“Huot Group’s $150 Million Hidden Debt Ignored by Creditors for Years”

Creditors ignored for years the existence of a debt of $ 150 million from the Huot Group, the disclosure of which in February 2023 would have been one of the triggers of its financial debacle, learned our Bureau of investigation.

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In April 2020 and May 2021, the Huot Group took out a $120 million loan from a company then linked to Robert Giroux, a Quebec businessman who brought some 75 millionaires from Quebec to invest in the giant. real estate in exchange for interest of up to 12%.

It took until February 17, 2023 for a $150 million mortgage – taken on the buildings of the Huot Group and linked to this loan – to be registered in the land register. It was at this time that many then discovered the existence of this loan contracted three years earlier.

The rest is now known: a week later, the Huot Group revealed in a press release its significant financial difficulties and halted its construction sites, citing rising interest rates and inflation.

“Earthquake”

The disclosure of this additional debt caused a stir among other creditors of Stéphan Huot, according to our information.

“There was an earthquake,” illustrates a source familiar with the matter.

It is that lenders have invested colossal sums in the conglomerate of Quebec, ignoring its true level of indebtedness.

“Having known that there was a $150 million mortgage, I would never have made a loan,” complains a creditor, who has injected millions of dollars into a subsidiary of the Huot Group.

After a “long weekend” of investigation and verifications, creditors then realized the extent of the financial difficulties of the Huot Group, which did not even have enough money to pay its employees.

Ultimatum from a creditor

The publication of this $150M mortgage also involved one of the Huot Group’s largest lenders. Timbercreek Mortgage Servicing is now demanding reimbursement of $250 million within 60 days, failing which it will take over several residential buildings that make up the Quebec giant’s real estate portfolio.

The firm thus registered seven notices of exercise of sale under judicial control, at the beginning of May.

According to our information, Timbercreek is currently in contact with the group of Quebec lenders who have been working for weeks on a backup plan aimed at regaining control of the housing stock, in order to reach an agreement.

An “agreement”, defends Huot

Real estate developer Stéphan Huot has denied having had a “hidden debt”. He claims that he had an “agreement” with the company managed by Robert Giroux so that this $ 150 million mortgage would not be published, unless he was in default of payment, explained his spokesperson Florence Brouillard.

“But on February 17, Robert Giroux would have broken the agreement and would have published it, even if Stephan Huot was not in default of payment”, she insisted, without however advancing on the reasons explaining why this mortgage had not been made public when it was created.

Robert Giroux’s lawyer declined to comment on this case.

Financial meltdown

Made up of nearly a hundred companies active in about twenty varied business sectors, the Huot Group halted its construction sites and proceeded with layoffs in mid-February.

Financial difficulties forced the company to end part of the activities of the Capitale Hélicoptère complex, near the Quebec airport. Stéphan Huot has also left his position at the distribution center Transrapide, on the south shore of Quebec, which falls under the protection of the Creditors Arrangement Act.

Stéphan Huot – who has not publicly commented on this debacle – put up for sale his mansion in Lebourgneufhis Florida penthouse and had two lots seized in Lac-Beauport by his ex-wife, who claims $ 2.3 million.

Last April, the Huot Group had more than $900 million in active loans on its buildings. As of April 28, no less than 357 legal construction mortgages totaling $158.6 million had been registered on buildings of the conglomerate and its subsidiaries, according to data from the firm Terram Technologies.