Credit union sues Windsor Business Accelerator for $1.1M

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Described as a “huge shock” by a local non-profit organization devoted to the success of budding entrepreneurs, the Downtown Windsor Business Accelerator (DWBA) was served with legal notice this month that it’s being sued by its mortgage holder.

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Libro Credit Union Ltd. filed a civil lawsuit on June 9 in London’s Superior Court of Justice seeking a judge’s order that the DWBA pay it just over $1.1 million for the commercial mortgage held on a property at 1501 Howard Ave. If that payment isn’t, or can’t, be made, the request is for the court to order the DWBA’s current home be surrendered to Libro.

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“Obviously, this came as a huge shock to us,” said business accelerator CEO Arthur Barbut. He said Libro has held a mortgage on the property the past five years but that, even during COVID, no monthly mortgage payments or other bills were ever missed.

“It’s kinda crazy,” said Barbut.

Citing confidentiality, a Libro spokesperson said in a statement Thursday the credit union could not comment on the matter.

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In an appraisal by FR Jordan & Associates dated this week, a copy of which was obtained by the Star, the property at 1501 Howard Ave., which includes a nearly fully occupied 55,000-square-foot building and a 75-spot parking lot, is valued at $3.52 million.

“They’re seeking, essentially, to take possession of a property with a mortgage at about a third of its assessed value,” said lawyer Andrew Colautti of Colautti Landry Partners, which is working on the Downtown Windsor Business Accelerator’s legal defence.

Barbut showed the Windsor Star a copy of a letter dated May 17 from Libro Credit Union to the DWBA advising of the automatic renewal of its five-year variable open term mortgage. Libro’s statement of claim was filed in court three weeks later.

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After failing to obtain a senior government grant to invest in property refurbishments to the historic old building, Barbut said his organization had recently sought higher refinancing in order to do that work, in part to meet demand for additional space. He said Libro rejected that request.

The DWBA, he said, needed that open term mortgage flexibility as it sought a new building owner or at least a new financial lender who would provide the extra investment capital.

Colautti said another Libro letter followed a short time later, calling in the mortgage and giving the DWBA 10 days to pay the total amount. In its lawsuit, Libro states the mortgage is “payable on demand” and that its terms “authorizes Libro to take possession of the Property in the event of default.”

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Colautti said the only default occurred when the DWBA couldn’t come up with a million dollars in short order.

“The concern here are the time constraints,” he said. “Nobody is suggesting Libro shouldn’t get its money.

“I don’t know of many businesses, let alone a non-profit, that can come up with a million dollars cash in 10 days. It doesn’t seem fair.”

Arthur Barbut, CEO of the Downtown Windsor Business Accelerator, is shown outside his Windsor office in this Aug. 24, 2022, file photo. Photo by Dan Janisse /Windsor Star

Barbut said there’s currently “a good offer” on the table from a local investor willing to buy the building, which he describes as prime commercial real estate just a two-minute drive from downtown Windsor. But that deal wouldn’t close until September.

If the sale goes ahead, Barbut said the DWBA would become a tenant rather than landlord, have its debts paid and money freed up to refurbish space to accommodate more business start-ups, as well as have funding secured to cover the next five to 10 years of operations.

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Opened in 2011, the Downtown Windsor Business Accelerator states it has played a role in more than 200 budding companies getting their start or expanding, resulting in the creation of 1,450 direct local jobs and generating about $30 million in new regional economic activity.

Unlike “most players in the entrepreneurial ecosystem,” Barbut said it does so without any core government funding. Rents, sponsorships, events, programming and “some” grants pay the way. One program begun in 2014 has seen the message of entrepreneurship brought to almost 5,000 local high school students, with Tepperman’s the corporate sponsor over the next three years.

Currently, the DWBA’s Howard Avenue location hosts about 30 business tenants, some of whom were “literally subsidized by us through COVID to help them survive,” said Barbut. He describes his organization as a “vital” asset for Windsor and essential to helping jump-start new local businesses through mentoring, networking, programming and by offering subsidized office space and other supports.

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Harrison Pensa LLP, the London law firm that filed the claim in court on Libro’s behalf, did not return a call from the Windsor Star. Responding to the Star’s requests for comment, a Libro spokesperson said it was “not appropriate for us to provide someone for an interview.”

A subsequent email from its communications manager stated: “Libro Credit Union has a duty to maintain strict confidentiality for all Owners, and we can’t provide any more details than in the statement of claim.

“We are long-term supporters of the Windsor Accelerator and its values, especially in encouraging entrepreneurs in the community.” Libro is one of the tenants at 1501 Howard Ave.

“I’ve been in business long enough to know you can always find a solution — there’s always a way in business,” said Barbut.

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One of the Downtown Windsor Business Accelerator’s tenants at 1501 Howard Ave. is Libro Credit Union, which has taken the DWBA to court over a mortgage dispute. Photo by Dan Janisse /Windsor Star

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