states that Quest owed it $23.4 million as of November 2019.
The CCAA stay of proceedings generally shields institutions from legal action, which makes it unclear as to whether this lawsuit will be allowed to proceed.
In response to the lawsuit, Quest University’s lawyers say that this legal action violates the stay.
“Under the court orders in these proceedings, currently no party can commence an action against Quest, unless Quest and the monitor consent, or the court permits it,” wrote John Sandrelli, the school’s lawyer, in an email to The Chief. “Neither Quest nor the monitor have consented.”
Vanchorverve did not serve Quest or its legal counsel with the lawsuit, and therefore the school hasn’t filed a statement of response, Sandrelli said.
Quest’s spokesperson, Jasmine Aimaq, said the school is considering its options, and will address the matter in court as necessary.
“It’s unclear why the Vanchorverve Foundation would actively and intentionally violate the stay that's in place during the CCAA proceedings,” Aimaq said.
In the lawsuit, Vanchorverve asks the courts to declare that Quest owes the foundation money and to force the school to pay back the amount owed.
It also asks the court to appoint a receiver and manager over all of the school’s assets and property as per the Bankruptcy and Insolvency Act.
Vanchorverve says in the claim that it is now the lender in a loan agreement that was originally formed between Quest and other entities.
The claim says Quest entered into loan agreements as a borrower with Global Charity Fund as the lender between 2011 and 2014.
The PWC report says Bromley arranged financial support to Quest through the Global Charity Fund.
“A source of discontent between Quest and Mr. Bromley is based on Quest’s expectation that the funds advanced by [Global Charity Fund] were intended to be gifts,” reads the report.
Vanchorverve’s claim says the loan agreements with the Global Charity Fund were consolidated and transferred to the Foundation for Public Good.
Around this time, Quest agreed to secure the loan with the Foundation for Public Good with a mortgage on some of its lands and an assignment of rents, among other things.
The claim says the portion of land that was mortgaged is called Lot 1.
In the PWC report, Lot 1 is identified as the central campus area where core academic buildings, a recreational complex and student residences were built.
The loan and security agreements were later transferred to the Charitable Impact Foundation, or CHIMP, the claim says.
CHIMP was founded by Bromley’s son, John Bromley, the organization’s website states.
CHIMP would later transfer the loan and security agreements to Vanchorverve Foundation, Vanchorverve’s claim says.
The Vanchorverve claim says the mortgage terms state that if Quest enters into another mortgage agreement offering up the already-mortgaged lands as security without the written consent of Vanchorverve, Vanchorverve may call in its loan immediately.
The claim says that on March 2017, Quest entered into a loan and security agreement with Pacific Coast Financial Group. This included a mortgage and an assignment of rents.
This was done without the knowledge or consent of the Foundation for Public Good, which was Vanchorverve’s predecessor, the claim says.
The monitor’s report shows that Quest owes Pacific Coast Financial $1 million as of Dec. 31, 2019.
An affidavit filed in court on Jan. 23 by Leslie Brandlmayer of Benefic Group, which is headed by Bromley, says Pacific Coast is controlled by Michael Hutchison, who was a member of Quest’s board of governors at the time the loan agreement was made.
Hutchison resigned from Quest’s board of governors in 2019, according to a past report from The Chief.
In April 2017, Quest also entered into a loan and security agreement with numbered corporation 1114586 BC Ltd., or 1114, the claim says. This arrangement also included a mortgage and an assignment of rents.
Vanchorverve’s claim says that this was also done without the knowledge or consent of the Foundation for Public Good.
The Brandlmayer affidavit says that the numbered corporation is owned either directly or indirectly by Stuart Louie, who sits on Quest’s board of governors.
The monitor’s report shows that Quest owes the numbered corporation $1.5 million as of Dec. 31, 2019.
The Vanchorverve claim says, Vanchorverve sent a letter to Quest in 2018 demanding repayment of its debts. The foundation would later send another letter in November 2019 demanding repayment.
*Please note, a correction has been made to this story since it was first published to fix a misspelling of Leslie Brandlmayer's last name.
