The Globe and Mail reports in its Friday edition that an Ontario bankruptcy trustee has launched an investigation after a developer failed to pay millions of dollars owed to investors who financed a housing development north of Toronto. The Globe's Janet McFarland writes that Grant Thornton LLP was appointed in June as bankruptcy trustee to oversee the Eden housing project in King City, which was completed last year. The trustee is investigating why cost overruns revealed after the houses were built and sold meant no money was left to repay $7-million to a group of lenders. FAAN Mortgage Administrators is overseeing the loan on behalf of the 129 investors who financed the project through a syndicated mortgage arranged by consultant Fortress Real Developments. FAAN was appointed last April to take control of $560-million in outstanding syndicated loans that Fortress helped arrange from 11,000 individual investors for an array of construction projects. FAAN said in its bankruptcy application that companies associated with the project "have not provided satisfactory information explaining the abrupt downturn of the Eden borrower's financial position and the resultant disappearance of $7-million from the Eden borrower's coffers."
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