Toronto’s storied El Mocambo music venue is up for sale after owner and former Dragons’ Den star Michael Wekerle defaulted on $55.6-million in debt through companies he controls.

An Ontario court signed an order last Friday appointing Ernst & Young Inc. to oversee the sale of the downtown club. The bidding process attached to the order anticipates a deadline of June 30 for binding offers and a closing date no later than August 15.

Waygar Capital Inc., a lender in Toronto, filed an application in January to put the El Mocambo into receivership, saying that Mr. Wekerle had not made any payments since June, 2021 on loans he had taken out in part to renovate the club. At a hearing last month, lawyers for Waygar asked Ontario’s Superior Court of Justice to appoint Fuller Landau Group Inc. as the receiver, saying the club would be shut down and cancellation notices sent out to those who had booked events.

Counsel for Mr. Wekerle objected and said ceasing operations would destroy the value of the El Mocambo, adding that more than 60 events were scheduled for the next three months.

Justice Peter Osborne instead appointed Fuller Landau to act as a financial monitor for the El Mocambo, allowing the club to continue operating under existing management. “While there is no formal receivership here, the temporary oasis is appropriate to provide the necessary stability during the marketing processes,” he wrote in an endorsement dated April 4.

Steven Graff, a lawyer with Aird & Berlis LLP who represents Waygar, said he expects interest in buying the venue to be “robust.”

Ernst & Young declined to comment.

“Business will continue as usual with the El Mocambo management team maintaining their excellent concierge service to clients,” Mr. Wekerle said in an e-mailed statement, adding that Ernst & Young is “taking all necessary steps to find a buyer who will preserve the legacy of the El Mocambo.”

Mr. Wekerle, who earned a reputation as a brilliant trader on Bay Street before becoming a TV star, told The Globe and Mail earlier this year that he wanted to remain involved with the El Mocambo but with a significantly reduced ownership stake, allowing others with industry experience to run the club. He also said he had assembled a new investment group to make an offer for the El Mocambo.

The club has been a fixture in Toronto since it opened in 1948. Mr. Wekerle purchased the venue in 2014 for $3.8-million and eventually spent more than $30-million on renovations. The relaunch was significantly delayed, in part by the COVID-19 pandemic, and since the club reopened in 2021 it has struggled to book marquee names to perform.

The loans to Mr. Wekerle were provided through the Canadian Senior Debt Master Fund managed by Ninepoint Partners in Toronto, which retained Waygar as a consultant for the fund.