Our Lady Peace play a show to mark the re-opening of the iconic Toronto music venue the El Mocambo in October, 2021.Chris Young/The Canadian Press
An Ontario court has approved the sale of the famed El Mocambo club in Toronto to a buyer that intends to keep it operating as a music venue, after former owner and Dragons’ Den star Michael Wekerle defaulted on $55.6-million in debt through companies he controls.
Documents filed by Ernst & Young Inc., which has been running a sales process for the property, show the firm recommended an offer by a numbered Ontario company whose director is Cyrus Madon, executive vice-chair at Brookfield Asset Management Inc. in Toronto.
Judge Peter Osborne approved the transaction at an Ontario Superior Court of Justice hearing on Tuesday. The deal is expected to close within a month.
Mr. Madon did not respond to requests for comment. He is also executive chair of Brookfield’s private equity group and has been with the company for about 27 years, according to his LinkedIn profile.
“There will be someone who’s continuing the heritage of that property and operating as a music venue,” said Graham Phoenix, a lawyer with Loopstra Nixon LLP who represents Ernst & Young, at the hearing.
The court appointed Ernst & Young as the sales monitor in April to find a buyer for the El Mocambo. After talking with 89 interested buyers, the company received three offers in the final round of bidding. The winning proposal came with the highest purchase price and no conditions. Financial terms were not disclosed.
However, Mr. Phoenix said at the hearing that there is “a significant shortfall” with respect to Toronto-based investment firm Ninepoint Partners, which provided the loans to Mr. Wekerle.
“This proceeding is not the end of the proceedings involving these parties,” he said.
Mr. Wekerle, in addition to the El Mocambo debt, has been on the hook for the repayment of $32.2-million in loans from Ninepoint related to a commercial real estate venture in Waterloo, Ont.
Ninepoint declined to comment. Mr. Wekerle did not respond to a request for comment.
Toronto-based lender Waygar Capital Inc., acting on behalf of Ninepoint, asked the Ontario Superior Court of Justice in January to put the El Mocambo into receivership. Waygar said Mr. Wekerle had defaulted on loans taken out in part to renovate the club, and that he had not made any payments since June, 2021. The court instead appointed a financial monitor to keep the venue operating while Ernst & Young looked for a buyer.
(Waygar had been the agent for a Ninepoint fund, but the relationship has since been terminated.)
The El Mocambo opened in 1948, and has hosted musical acts such as the Rolling Stones, Joan Jett and U2. Mr. Wekerle purchased the venue in 2014 for $3.8-million and spent more than $30-million on renovations. The relaunch was significantly delayed, in part by the COVID-19 pandemic.
The club has struggled to attract marquee performers since reopening in 2021, and has only been able to break even, without accounting for debt servicing costs, according to documents filed with the court.
“A lot of mistakes were made,” Mr. Wekerle previously told The Globe and Mail. “I don’t have that background in the music business, other than going to shows.”
Mr. Wekerle, who worked on Bay Street before appearing on Dragons’ Den, also said earlier this year that he had assembled a new investor group to make a bid for the El Mocambo, allowing him to reduce his own stake and to let industry professionals handle the operations.
