B.C. court approves sale of Squamish-area ski resort development, despite government objections

An artist's rendering of the Garibaldi at Squamish ski resort project is seen in this image from the project website. (garibaldiatsquamish.ca)

Plans for a massive ski resort near Squamish, B.C., that have been in the works for more than two decades got a lifeline in the province's Supreme Court last week.

Justice Paul W. Walker approved a transfer of ownership of the insolvent companies responsible for the proposed 2,800-hectare resort, despite the provincial government's objections to the transaction.

The project and the companies

Garibaldi at Squamish Inc. (GAS) was founded in 2001 for the purpose of developing a proposed ski resort on Brohm Ridge, according Walker's decision, which was issued Friday and posted online Monday. 

The company owns roughly 90 per cent of Garibaldi at Squamish Limited Partnership, with another 10 per cent owned by the Squamish Nation.

Both GAS and the partnership are insolvent, and have been placed in receivership, with the consultant Ernst & Young Inc. appointed as the receiver.

Referred to in the decision collectively as the "Garibaldi entities," the companies have proposed the construction of "a world-class, all-season resort, encompassing skiing, snowboarding, mountain biking, and other alpine activities, on Nch’Kay Mountain near Squamish," according to the decision.

The decision indicates the resort would be built on 2,800 hectares of previously logged forest. Plans call for construction to take place in four phases over 30 years, with the completed resort boasting 126 ski and snowboard runs accessed via 21 ski lifts.

It's also supposed to include a residential component with "21,960 bed units spread out over 5,233 residential units representing hotel, condominium, townhouse, and detached dwellings" and result in "4,000 long-term operational careers" once complete.

'Reverse vesting order'

Whether the project will ever reach completion remains an open question, but Walker's ruling allows the companies to get out of the roughly $80 million of debt they owe and allows the new owners to proceed with time-sensitive work as a 2026 deadline approaches.

The Garibaldi entities' right to develop the project stems from an environmental assessment certificate granted by the province in 2016.

That approval came with 40 conditions that the companies must meet before construction can begin. The deadline for satisfying those conditions and obtaining provincial approval on a master plan, according to the court decision, is Jan. 26, 2026.

"The Garibaldi entities do not own any physical assets and do not generate revenue," the decision reads. "They have been dependent on third-party funding since inception."

According to Ernst & Young, as described in the decision, the companies' ability to raise funds has been "hindered" in recent years by "a lack of consensus amongst GAS’ directors over the direction of the company and the future of the project."

"EY also reports that eight of the construction pre-conditions, which are sequential in nature, are urgent and foundational to subsequent conditions since they inform the context of the remaining work to be done to satisfy the EA certificate," the decision reads. "EY reports they must be completed in the next 12 months and estimates the cost to complete the urgent construction pre-conditions is $5.5 million."

In light of the companies' substantial debt and lack of ongoing funding, the court-appointed receiver sought a buyer for the company's assets, which include the environmental assessment certificate, an interim agreement with the province allowing occupation of the lands, and some tax write-offs.

While there were several "expressions of interest" from potential buyers, the court decision indicates only one qualified bid was received.

That bid came from the Garibaldi entities' creditors – Aquilini Development Limited Partnership, Garibaldi Resort Management Company Ltd. and 1413994 B.C. Ltd. – who proposed to acquire them for the amount they were owed in debt, plus a few other considerations, including a "reverse vesting order."

Walker's decision explains that reverse vesting orders "are not the norm and should only be granted in exceptional circumstances," but concludes that such circumstances exist in this case.

The judge explains that an "RVO" is a transaction structured so that a debtor company's "good assets" remain with it, under new ownership, and its "unwanted" assets and liabilities are spun off into a separate "residual" company.

In this case, the residual company would be assigned into bankruptcy, according to the decision.

"To give effect to the Transaction, the Garibaldi entities will cancel all shares of GAS’ existing shareholders and Partnership units and issue new shares and new units to the petitioners," the decision reads. "Thus, there is no proposed transfer or assignment of the EA certificate and the interim agreement. The result is a change of control."

Ernst & Young, the Garibaldi entities, their creditors and the Squamish Nation all either supported or expressed no objection to the transaction. Only the province was opposed.

The provincial government's objections

The province raised three objections to the transaction.

First, it argued that the court does not have jurisdiction to allow a reverse vesting order under the federal Bankruptcy and Insolvency Act.

Second, it argued that even if the court has jurisdiction, it should not allow an RVO in this case because doing so would circumvent provincial legislation and decision-making authority.

Finally, it argued that the terms of the proposed transaction were too broad and would release the purchasers from their obligations under the provincial Environmental Management Act. This last concern was resolved through a change of wording on the transaction.

Walker addressed and dismissed the other two concerns, concluding, first, that there was no reason to ignore previous court rulings that found the courts do have jurisdiction to allow a variety of remedies – including RVOs – in Bankruptcy and Insolvency Act cases.

"In contrast to the province’s characterization of the BIA as a rigid, formulaic, rules-based statute, an expansive interpretation of flexibility of those sections of the BIA to allow insolvency judges to react to circumstances as they arise to do what practicality demands and justice dictates in BIA proceedings, including receiverships, was remarked upon (in court decisions) as far back as 1994," Walker's decision reads.

Regarding the specific RVO proposed for the Garibaldi entities, Walker found the province's legislative and decision-making authority would not be circumvented by the transaction.

Indeed, the judge noted that the provincial Environmental Assessment Act is "silent" on circumstances involving the change of control of a company with an approved environmental assessment certificate.

The province's "transfer policy and procedures" does mention changes of control, and specifically says that a request to transfer a certificate is not required in cases where the approved entity experiences a change of control.

"This is not a case where the RVO seeks to circumvent or work around provincial legislation, legislative intent, and statutory decision-making powers," the decision reads. "To the contrary, the province has specifically exempted from the transfer process the change of control mechanism called for in the transaction."

"The province is the only stakeholder objecting to the transaction despite its stated desire for the project to complete. None of its statutory powers are adversely affected. There is no other viable alternative at this juncture to preserve the economic benefits to all stakeholders."

A statement on the homepage of the Garibaldi at Squamish project website acknowledges Walker's decision to approve the transfer to "Aquilini Development Limited Partnership."

"Aquilini remains committed to developing a world-class all-season resort that achieves the highest environmental performance in North America, while responsibly meeting the growing demand for outdoor recreation infrastructure in B.C.’s South Coast," the statement reads.