Form 7 COURT OF QUEEN'S BENCH OF ALBERTA IN BANKRUPTCY AND INSOLVENCY

Form 7
Rule 3.8
Clerk's Stamp
COURT FILE NO.
COURT
24-1957048
COURT OF QUEEN'S BENCH OF ALBERTA
IN BANKRUPTCY AND INSOLVENCY
JUDICIAL
CENTRE
EDMONTON
IN THE MATTER OF 1749049 ALBERTA LTD.
IN THE MATTER OF THE NOTICE OF INTENTION TO MAKE A
PROPOSAL OF 1749049 ALBERTA LTD., A CORPORATION WITH A
HEAD OFFICE IN THE CITY OF EDMONTON IN THE PROVINCE OF
ALBERTA
APPLICANT
PRICEWATERHOUSECOOPERS INC. IN ITS CAPACITY AS PROPOSAL
TRUSTEE UNDER THE NOTICE OF INTENTION TO FILE A PROPOSAL
DOCUMENT
THIRD REPORT OF PRICEWATERHOUSECOOPERS INC.
AS PROPOSAL TRUSTEE UNDER THE NOTICE OF INTENTION TO
FILE A PROPOSAL DATED MAY 11, 2015
ADDRESS FOR
Stephanie A. Wanke
Phone: (780) 429-6237
Fax: (780) 429-4453
Email: [email protected]
1
File 41632.30
OGILVIE LLP
1400 Canadian Western Bank Place
10303 Jasper Avenue
Edmonton, Alberta, Canada, T5J
3N6
A.
INTRODUCTION .................................................................................................................... 3
B.
UPDATE ON MCW APA .......................................................................................................... 4
C.
UPDATE ON THE PROPOSAL ............................................................................................... 4
D. MEETING OF CREDITORS .................................................................................................... 5
E.
OPINION OF PROPOSAL TRUSTEE ......................................................................................7
F.
CONCLUSION ......................................................................................................................... 8
EXHIBITS
A. Trustee’s Report on the Proposal dated April 16, 2015
B. Notice to Creditors
C. Notice of Proposed Amendment
D. Proposal dated April 16, 2015, as amended
E. Minutes from Meeting of Creditors
2
A. INTRODUCTION
1. This report (the “Third Report”) is filed by PricewaterhouseCoopers Inc. (“PwC”) in its
capacity as proposal trustee (“Proposal Trustee”) in connection with the Notice of
Intention to Make a Proposal (“NOI”) filed by 1749049 Alberta Ltd., operating as
Hemisphere Engineering (“the “Company” or the “Vendor”).
2. On February 3, 2015 (the “Filing Date”), the Company filed a NOI pursuant to Section
50.4(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (“BIA”) and
PwC was appointed as Proposal Trustee.
3. On February 5, 2015, the Company finalized its negotiations with a prospective purchaser,
MCW Hemisphere Ltd. (“MCW-H” or the “Purchaser”) and entered into an asset
purchase agreement (the “MCW APA”) dated February 11, 2015 the highlights of which are
as set out in the Proposal Trustee’s First Report.
4. On February 11, 2015, the Trustee filed its First Report to the Court dated February 11, 2015
(the “First Report”).
5. On February 17, 2015, the Court of Queen’s Bench of Alberta (the “Court”) granted an order
approving the MCW APA and the sale transaction and vesting title to the purchased assets in
MCW-H, upon meeting certain conditions including the delivery of a Trustee’s certificate.
(“Approval and Vesting Order”).
6. On February 26, 2015, the Company filed an application, returnable on March 4, 2015,
seeking an extension of the time within which the Company must file a Proposal (the
“Extension Motion”).
7. On February 27, 2015, the Trustee filed its Second Report to the Court dated February 27,
2015 (the “Second Report”).
8. On March 4, 2015, the Court granted an order extending the time for the filing of a proposal
by the Company until April 16, 2015.
9. The Company lodged a proposal with the Proposal Trustee dated April 16, 2015 (the
“Proposal”), which was filed with the Official Receiver on the same date.
3
10. On April 16, 2015, the Proposal Trustee mailed to the Company, the Superintendent of
Bankruptcy (the "Superintendent") and to all known creditors a creditors’ package
notifying the recipients of the meeting of creditors scheduled for May 5, 2015 (the “Meeting
of Creditors”) and enclosing, among other things, a copy of the Proposal Trustee’s Report
to Creditors on the Proposal dated April 16, 2015 (the “Trustee’s Report”). The Trustee’s
Report contains a summary of the terms of the Proposal and the Trustee’s comments on the
Proposal. A copy of the Trustee’s Report is attached hereto as Exhibit A.
B. UPDATE ON MCW APA
11. The sale of the assets to MCW has closed in escrow with an effective date of January 1, 2015.
In accordance with the agreement with MCW, the majority of the Company’s employees
were offered continued employment with MCW. Claims for outstanding wages have been
assumed by MCW as part of the transaction.
12. As required by the Approval and Vesting Order, the Trustee must complete a Trustee’s
Certificate and deliver it to the Purchaser to confirm that certain conditions have been met.
As at the date of this report, the Company is awaiting documents from the Purchaser’s
counsel to finalize the transaction and a copy of the Trustee’s Certificate will be provided to
the Purchaser and the Court upon receipt of these documents.
C. UPDATE ON THE PROPOSAL
13. On the 16th day of April, 2015, in accordance with the requirements of the BIA, the Trustee
gave notice (the "Notice") to the Company, to the Superintendent and to every known
creditor affected by the Proposal, whose names and addresses are shown in Exhibit B2 to
this report, of the calling of a Meeting of Creditors to be held on the 5th day of May, 2015 to
consider the Proposal.
14. With the Notice was included a copy of the Proposal, the Company’s Statement of Affairs, a
list of creditors affected by the Proposal who have claims of $250 or more, a form of Proof of
Claim and Proxy in blank, a Voting Letter and the Trustee's Report. A copy of the Notice, the
list of creditors, and the Statement of Affairs are attached and marked as Exhibits
B1, B2, B3, respectively.
15. Prior to the Meeting of Creditors, the Proposal Trustee conducted an enquiry into the
liabilities of the Company, the Company’s assets and their value, the Company’s conduct,
4
and the causes of the Company’s insolvency. A discussion of that review, along with a
summary of the Proposal and the Proposal Trustee's comments thereon are included in the
Trustee's Report.
16. Upon receipt of the Notice, the Canada Revenue Agency (“CRA”) indicated it took exception
to the release of Directors Liability in the Proposal. On April 24, 2015, the Company advised
it was amending its Proposal to delete Article 12.1 of the Proposal, which will result in the
Directors being fully liable for Director Liability Claims. On this same date, notice of this
amendment was given to all known creditors (attached as Exhibit C) and posted on the
Trustee’s website. No creditors, other than CRA, were affected by this amendment. CRA
submitted a revised vote upon receiving notification of this amendment. There were no
objections from creditors to this amendment.
17. On April 29, 2015, CRA’s deemed trust claim for source deductions was paid in full.
D. MEETING OF CREDITORS
18. The Meeting of Creditors was held on May 5, 2015 and was presided over by Mr. Don
MacLean ("Chairman") and Ms. Jennifer Pede of PwC.
19. The Proposal as amended was accepted by the required majority creditors at the Meeting of
Creditors. A copy of the proposal, as amended is attached as Exhibit D. The results of the
vote tabulated at the Meeting of Creditors are set out in the table below:
VOTE TOTAL FOR ALL CLAIMS
# Creditors
12
12
In favour
Against
Abstain
Total
# Voting in favour
$ Value represented by "in favour" votes
Creditors $
637,441
637,441
100.0%
100.0%
Equity Claims
20. The Proposal Trustee received Proofs of Claim from five former shareholders of the
Company for amounts owing to them for share redemptions. The Proposal Trustee has
admitted these claims as “equity claims” pursuant to section 54.1 of the BIA (“Equity
Claims”).
5
21. At the Meeting of Creditors the Chairman declared the Proposal accepted, but pointed out to
the creditors present that two of the Equity Claims had submitted proofs of claims and votes
as unsecured creditors; however, these votes had been excluded from the calculation of the
vote in accordance with section 54.1 of the BIA.
22. The Proposal Trustee understands that certain of the former shareholders may appeal the
determination of their claims as Equity Claims. The 30 day period to appeal has not yet
elapsed. The Proposal Trustee will ensure that the Equity Claimants are served with notice
of the application for the sanctioning of the Proposal by the Court.
23. For illustrative purposes, the Proposal Trustee has calculated the impact on the vote, in the
event all Equity Claims were classified as unsecured creditors and voted against the
Proposal.
VOTE TOTAL INCLUDING EQUITY CLAIMS AS CREDITORS
For illustrative purposes only
# Creditors
Creditors $
In favour
12
637,441
Against
5
198,331
Abstain
Total
17
835,772
# Voting in favour
$ Value represented by "in favour" votes
70.6%
76.3%
24. Accordingly, the Proposal would still have the requisite majority.
25. As stated in the Proposal, the secured creditor has agreed to postpone its security over the
Company’s assets, to the unsecured claims as listed by the Company in its Statement of
Affairs, but not Equity Claims, subject to approval of the Proposal. Two of the Equity
Claimants were listed as creditors in the Statement of Affairs, totaling claims of $26,433;
however, the remaining Equity Claims were not listed in the Statement of Affairs. The
secured creditor advised that it would not postpone its security to any of the Equity Claims,
even if they were determined on appeal to be unsecured creditors.
26. As noted in the Trustee’s Report, if the Proposal is not approved, the Company will be
deemed to have made an assignment in bankruptcy. In this scenario, the secured creditor
will likely enforce its security and realize whatever it can with nothing being available to the
unsecured creditors.
6
27. A copy of the minutes of the Meeting of Creditors is attached hereto as Exhibit E.
28. At the Meeting of Creditors, no creditor bought a motion to elect an inspector. As such, no
inspectors were appointed.
E. OPINION OF PROPOSAL TRUSTEE
29. The Proposal Trustee is of the opinion that:
a. The assets of the Company and their fair realizable value are as reflected on the
Statement of Affairs (see Exhibit C3); and
b. The liabilities of the Company are as reflected on the Statement of Affairs (see
Exhibit C3).
30. The Proposal Trustee is also of the opinion that:
a. Based on the information provided by the Company, the cause of 1749049's financial
difficulties were declining sales, difficulties in reducing staffing levels to match
revenues, continuing fixed overhead costs and resulting liquidity pressures;
b. Based on the Proposal Trustee's investigations, as detailed in the Trustee's Report,
the Proposal Trustee did not identify payments that may qualify as preferences
pursuant to Section 95(1) of the BIA; and,
c. The Proposal Trustee is not aware of any facts, pursuant to Section 173 of the BIA,
which may be proved against the Company and, therefore, is of the view that section
59(3) should apply.
31. The Proposal Trustee believes that the Proposal is advantageous to the Company’s creditors
for the following reasons:
a. If the Proposal fails to be sanctioned by the Court, pursuant to section 61(2) of the
BIA, there will be a deemed assignment into bankruptcy;
b. The secured creditor has agreed to postpone its secured claim to the claims of the
non-equity unsecured creditors as listed in the Proposal, subject to the Proposal
being approved.
7
c. The amount owing to the secured creditor exceeds the estimated proceeds from the
realization of all remaining assets. Accordingly, there will be no recovery for
unsecured creditors in a bankruptcy. As such, the Proposal provides a distribution to
the Company’s unsecured creditors in excess of that which would be available in a
bankruptcy; and
d. The Proposal is calculated to benefit the general body of the creditors.
32. At least fifteen days before the date of the hearing, the Proposal Trustee will cause to be sent
to the Superintendent, the Company, and to every known creditor of the Company, a notice
of the time and place of the hearing of the application to the Court to approve the Proposal.
33. The Proposal Trustee will forward a copy of this Third Report to the Superintendent as soon
as possible following its issuance.
F. CONCLUSION
34. In accordance with section 58 of the BIA the Proposal Trustee is seeking the approval of the
Court for the Proposal.
This report is respectfully submitted this 11th day of May, 2015.
PricewaterhouseCoopers Inc.
Proposal Trustee under the Notice of Intention to File a Proposal
Of 1749049 Alberta Ltd.
Jennifer Pede, CIRP
Vice President
8
EXHIBIT A
Trustee’s Report on the Proposal dated April 16,
2015
Estate No./Court No.:
24-1957048
IN THE MATTER OF THE PROPOSAL OF
1749049 ALBERTA LTD.
Trustee’s Report on the Proposal
TO:
THE CREDITORS OF 1749049 ALBERTA LTD.
This report provides an outline of the background and financial position of 1749049 Alberta Ltd. (formerly
known as Hemisphere Engineering Inc.) (“1749049” or the “Company”), including relevant information
that should be assistance to the Company’s creditors in considering their position with respect to the
Proposal (as defined herein) being presented by the Company to its creditors.
Enclosed is a copy of the Proposal (the “Proposal”) under Part III, Division I of the Bankruptcy and
Insolvency Act (the “BIA”) lodged with PricewaterhouseCoopers Inc. (“ PwC” or the “Proposal
Trustee”)by 1749049 Alberta Ltd. on April 16, 2015 and filed with the Official Receiver on April 16, 2015.
In preparing this report, the Proposal Trustee has relied upon unaudited information prepared by the
Company’s representatives, the Company’s books and records, discussions with the Company’s
representatives and its legal counsel. The Proposal Trustee has not audited, reviewed, or otherwise
attempted to verify the accuracy or completeness of this information.
Unless otherwise stated, monetary amounts contained herein are expressed in Canadian dollars.
Capitalized terms not otherwise defined in this report have the meanings attributed to such terms in the
Proposal.
A.
BACKGROUND
1749049, formerly Hemisphere Engineering Inc., is a privately held company, offering mechanical and
electrical engineering design services in Alberta. The Company has five divisions, including mechanical
design, electrical, commissioning, LEED & Sustainable and Power Systems and is headquartered in
Edmonton, Alberta, with an additional location in Calgary, Alberta.
The Company incurred losses since 2011 and breached its covenants with its secured lender.
In November 2013, the Company began a sales process to solicit offers from interested parties for a
possible transaction involving a sale of the business and/or assets of the Company. There was limited
interest expressed but it continued to seek a buyer for the business and/or the Company’s assets in order
PricewaterhouseCoopers Inc.
TD Tower, 10088 102 Avenue NW, Suite 1501, Edmonton, Alberta, Canada T5J 3N5
T: +1 780 441 6700, F: +1 780 441 6776, Direct T: +1 780 441 6723, Direct F: +1 780 441 6776, www.pwc.com/ca
to enhance recoveries for its creditors.
The Company exhausted its liquidity and on February 3, 2015 (“NOI Filing Date”), the Company filed a
Notice of Intention to Make a Proposal (“NOI”) under Subsection 50.4(1) of the BIA. On March 4, 2015,
the Court granted an order extending the time for filing a proposal until April 16, 2015.
Before and subsequent to the filing of the NOI, the Company held extensive discussions with MCW
Consultants Ltd. for the purchase of the Company’s assets. MCW Consultants Ltd. formed a new entity
called MCW Hemisphere Ltd. (“MCW”) to facilitate a transaction. On February 11, 2015, the Company
entered into an Asset Purchase Agreement with MCW for the sale of substantially all of the Company’s
assets, along with the assignment of its contracts. It is anticipated that the MCW transaction will preserve
the business as a going concern, preserve jobs, keep a tenant for the landlords and through the completion
of customer contracts, render the accounts receivable collectible such that the creditors can be paid.
The BIA requires that any sale of assets outside the ordinary course of business be approved by the Court
and, as such, the Company brought a motion for Court Approval once the Asset Purchase Agreement had
been executed. On February 17, 2015, the Court of Queen’s Bench of Alberta approved the sale of the
assets to MCW.
The sale of the assets to MCW has closed in escrow with an effective date of January 1, 2015. In
accordance with the agreement with MCW, the majority of the Company’s employees were offered
continued employment by MCW. All amounts due and owing are being paid in the normal course of
operations. MCW is contractually responsible for the payment of all liabilities incurred post-December
31, 2014, some of which were paid by the Company in order to ensure the continued supply of what it
considered to be critical goods and services for the ongoing operations. The Company and MCW are in the
process of adjusting the net amount payable.
While the intervening transaction with MCW adds some complexity to the situation in terms of
transactions occurring in the period between the effective date (January 1, 2015) and the NOI Filing Date
(February 3, 2015), the completion of the sale of the assets to MCW is expected to significantly enhance
recoveries to the creditors.
B.
SUMMARY OF PROPOSAL
A brief summary of the Proposal which the Company filed with the Proposal Trustee on April 16, 2015, is
provided below. The terms of the Proposal will only be effective if the following occurs:
a) the unsecured creditors vote for acceptance of the Proposal by a majority in number and two thirds in
value of Creditors voting on the proposal by voting letter or present, personally or by proxy, at the
Creditors’ Meeting; and;
b) the Proposal is approved by the Court, in accordance with the provisions of the BIA.
2
The Company’s Proposal provides for the orderly collection of the Company’s accounts receivable
enhanced as a result of the continuation of the business by MCW with the expectation that the creditors
will derive a greater benefit than would be realized from a bankruptcy. Collections of these accounts
receivable, net of costs, will be used to pay the creditors.
The security held by HSBC has been assigned to 1890642 Alberta Ltd. which has agreed to postpone its
secured claim to the claims of the non-equity unsecured creditors as listed herein, subject to acceptance of
this Proposal, significantly enhancing the prospects of full repayment to the unsecured creditors. The
Company is in the process of accumulating funds from the collections and anticipates that a payment to
the unsecured creditors (other than the holders of Equity Claims) will be made within six months of the
Plan Implementation Date. This process will be administered by the Proposal Trustee.
The Proposal provides that payments to the unsecured creditors (other than the holders of Equity
Claims) will be paid as funds become available in the following order, in accordance with the scheme
of distribution as set out in the BIA:

The fees and disbursements of the Proposal Trustee, including the legal fees and expenses of the
Proposal Trustee and the Company in connection with the preparation and proceedings arising
out of the Proposal;

Source deductions owing as at the NOI Filing Date, which are required to be paid within 6 months
of receiving Court approval of the Proposal;
The balance of the funds are to be distributed, on a pro rata basis, to the remaining unsecured creditors
(other than the holders of Equity Claims) of the Company. Payment will be made as soon as sufficient
funds are available until the claims are paid in full, or the accounts receivable are exhausted, whichever
occurs first.
Claims in respect of goods supplied, services rendered and other consideration given to the Company,
after December 31, 2014, the effective date of the sale, have been paid in full by MCW, in the ordinary
course of business and on terms agreed to between the Company and its respective creditors.
Sections 95 to 101 of the BIA shall not apply to the Proposal.
Upon the (i) approval of the Proposal by the Creditors and the Court and (ii) the making of the payments
provided for in the Proposal all Claims against the Company shall be forever discharged and released.
Upon making the payments referred to above, the Proposal will have been fully performed and the
Proposal Trustee will issue to the Company the certificate referred to in Section 65.3 of the BIA (Certificate
of Full Performance of Proposal).
3
C.
FINANCIAL POSITION AND CAUSES OF DIFFICULTIES
The Company’s financial difficulties have arisen due to the following:
a) Decrease in sales commencing in 2011, with the Company struggling to reduce its staffing levels to
match its declining revenues;
b) Continuing fixed overhead costs; and,
c) Resulting liquidity pressures.
D.
INTERIM RECEIVER
Not applicable
E.
IDENTIFICATION AND EVALUATION OF ASSETS
A summary of significant assets as at April 8, 2015 is as follows:
Estimated
NBV
$000's
Assets
Accounts receivable
Capital assets – proceeds on sale
Other assets
1,900
1,900
Estimated Realizable
Value per SOA
$000's
1,600
1,600
The estimated realizable value per the Statement of Affairs reflects the transactions in the intervening
period and the sale of the assets to MCW (as previously described in this report).
Accounts Receivable
According to the Company’s books and records, the accounts receivable balance as at December 31, 2014
was approximately $4.0 million. Since this date, the Company has collected some of its accounts
receivable which were used to pay down HSBC. The Company has undertaken a detailed analysis of its
accounts receivable to determine the collectability of each account taking into consideration historic bad
debt rates, the nature of the customer and the aging of the receivable. As at April 8, 2015, the Company
had a remaining $1.9 million of the accounts receivable to collect and based on its analysis of collectability,
the Company has estimated that on a going concern basis approximately $1.6 million or 85% of its
remaining accounts receivable are collectible.
4
Capital Assets
According to the books and records, the net book value of the capital assets as at December 31, 2014 was
approximately $180,000. The capital assets consist of leasehold improvements, computers and office
furniture.
As previously noted, the Company’s assets were sold to MCW with an effective date of January 1, 2015.
Proceeds of $300,000 for the capital assets were received on February 18, 2015 and were paid to HSBC as
part of its security, net of a holdback of $25,000 required by the Court.
Other Assets
Other assets are comprised of a future tax asset and prepaid expenses and of no realizable value.
F.
CONDUCT OF DEBTOR
The Proposal Trustee has not performed an extensive review of the transactions of 1749049 Alberta Ltd. to
evaluate the existence of any possible payments or transactions which may be considered to be
preferences, settlements or reviewable transactions; however, made enquiries of management of the
Company to discuss the potential existence of such transactions. As at the date of this report, the Proposal
Trustee has not seen any conduct or evidence from the Company’s management or directors that would
indicate such transactions exist. Without additional investigation, the Proposal Trustee will not be in a
position to report on the existence of such transactions.
Other than some of the originally listed creditors that have been satisfied in the interim period as a result
of the assumption of those claims by MCW (the vast majority of these were employee wages claims) the
Proposal Trustee is not aware of transactions that would be considered payment of pre-filing debt, not
necessary for the preservation of the business.
G.
CREDITORS’ CLAIMS
The list of creditors and their claim amounts is part of the Statement of Affairs filed by the Company with
the Proposal and is attached to this report.
Secured Creditors
HSBC, the Company's principal secured creditor, was owed approximately $3.2 million as at December 31,
2014 ($3.7 million at NOI Filing Date). After partial repayment, the balance of HSBC’s claim was
assigned to 1890642 Alberta Ltd., who has agreed to postpone its claim to the claims of the non-equity
unsecured creditors listed herein, subject to their acceptance of this Proposal.
The Proposal Trustee obtained a legal opinion on the validity and enforceability of the security granted by
the Company to HSBC from independent legal counsel, Ogilvie LLP (“Ogilvie”). Ogilvie’s legal opinion
states that, subject to the customary assumptions and qualifications for an opinion of this nature, the
security interest of HSBC is valid and enforceable as against the Company.
5
The Proposal Trustee also notes that, based on its review of registrations of security interests against the
Company pursuant to the Personal Property Security Act (Alberta), in addition to the above noted
Secured Creditor, Hewlett-Packard Financial Services Canada Company, Konica Minolta Business and
Roynat Inc. have registered security interests against the Company. The Company has informed the
Proposal Trustee that MCW has renegotiated or assumed the equipment leases in respect of these
registrations. The parties holding these security registrations will be provided with notice of the Creditors’
Meeting and any remaining claims have been included in the list of unsecured creditors.
Preferred Creditors
According to the Statement of Affairs, the Company does not have any preferred creditors. All amounts
owed to the Company’s employees, in respect of outstanding wages, which may have existed as at the NOI
Filing Date, have been paid by the Company or by MCW in the ordinary course.
Unsecured Creditors
According to the Company’s Statement of Affairs, the Company’s unsecured creditors are owed
approximately $675k (including the deemed trust claim to CRA).
Contingent Creditors
The Company is not aware of any contingent creditors.
H.
PREVIOUS BUSINESS DEALINGS WITH THE DEBTOR
Since 2013, PricewaterhouseCoopers Inc. has been working with the Company to assess its financial
position, assist with evaluating its options and liaise with its primary secured creditor.
The undersigned Trustee advises that PricewaterhouseCoopers Inc. was appointed Trustee pursuant to a
Notice of Intention to File a Proposal on February 3, 2015. We confirm that we do not have any knowledge
of any conflict of interest situation arising from the acceptance of this appointment as Trustee under the
Proposal.
I.
INFORMAL MEETING WITH MAJOR CREDITORS
Not applicable.
J.
REMUNERATION OF TRUSTEE
The Trustee shall render accounts to 1749049 Alberta Ltd. for the fees and disbursements (including fees
and disbursements of its legal counsel) incurred by the Trustee in assisting in the formulation of and
administering this Proposal on a monthly basis. These fees are to be paid by 1749049 Alberta Ltd. from
funds collected on the Company’s accounts receivable balance at December 31, 2014 .
6
K.
OTHER
Not applicable.
L.
ESTIMATED REALIZATIONS
Proposal Accepted
The Company determined that it was in the best interest of all stakeholders to file a Proposal to facilitate
an orderly distribution to its creditors of the proceeds collected from the accounts receivable (as at date of
report $1.8 million). It is the Company’s expectation that creditors will derive a greater benefit from the
Company’s efforts to collect its accounts receivable than would be realized from a bankruptcy.
As noted previously in this report, the Company has finalized the sale of the assets and assumption of its
contracts through the sale to MCW which was approved by the Court on February 17, 2015 and the
transaction closed with an effective date of January 1, 2015.
In the Proposal Trustee’s view, the MCW transaction presents the best opportunity for the creditors to
maximize their recovery from the Company’s assets.
In connection with the Proposal, please note that the amounts owing to unsecured creditors and,
therefore, the estimated dividend to unsecured creditors, is subject to variation in the event that the
amounts included in the Proofs of Claim filed by the Creditors and accepted by the Proposal Trustee vary
from the amounts included in the Company’s Statement of Affairs as well as actual amounts collected on
the accounts receivable.
Distributions to unsecured creditors in respect of Proven Claims will be subject to the Superintendent of
Bankruptcy’s levy that will not exceed 5% of the dividend otherwise paid.
After the creditors have approved the Proposal, the Trustee will, in accordance with the BIA, make an
application to the Court for its approval.
Proposal Not Accepted
If the Proposal is not accepted by the unsecured creditors or the Court does not approve the Proposal, the
Company will be deemed to have made an assignment in bankruptcy. In this scenario, the secured
creditor will likely enforce its security and realize whatever it can with nothing being available to the
unsecured creditors.
M.
RECOMMENDATION
Based on the information set out in this report, the Trustee recommends that the unsecured creditors
accept the Proposal in order to allow them to maximize their recovery.
7
N.
PROCEDURES FOR DEALING WITH THE PROPOSAL
In completing the Proof of Claim form enclosed herein, creditors should include all amounts
outstanding as at February 3, 2015.
Any accounts arising subsequent to February 3, 2015 should not be included. Payment of these amounts
will be dealt with in the normal course of operations.
Please refer to the “Notice of Proposal to Creditors” enclosed in this package for further instructions
on the procedure for filing proofs of claim and voting letters.
It is expressly noted and should be clearly understood that PricewaterhouseCoopers Inc., in its capacity as
Trustee under this Proposal, assumes no personal liability for any claims against 1749049 Alberta Ltd.
before or after the filing of the Proposal.
DATED at Edmonton, Alberta, this 16th day of April 2015.
PRICEWATERHOUSECOOPERS INC.
Trustee
Per:__________________________________
Jennifer Pede
Vice President
8
EXHIBIT B1
Notice to Creditors
Notice of Proposal
pwc
Province of Alberta
Court File Number: 24-1957048
iN THE MATTER OF THE PROPOSAL OF:
1749049 Alberta Ltd. having its principal
place of business at 10950 - 119 Street, in
the City of Edmonton, in the Province of
Alberta, T5H 3N5.
Estate No: 24-1957048
1749049 ALBERTA LTD.
- and-
PRICEWATERHOUSECOOPERS INC.,
TRUSTEE
Notice of Proposal to Creditors
(Section 51(1) of the Bankruptcy and insolvency Act)
TAKE NOTICE THAT on April 16, 2015, 1749049 Alberta Ltd. ("1749049" or the "Company") of the
City of Edmonton in the Province of Alberta lodged with PricewaterhouseCoopers Inc., in its capacity as
proposal trustee (the tTrustee) a proposal (the "Proposal") pursuant to Part III of the Bankruptcy and
Insolvency Act (the "BIA").
TAKE FURTHER NOTICE THAT a general meeting of the creditors (the "Meeting") will be held at the
the offices of the Trustee, Suite 1501, 10088-102 Avenue, Edmonton, Alberta on the 5th day of May 2015 at
10:00 a.m., for the purpose of considering the Company's Proposal.
A copy of the Proposal, the Trusteets Report to Creditors on the Proposal, a condensed statement of the
Company's assets and liabilities, a list of the creditors whose claims amount to $250 or more, a Proof of
Claim Form, General Proxy and Voting Letter are enclosed herewith.
PricewaterhouseCoopers Inc.
TD Tower, ioo88 102 Avenue NW. Suite 1501, Edmonton, Alberta, Canada T5J3N5
T: +1780441 6700, F: +1 780 441 6776, www.pwc.com/ca
pwc
The creditors or any class of creditors qualified to vote at the Meeting may by resolution accept the Proposal
either as made or as altered or modified at the Meeting. If so accepted and if approved by the Court, the
Proposal is binding on all the creditors.
The Proof of Claim Form, General Proxy and Voting Letter intended to be used at the Meeting must be
lodged with the Trustee prior to the commencement of the Meeting and should be forwarded to:
PricewaterhouseCoopers Inc.
Proposal Trustee of 1749049 Alberta Ltd.
Suite 1501, I0088-l02AvenueNW
Edmonton, AB T5J 3N5
Attention: Corinne McKay
Telephone:
1 (780) 441-6700
Facsimile:
1(780) 441-6776
To be eligible to participate in the Meeting, creditors must have filed a Proof of Claim Form with the
Trustee prior to the commencement of the Meeting and creditors who are not attending the Meeting in
person and who are entitled to vote on the Proposal, or who wish to designate another party to attend the
Meeting and vote on their behalf are required to date, sign and return the General Proxy form to the
Trustee. Please note that in the case of a creditor which is a corporation, a General Proxy form
designating the individual who is to attend the Meeting on behalf of the corporation, must be filed before
the Meeting, in order for such a creditor to participate in the Meeting.
TAKE FURTHER NOTICE that creditors who have filed a Proof of Claim Form and who do not intend to
attend the Meeting in person or by Proxy may have their vote recorded by the Trustee, by completing and
returning the enclosed Voting Letter to the Trustee with their Proof of Claim Form.
Further information regarding the Proposal proceedings may be obtained from the Truste&s website at
w\vw.pwc.conl/ca/en/car/l 749O49albertaltd
Should you require any further information regarding these proceedings, you may contact the Trustee at
780-441-6700:
Dated at Edmonton, this 16th day of April 2015.
PricewaterhouseCoopers Inc., in
its capacity as Proposal Trustee of
1749049 Alberta Ltd.
and not in its personal capacity
nnifer L. Pede
Vice President
2
EXHIBIT B2
Notice to Creditors
List of Creditors
FORM 92 --- Continued
List of Creditors with claims of $250 or more.
Creditor
Address
Account#
Claim Amount
250.00
Beltline Real Estate Holdings
Ltd. (amount not yet
quantified)
PO Box 484
#210, 815-10 Avenue SW
Calgary AB T2R 0B4
Devon Golf & CC
1130 River Valley
Devon AB T9G 1Z3
14,577.80
Geneva Merger & Acquisition
Services of Canada (Ont.) Inc.
1 Yonge Street, Suite 1506
Toronto ON M5E 1E5
50,000.00
Grahame Morris (wages)
10722-128 Street NW
Edmonton AB T5M 0V9
2,726.39
Hanscomb Limited
503 - 10080 Jasper Ave
Edmonton AB T5J 1V9
2,205.00
HSBC Bank Canada
Bob Elliott
Suite 400, 888 Dunsmuir Street
Vancouver BC V6C 3K4
Hurleyworks Inc.
243 Byrne Place SW
Edmonton AB T6W 1E3
11,203.50
John Chomiak (wages)
RR #1
Mundare AB T0B 3H0
18,822.77
Konica Minolta Business
100-1235 North Service Rd
W
Oakville ON L6M 2W2
Mobility Central
5, 14220 Yellowhead Trail
Edmonton AB T5L 3C2
N. Patrick Fleming
8639-77 Street
Edmonton AB T6C 2L9
13,216.62
Parlee McLaws LLP
10180-101 Street
1500 Manulife Place
Edmonton AB T5J 4K1
84,393.63
Receiver General for Canada
(GST)
Ottawa Tax Ctr
A100, 875 Heron Road
Ottawa ON K1A 9Z9
113,974.50
Receiver General for Canada
(source deductions - deemed
trust)
875 Heron Road
Ottawa ON K1A 1B2
Rogers Wireless Inc.
PO Box 8878 Stn Terminal
Vancouver BC V6B 0H6
Saba Migo Kelada
10 Leveque Way
St
Albert AB T8N 2P3
1,500,000.00
2,685.12
766.50
28,365.14
526.21
13,216.62
Page 2 of 3
FORM 92 --- Concluded
List of Creditors with claims of $250 or more.
Creditor
Address
Account#
Claim Amount
Staples Business Depot
6 Staples Avenue
Richmond Hill ON L4B 4W3
303.95
Telus Mobility
PO Box 8950 Stn Terminal
Vancouver BC V6B 3C3
7,802.58
University Sports Publications
- Ontario
1063 King ST
W, Etobicoke Postal Stn A
Hamilton ON L8S 4S3
595.00
Vern Mantai (wages)
7016-163 Avenue NW
Edmonton AB T5Z 3X7
Web Mechanical Services Inc.
8047 Coronet Rd
33,389.57
6,592.85
Edmonton AB T6E 4N7
Willms Engineering Ltd.
Innovation Place
405-15 Innovation Boulevard
Saskatoon SK S7N 2X8
Winnington Properties
1, 12415 Stony Plain Rd
27,580.88
235,840.50
Edmonton AB T5N 3N3
Yellow Pages Group
7,011.79
16 Place Du Commerce
Ile-des-Soeurs QC H3E 2A5
2,176,046.92
Total
Page 3 of 3
EXHIBIT B3
Notice to Creditors
Statement of Assets & Liabilities
1
District of:
Alberta
Division No.
01 - Edmonton
Court No.
241 967048
Estate No.
24-1957048
Original
LjAmended
_Forrn 78_
Statement of Affairs (Business Proposal) made by an entity
Subsection 49(2) and Paragraph 158(d) of the Act I Subsections 50(2) and 62(1) of the Act)
In the matter of the Proposal of
1749049 Alberta Ltd.
of the City of Edmonton, in the Province of Alberta
To the debtor
You are required to carefully and accurately complete thIs form and the applicable attachments showing the slate of your alfairs on the date of the tiling of your
proposal (or notice of ntention, if applicable), on the 3rd day of February 2015. When completed, this form and the applicable attachments will constitute the Statementof
Maim arid must be verified by oath orsolemn declaration.
ASSETS
(as stated and estimated by the officer)
LIABILITIES
(as stated and estimated by the officer)
1. Unsecured creditors as per list A' ..................
Balance of secured claims as per list "B' .............
Total unsecured creditors.....................
2. Secured creditors as per list 'B" ....................
647,661.78
1. Inventory.......................................
0.00
0.00
2.Trade fixtures, etc.................................
0.00
647,691.78
1,528,365.14
3. Preferred creditors as per list C....................
0.00
4. Contingent trUst claims orother liabilities as per list'D'
estimated to be redairnable for...................
0.00
Total liabilities. ..................................
Surplus........................................
Other
property,
3. Accounts receivable and other receivables, as per list 'E'
2,176,046.92
NIL
as
Good ....................
1,922,459.26
Doubtful..................
0.00
0.00
Bad.....................
Estimated to produce...........................
4. Bills of exchange, promissory note, etc.. as per fist 'F'
1,64659626
5. Deposits in financial institubo......................
0.00
6. Cash .........................................
0.00
7.Livestock ......................................
0.00
8. Machinery, equipmentand plant ....................
0.00
9. Rea] property or immovable as per fist G'
0.00
10.Furniture ......................................
0.00
11.RRSPs, RRIFs, life insurance, etc ..................
0.00
12.Securities (shares, bonds, debentures, etc.)
0.00
Interests under wills.............................
13.
0.00
14.Vehicles .......................................
0.00
per
0.00
0.00
list 'H' ......................
If debtor is a corporation, add
Amount of subscribed capital
0.00
Amount paid on rapitat
0.00
Balance subscribed and unpaid .................
Estimated to produce .........................
0.00
0.00
Total assets ....................
1646,598.26
Deficiency.....................
529,448.66
the Town of Mundare in the Province of Alberta, do swear (or solemnly declare) that this statement and the attached lists are to the best of
e and complete statement c my affairs on the 16th day of April 2015 and fully disclose all properly of every descriplion that is in my
veon me in accordance with theAct.
rJERMy H. H. HOCKIW
BARRISTER AND SOLICITOR
NOTARY PUBLIC IN AND FOR
THE PRO VI4CE OF ALBERTA
Page 1
EXHIBIT C
Notice of Proposed Amendment
pwc
April 24, 2015
Estate #: 24 1957048
Court #: 24-1957048
To the Creditors of 1749049 Alberta Ltd. (o/a Hemisphere Engineering)
As previously advised, a copy of the Proposal (the "Proposal") under Part III, Division I of the Bankruptcy
and Insolvency Act (the "BIA") was lodged with PricewaterhouseCoopers Inc. C" PwC" or the "Proposal
Trustee") by 1749049 Alberta Ltd. ("1749049" or the "Company") on April i6, 2015 and filed with the
Official Receiver on April 16, 2015.
The Trustee has been advised that the Company intends to amend its Proposal at the general meeting of
creditors on May 5, 2015 (the "Meeting"), the details of which is enclosed for your reference.
Based on the information set out in the Trustee's report dated April i6, 2015 (previously provided) the
Trustee recommends that the unsecured creditors accept the Proposal in order to allow them to
maximLe their recovery. The amendment proposed by the Company does not change the Trustee's
recommendation.
The Proof of Claim Form, General Proxy and Voting Letter intended to be used at Meeting must be lodged
with the Trustee prior to the commencement of the Meeting and should be forwarded to our office as
previously communicated. If you have already filed these documents, there is no further action required
unless you would like to amend your vote already submitted.
Further information regarding the Proposal proceedings may be obtained from the Trustee's website at
http:J/www.pwc.com/car-17.lgo4gAlbertaLtd.
Should you have any questions or require further information, please visit contact Jennifer Pede at 780441-6855.
PricewaterhouseCoopers Inc.
in its capacity as Trustee under the Notice of intention
to Make a Proposal filed by
1749049 Alberta Ltd.
nnifer Pede
Vice-President
Enclosure
PricewaterhouseCoopers Inc.
TD Tower, .zoo88 102 Avenue NW, Suite 1501, Edmonton, Alberta, Canada T5J3N5
T: +1780 441 6700, F: +1 780 441 6776, www.pwc.com/ca
PAR L E E Mc LAWS
BARlsrKRs & SOUCITORS
P.TrNr & TRADLMA, K ACET5
JEREM IL UOCKIN, ().C.
DIRECTDJAL: 780423.8532
DIRLiCT FAX: 780.4232870
EMAIL: [email protected]
OUR FILE #: 271-58/il-Il I
April 24, 2015
Via Email
PricewaterhouseCoopers LLP
10088 - 102 Avenue NW, Suite 1501,
Edmonton AB T53 3N5
Attention: Jennifer Pede, CA, CIRP
Dear Madam:
Re:
1749049 Alberta Ltd., (the "Debtor") - Proposal Proceedings;
Bankruptcy Court File No.: 24-1957048
As you know, we represent the Debtor with respect to this matter.
I am instructed by the Debtor that it intends to amend its Proposal by deleting Article 12.1
thereof. As you know, the intention of this Article was to provide a release to the Directors of
the Debtor of "Director's Liability Claims" as defined in Article 7.5 of the Proposal. The
deletion of Article 12.1 will result in the Directors of the Debtor remaining fully liable for
"Director's Liability Claims".
I trust you will communicate this intended amendment to the Creditors at your earliest
convenience.
/E1EY T1. HOCKIN. O.C.
n ru IF.u
cc:
cc:
Client (via email)
PricewaterhouseCoopers Inc.
Attn. Don MacLean (via email)
1500 ManIift, PIac . 10180-101 Street
Edmonton, AS
Tel: 780.423.8500 Fax: 780.423.2870
fl)MONTOFe
WWPtI.COM
CALG#8Y
5t 41].
{E6851 196,DOCX I }
EXHIBIT D
Proposal dated April 16, 2015, as amended
District of Alberta
Division No. 01 - Edmonton
Court No. 24-1 957048
Estate No.: 24-1957048
Form 35
IN THE MATTER OF THE DIVISION I PROPOSAL 0F1749049 ALBERTA LTD.
AN iNSOLVENT PERSON
DIVISION I PROPOSAL (AMENDED)
(Section 50 of the Bankruptcy and Insolvency Act)
ARTiCLE I - DEFINITIONS
1.1 Definitions
In this Proposal, the following words and phrases shall have the following respective
meanings:
a) "Acceptance" means the acceptance of the Proposal by the Creditors and the
ratification of the Proposal by the Court;
b) "Act" means the Bankruptcy and Insolvency Act, RSC 1985, c. B-3 (as
amended);
c) "Certain Crown Claims" means those Creditors defined in Article 7.2 hereof;
d) "Claims" has the meaning ascribed thereto in the Act;
e)"Court" means the Court of Queen's Bench of Alberta in Bankruptcy and
Insolvency;
f) "Creditor" or "Creditors" means the creditors of 1749049 Alberta Ltd. affected by
this Proposal;
g) "Director's Liability" means the liability of the directors of 1749049 Alberta Ltd. in
regard to those claims against 1749049 Alberta Ltd. defined in Article 7.5 hereof
{E6858007.DOC; I }
2
in respect of which the directors of 1749049 Alberta Ltd. are liable in their
capacity as a director of 1749049 Alberta Ltd.;
h) "Insolvent Person" means 1749049 Alberta Ltd.;
i) "Meeting of Creditors" means the meeting of Creditors scheduled to consider and
vote on the Proposal;
j) "Notice of Meeting" means the notice of the Meeting of Creditors forwarded •to the
Creditors;
k) "Preferred Creditors" means all those Creditors of 1749049 Alberta Ltd. defined
in Article 7.7 hereof;
I) "Professional Fees" means, individually or cumulatively as the context requires,
the fees and disbursements of the Trustee under the Proposal of 1749049
Alberta Ltd., the fees and disbursements of the Trustee's legal counsel (if any),
and the fees and disbursements of legal counsel to 1749049 Alberta Ltd.
m) "Proposal" means the series of steps and arrangements contemplated herein, by
which the debts and obligations owing by 1749049 Alberta Ltd. to the Creditors
will be dealt with pursuant to Division I of Part Ill of the Act;
n) "Proposal Fund" shall mean the fund of money arising from the collection of the
Insolvent Person's accounts receivable, net of collection costs and expenses, to
be paid to the Trustee for the purpose of distribution to the Creditors of 1749049
Alberta Ltd. in accordance with the terms of this proposal;
o) "Proposal Implementation Date" means the date that rights and obligations under
the Proposal become effective and is the latest date upon which each of the
following events has occurred:
i.
the approval of the Proposal by the requisite majority in number and in
value of the Creditors required under Division I of Part III of the Act has
been obtained; and
{E6858OO7DOC; 1 }Page 2 of 15
3
ii.
an Order of the Court approving the Proposal has been obtained and the
appeal period from such Order has expired, or if any appeal is taken from
such Order, a final Order dismissing such appeal has been obtained;
p) "Proposal Valuation Date" means February 3, 2015;
q) '1749049" means 1749049 Alberta Ltd.;
r) "Termination Date" means the date upon which the claims of all Creditors have
been satisfied in accordance with the Proposal or otherwise satisfied;
s) "Trustee" means PricewaterhouseCoopers Inc., trustee under the Proposal;
t) "Unsecured Creditors" means those Creditors defined in Article 7.8 hereof;
u) "Valued Claim" means the claim of a Creditor as of the Proposal Valuation Date
which has been valued by the Trustee; and
v) "Wage Claims" means the claims .advanced against 1749049 by those Creditors
defined in Article 7.4 hereof.
ARTICLE 2- INSOLVENT PERSON
2.1
1749049, the Insolvent Person, hereby submits the following Proposal pursuant
to the Act.
ARTICLE 3- PURPOSE AND EFFECT OF PROPOSAL
3.1
The purpose of the Proposal is to allow 1749049 the opportunity to offer a
compromise to its Unsecured Creditors of their claims against 1749049. The
Proposal is not intended to affect any Secured Creditor of 1749049.
3.2
1749049 wishes to permit the Creditors to achieve a recovery on their claims
against I 749049 which is superior to that which the Creditors are expected to
achieve in the event that 1749049 were to become bankrupt.
{E6858007.DOC; 1)Page 3 of 15
4
3.3
The Proposal will become effective on the Proposal Implementation Date, on
which date the claims of the Creditors will be compromised in accordance with
the terms hereof.
ARTICLE 4- MEETING OF CREDiTORS
4.1
The Creditors shall be given formal notice to attend a Meeting of Creditors as
outlined in the Notice of Meeting.
ARTICLE 5- ADMINISTRATION OF THE PROPOSAL
5.1
The Creditors, with the consent of the Insolvent Person, may include such
additional provisions or terms in the Proposal with respect to the supervision of
the affairs of the Insolvent Person as they may deem advisable.
5.2
The Creditors may appoint one or more, but no more than five, inspectors of the
Proposal of the Insolvent Person.
5.3
The Proposal shall be terminated upon the date on which the claims of all
Creditors have been satisfied pursuant to the terms of the Proposal, or upon the
bankruptcy of the Insolvent Person, or as otherwise provided in the Act.
ARTICLE 6- DEFAULT BY INSOLVENT PERSON IN PERFORMANCE
OF PROPOSAL
6.1
The Insolvent Person shall be in default of its obligations under the Proposal in
the event that:
a)
it has not paid the full amount of the Proposal Fund to the Trustee on or
before the date(s) specified in Article 14.2 hereof for such payment(s) to
be made; or,
b)
the Insolvent Person shall have failed to comply with the requirements of
Article 14.3 hereof.
{E6858007D0C; I }Page 4 of 15
5
6.2
Where default is made in the performance of any provision of the Proposal and
the default is not remedied by the Insolvent Person or waived by the Inspectors,
or in the absence of Inspectors, by the Trustee or a majority of the Creditors as
defined in dollar value of proven claims, within thirty (30) days immediately
following the default, the Trustee shall so inform all of the Creditors and the
Official Receiver in the manner prescribed pursuant to the Act.
6.3
In the absence of Inspectors, the Trustee shall have the power to extend the time
for the making of any payment required to be made pursuant to this Proposal.
ARTICLE 7- DEFINITION OF CREDITOR CLAIMS
7.1
The claims of the Creditors shall have the respective definitions provided in this
Article 7.
7.2
"Certain Crown Claims" shall mean any claim of Her Majesty in the Right of
Canada or a Province or Territory of all amounts of a kind that could be subject to
a demand under:
a)
subsection 224.4(1.2) of the Income Tax Act;
b)
any provision of the Canada Pension Plan or the Employment Insurance
Act that refers to subsection 224.(1 .2) of the Income Tax Act; and
c)
any substantially similar provincial or territorial legislation that has a similar
purpose to the subsection 22.4(1.2) of the Income Tax Act.
7.3
"Secured Creditor" means a person holding a mortgage, hypothec, pledge,
charge, security interest or lien on or against the property of the Insolvent Person
or any part of that property as security for a debt due or accruing due to the
person from the Insolvent Person, or a person whose claim is based on, or
secured by, a negotiable instrument held as collateral security and in respect of
which the Insolvent Person is only indirectly or secondarily liable.
{E6858007.DOC; I }Page 5 of 15
6
7.4
"Wage Claim" includes any claim of employees and former employees of
1749049 for amounts equal to the amounts that such employees may be
qualified to receive pursuant to subsection I 36(1)(d) of the Act as at the Proposal
Valuation Date or of the filing of the Proposal.
7.5
"Director's Liability Claims" includes any claim for obligations of the Insolvent
Person where the claim extends to the Directors of the insolvent Person and
such Directors are by law personally liable in their legal capacity as Director of
the Insolvent Person for:
a)
Certain Crown Claims as defined in Article 7.2 hereof;
b)
Wage Claims as defined in Article 7.4 hereof;
C)
Goods and Services Tax ("GST") claims as defined pursuant to the Excise
Tax Act;
d)
WCB premiums as directed under any Provincial or Territorial Workers'
Compensation Act; and
e)
Any claim respecting any environmental contamination or condition under
any federal, provincial or territorial environmental act.
7.6
For greater certainty, "Director's Liability Claims" excludes any claims that relate
to obligations arising out of contractual obligations or claims that are based on
allegations of misrepresentation or wrongful or oppressive conduct.
7.7
"Preferred Creditor" includes any Creditor with a claim defined pursuant to
subsection 136(1) of the Act. However, "Preferred Creditor" shall exclude any
person advancing a Wage Claim.
7.8
"Unsecured Creditor" includes all persons to whom the Insolvent Person owes
any obligations of any nature and kind whatsoever, whether due or not due for
payment at the time of the filing of the Notice of Intention (February 3, 2015) and
including contingent or unliquidated claims arising out of any transactions
{E6858007.DOC; 1}Page 6 of 15
7
entered into by the Insolvent Person prior to the time of the filing of the Notice of
Intention, and shall include Equity Claims, but shall exclude the claims of
Secured Creditors, Wage Claims, Certain Crown Claims and the claims of
Preferred Creditors.
7.9
"Equity Claims" shall have the meaning set out in the Act and all provisions of the
Act applicable to Equity Claims shall apply in this Proposal.
ARTICLE 8- ARRANGEMENTS AFFECTING CANADA REVENUE AGENCY
("CRA")
8.1
The Insolvent Person shall be deemed to have completed a year-end on the day
prior to the filing of the Notice of Intention (February 3, 2015). Federal provincial
and territorial income taxes, including interest and penalty charges thereon and
goods and services taxes (GST), including interest and penalty charges thereon,
accruing due or payable for the current fiscal year up to and including the day
preceding the filing of the Notice of Intention shall be included as an unsecured
claim pursuant to Article 7.8 herein.
Any adjustments, assessments or
reassessments (if any) made by CRA for claims filed by the insolvent Person
prior to the date of the Notice of Intention in relation to income taxes or GST shall
be considered an adjustment, assessment or reassessment in relation to the preproposal period.
ARTICLE 9- ARRANGMENTS AFFECTING CERTAIN CREDITORS
9.1
Any indebtedness incurred by the Insolvent Person for the provision of goods,
services, supplies, or any other considerations subsequent to the filing of the
Notice of Intention and prior to the approval of the Proposal by the Court shall be
paid in full in the ordinary course of business from proceeds realized in relation to
the business operations in priority only to the claims of the Unsecured Creditors
as defined in Article 7.8 herein, existing at the time of the filing of the Notice of
Intention.
{E6858007.DOC; I }Page 7 of 15
S
9.2
Creditors dealing with the Insolvent Person following the time of the filing of the
Notice of Intention shall have no right of set-off.
9.3
Certain Unsecured Creditors of 1749049 whose claims arose prior to the
Proposal Valuation Date have been paid in order to assure the continued supply
of goods and services deemed critical to the continued operation of the business
of 1749049. Sections 95 to 101 of the Act will not apply to any such payments.
ARTICLE 10- ARRANGEMENTS AFFECTING CERTAIN CROWN CLAIMS
10.1
Intentionally deleted.
10.2
The Insolvent Person has already remitted payment directly to CRA for claims
defined in Article 7.2 hereof.
ARTICLE 11 - ARRANGEMENTS AFFECTING EMPLOYEES AND FORMER
EMPLOYEES
11.1
The claims as defined in Article 7.4 hereof of all amounts outstanding at the time
of the filing of the Notice of Intention or of filing the Proposal, together with all
amounts accrued due for services rendered after that date and before Court
approval of the Proposal, shall be paid in full immediately following Court
approval of the Proposal from proceeds realized in relation to business
operations and in priority to the claims of all other Creditors, however, payment to
wage claimants shall be subordinate to payment of the Professional Fees.
11.2
For greater certainty, the payment of the claims defined in Article 7.4 hereof shall
be the sole responsibility of the Insolvent Person and the claims shall not be
included for distribution or any dividends payable by the Trustee with respect to
this Proposal.
11.3
The Insolvent Person is not aware of any indebtedness to employees or former
employees as defined in Article 7.4 hereof.
ARTICLE 12-ARRANGEMENTS AFFECTING DIRECTOR'S LIABILITIES
{E6858007.DOC; I}Page 8 of 15
9
12.1 Intentionally deleted
ARTICLE 13- ARRANGMENTS AFFECTING PREFERRED CREDITORS
13.1
That the funds available for distribution in this Proposal shall be distributed to the
Preferred Creditors (as defined in Article 7.7 hereof) in priority only to the
Unsecured Creditors and the distribution of dividends to the Preferred Creditors
shall be subordinate to payment of the Professional Fees.
13.2
The Insolvent Person is not aware of any indebtedness to Preferred Creditors as
defined in Article 7.7 hereof.
ARTICLE 14- ARRANGEMENTS AFFECTING UNSECURED CREDITORS
14.1
The Insolvent Person shall contribute the Proposal Fund:
a)
for payment of the Professional Fees in priority to all claims;
b)
for payment of the Superintendent's levy for distribution; and
c)
for distribution to the Preferred Creditors (where applicable) in priority only
to the Unsecured Creditors;
14.2
Commencing on the earlier of:
a)
the payment by the Insolvent Person to the Trustee of net funds arising
from the collection of the Insolvent Person's accounts receivable in an
amount sufficient to fully pay all of the claims of Unsecured Creditors
(other than the holders of Equity Claims) as listed in the Insolvent
Person's Statement of Affairs, or such lower amount as the Trustee may
have valued them at; or,
b)
Six months (6) from the Proposal Implementation Date,
the Trustee shall distribute the Proposal Fund in accordance with the terms of
this Proposal.
{E6858007.DOC; I }Page 9 of 15
10
14.3
The Insolvent Person shall continue to remit payment of funds arising from the
collection of its accounts receivable to the Trustee, net of collection costs and
expenses, as those funds are available.
The Insolvent Person shall use
reasonable commercial efforts to collect its accounts receivable but shall not be
obliged to commence legal proceedings against any of its account debtors if the
Insolvent Person, acting reasonably and on the advice of its professional
advisors, including the Trustee, considers that it would not be economical to do
so. On the earlier of:
a)
the date that is twelve months (12) from the Proposal Implementation
Date; or,
b)
the date upon which the payment contemplated by paragraph 14,2(a)
above occurs,
the Trustee shall make a final payment of the Proposal Fund and the Proposal to
the Unsecured Creditors (other than the holders of Equity Claims) shall be
deemed to be fully completed and satisfied.
14.4
The Insolvent Person's Secured Creditor has agreed to postpone and
subordinate its security over the Insolvent Person's accounts receivable to the
Unsecured Claims as listed by the Insolvent Person in its Statement of Affairs,
other than Equity Claims. Upon the earlier of the dates described in paragraph
14.3(a) and (b) above, the Secured Creditor's postponement and subordination
of its claims will end and the Secured Creditor will be entitled to assert priority
over any remaining uncollected accounts receivable of the Insolvent Person.
14.5
Upon the Secured Creditor's claim being paid in full, the Secured Creditor shall
discharge its security and any remaining funds coming into the hands of the
Insolvent Person or its Trustee shall be distributed to the holder of Equity Claims.
14.6
The Insolvent Person reserves the right to payout this Proposal at any time
without penalty.
{E6858007.DOC; 1)Page 10 of 15
11
14.7
The Trustee's fees .and disbursements shall be paid in priority to the claims of all
Creditors defined in Articles 7.2, 7.7 and 7.8 hereof.
Trustee's fees shall be
calculated in accordance with the time spent by the Trustee and its staff at the
Trustee's standard rates for the individuals involved.
14.8
The Trustee's fees and disbursements shall be submitted to the Court for
approval and taxation with the Trustee's Final Statement of Receipts and
Disbursements pursuant to the Act. Notwithstanding the requirement for taxation
of Trustee's fees at the end of the administration of this Proposal, the Trustee will
be at liberty to draw its fees and disbursements on a monthly basis at the
discretion of the Trustee (if required) in order to cover the costs of administration
of the Proposal.
14.9
Effective as of the Proposal Implementation Date, 1749049 and each and every
present and former shareholder, officer, director, employee, auditor, financial
advisor, legal counsel and agent of 1749049 and the Trustee (collectively "the
Released Parties" and individually a "Released Party") will be released and
discharged from any and all demands, claims, actions, causes of action,
counterclaims, suits, debts, sums of money, accounts, covenants, damages,
judgments, expenses, executions, liens and other recoveries on account of any
liability, obligation, demand or cause of action of whatever nature that any of the
Creditors may be entitled to assert (including any and all claims in respect of
potential statutory liabilities of the former, present and future directors and
officers of 1749049), whether known or unknown, matured or unmatured
foreseen or unforeseen, existing or hereafter arising, based in whole or in part on
any act or omission, transaction, dealing or other occurrence existing or taking
place on or prior to the Proposal Valuation Date relating to, arising out of or in
connection with the Claims or the business affairs of 1749049
14.10 Upon 1749049 performing its obligations under the Proposal, the Trustee shall
provide 1749049 with a Certificate of Full Performance of the Proposal pursuant
{E6858007.DOC; I}Fage 11 of 15
12
to section 65.3 of the BIA. The Proposal shall be conclusively deemed to have
been fully performed upon the earlier of:
a)
payment of all Creditors' Claims; or,
b)
the Trustee being satisfied that all of the Insolvent Person's assets have
been realized and distributed in accordance with the terms of this
Proposal.
14.11 Upon issuance by the Trustee to 1749049 of a Certificate of Full Performance of
the Proposal, 1749049 will be released from all debts and liabilities, present or
future, to which 1749049 was subject on the Proposal Valuation Date, or to which
1749049 has or may become subject after the Proposal Valuation Date by
reason of any obligation incurred or any act or omission which occurred on or
before the Proposal Valuation Date (save and except for Claims against 1749049
under section 178 of the Act), including claims against 1749049 for indemnity
and all unliquidated or contingent claims arising out of any transaction entered
into by 1749049 on or prior to the Proposal Valuation Date, regardless of whether
or not a proof of claim was filed with the Trustee in respect of any such claim.
14.12 As required by section 60(2) of the Act, all monies payable under the Proposal
shall be paid by 1749049 to the Trustee, and shall thereafter be distributed by the
Trustee in accordance with the Proposal and the Act.
ARTICLE 15- VALUATION OF CLAIMS, VOTING AND APPLICABLE DATES
15.1
The Claims of all Creditors who have proven claims against 1749049 shall be
valued as at the Valuation Date by the Trustee, at or before the Meeting of
Creditors.
15.2
Proofs of Claim, proxies and voting letters intended to be used at the Meeting of
Creditors must be logged with the Trustee prior to the Meeting of Creditors.
E68$8OO7.DOC; 1}Page 12 of 15
13
15.3
Creditors may vote their claims by either returning a properly completed voting
letter to the Trustee prior to the Meeting of Creditors, or by attending at the
Meeting of Creditors and voting in person or by proxy.
15.4
Pursuant to sections 50(1.2) and 54.1 of the Act, and for the purposes of the
Proposal, the Insolvent Person hereby makes this Proposal to the Creditors and
the Insolvent Person hereby designates such parties to whom it is making the
Proposal into the following two classes of Creditors more particularly described
below, namely:
a)
Class One - Creditors with Unsecured Claims other than Equity Claims;
and,
b)
Class Two - Creditors with Equity Claims.
ARTICLE 16- MODIFICATIONS AND AMENDMENTS
16.1
The Trustee, with the approval of the Court and without notice to the Creditors,
may agree to any modification or amendment to the Proposal after the Creditors
have voted on the Proposal, including without limiting the generality of the
foregoing, any extension of time for carrying out the terms of the Proposal or for
taking any steps or proceedings hereunder, other than any medication or
amendments which would materially adversely affect the rights of any Creditors.
ARTICLE 17- NOTICE
17.1
Unless otherwise indicated, any notice required or permitted to be given pursuant
to the Proposal shall be sufficiently given or made if delivered, faxed or mailed by
prepaid postage as follows:
E6858OO7.DOC; 1}Page 13of15
14
To the Insolvent Person
1749049 Alberta Ltd.
do 10950-119 Street
Edmonton, AB T5H 3P5
Tel: 780 452-1800
Fax: 780 453-5205
Copy to Counsel for the Insolvent Person
Parlee McLaws LLP
1500, 10180-101 Street
Edmonton, AB T5J 4K1
Attention: Jeremy H. Hockin, Q.C.
Tel: 780 423-8532
Fax: 780 423-2870
Copy to the Trustee:
PricewaterhouseCoopers Inc.
10088-102 Avenue NW, Suite 1501,
Edmonton AB T5J 3N5
Attention: Don MacLean
Tel: 780 441-6704
Fax: 780 441-6776
To the Creditors:
At their last known address according to the Insolvent Person or
such other addresses as any of the foregoing may designate from
time to time.
Any notice delivered as aforesaid shall be deemed to have been received when
delivered if delivered on a day other than Saturday, Sunday or statutory holiday,
and otherwise on the next following business day. Any notice mailed as
(E6858007.DOC; 1}Page 14 of 15
15
aforesaid shall be deemed to have been received on the 7th business day
following the day on which such notice is mailed.
Dated at the City of Edmonton, in the Province of Alberta, this 18th day of April, 2015.
1749049 Alberta Ltd.
(E6858007.DOC; I}Page 15 of 15
EXHIBIT E
Minutes from Meeting of Creditors
PROVINCE OF ALBERTA
DISTRICT OF ALBERTA
Division No. oi - Ednionton
Court No. 24-1957048
Estate No. 24-195704 8
IN THE MATTER OF THE PROPOSAL OF
1749049 ALBERTA LTD.
of the City of Edmonton, in the Province of Alberta
MINUTES OF THE FIRST MEETING OF CREDITORS
Minutes of the first meeting of creditors (the "Meeting") of 1749049 Alberta Ltd. ("1749049" or the
"Company"), held on May 5, 2015 at io:oo a.m. at:
TD Tower
Suite 1501, ioo88io2nd Avenue
Edmonton, AB
PRESENT:
Attendance list attached.
Don MacLean, of PricewaterhouseCoopers Inc. ("PwC") informed the Meeting that he was the designated
individual trustee representing PwC, as proposal trustee (the "Proposal Trustee") of 1749049, and pursuant
to the provisions of the Bankruptcy and Insolvency Act (Canada) (the "BIA"), the Proposal Trustee was
nominated by the Official Receiver to Chair the Meeting (the "Chairperson").
The Chairperson advised that there was a quorum of creditors present and called the Meeting to order at
io:oi a.m.
The Chairperson introduced Ms. Jennifer Pede, a Vice President of PwC, John Chomiak, Principal of the
1749049 and his legal counsel Jerry Hockin (Parlee McLaws).
The Chairperson advised all those in attendance, that the Meeting would be conducted in accordance with the
provisions of the BIA and that the only persons entitled to attend and participate in the Meeting are creditors
with proven voting claims, their proxy holders, legal counsel and advisors, representatives of the Company
and the Proposal Trustee.
The Chairperson advised that the purpose of this Meeting, which was the Meeting of the unsecured creditors
of 1749049 was primarily to consider and vote on the proposal dated April 16, 2015 (the "Proposal") and to:
Provide additional information to 1749 049's creditors;
Provide an opportunity for the creditors to ask questions;
Consider and vote on the Proposal; and
If required, appoint estate inspectors.
The Chairperson tabled the following documents:
Proposal;
Amended Proposal;
Proposal Trustee's Report to Creditors on the Proposal (the "Trustee's Report");
Cash-flows;
1
Company's Report on Cash-flows;
Trustee's Report on Cash-flows;
Statement of Affairs;
Notice to Creditors;
Affidavit of Mailing of Notice to Creditors; and
Claims register (record of claims) and Proxies.
Trustee's Preliminary Report to Creditors
The Chairperson referred to the Trustee's First Report dated February 11, 2015 (the "First Report")
recommending the Court approve the sale of the assets to MCW Hemisphere Ltd., which was posted on the
Trustee's website. The Chairperson referred to the Trustee's Second Report which bad been mailed to all
known creditors on April i6, 2015 to provide creditors with the necessary information to make a wellinformed decision on the Company's Proposal. Additional copies of the Report were made available to all
those in attendance.
The Chairperson noted that the Canada Revenue Agency ("CRA") took exception to the release of Directors'
Liability in the Proposal. On April 24, 2015, the Company advised it was amending its Proposal to delete
Article 12.1 of the Proposal previously circulated, which will result in the Directors being fully liable for
Director Liability Claims. On this same date, notice of this proposed amendment was given to all known
creditors and posted on the Trustee's website. No creditors, other than CRA, are affected by this amendment.
CRA submitted a revised vote upon receiving notification of thià amendment and there were no objections
from creditors to this amendment.
The Chairperson further advised that the deemed trust claim of CRA for approximately $29,000 has already
been paid, which only impacts CRA's claim and has been reflected as such in the proposal, as amended.
The Chairperson advised copies of the proposal reflecting the amendments noted above are available for
review (the "Amended Proposal").
The floor was opened for any questions from the attendees with respect to the Report and the Company's
Proposal.
Ouestion Period
The Chairperson invited questions from the floor.
Mr. Ingram asked if HSBC is still owed $1.5 million. The Chairperson advised that the security held by HSBC
was assigned to 1890642 Alberta Ltd. which now stands in the shoes of HSBC.
Mr. Ingram asked if there are any comments on the status of collections $1.9 million of accounts receivable
disclosed on the Statement of Affairs. Mr. Chomiak indicated that some of these projects are still in process
and he estimates possibly $i.o to $1.2 million are collectible over the next few months. Mr. Ingram asked for
further clarification on who is collecting the accounts receivable. The Chairperson indicated that Mr.
Chomiak is collecting the receivables and reports regularly to the Trustee on the status. The funds will
eventually be sent to the Trustee who will manage the distribution to the proven creditors.
Mr. Ingram asked to leave the meeting, however, before departing confirmed he was aware the vote would be
on the Amended Proposal and his vote was still in favor of the proposal. Mr. Ingram left the meeting at io:i
am.
2
Discussion on Equity Claims
The Chairperson invited Mr. Hockin to speak to the legal considerations in terms of the equity claims
submitted by former shareholders. Mr. Hockin read the definition of equity claim from section 2 of the BIA
indicating the Company considers the claims of former shareholders to be classified as equity claims ("Equity
Claims") as defined in the BIA. In accordance with sections 54.1 of the BIA, Equity Claims are not entitled to
vote at the Meeting of Creditors and the claims are postponed until all claims that are not Equity Claims have
been satisfied pursuant to subsection 60(1.7).
Mr. Hockin indicated the Trustee will issue notice to the Equity Claims if it is in agreement with the
Company's position and that the Equity Claims have the right to appeal.
A further discussion ensued between Mr. Hockin and Mr. Kelada, a former shareholder who is still owed
money in relation to the previous redemption of his shares.
It was left that Mr. Kelada would review the matter with his own legal counsel and consider whether or not he
would appeal any reclassification.
The Chairperson asked if there were any other questions from those creditors in attendance. There were no
further questions or comments raised by those in attendance.
Voting Process and Claims
The Chairperson explained the voting procedure at the Meeting and explained that only those creditors that
had filed a proof of claim with the Proposal Trustee prior to the Meeting and/or held a valid proxy (where
applicable) were eligible to vote at the Meeting.
The Chairperson advised the attendees of the following:
•
•
•
1 creditor is in attendance in person with claims totaling $18,822.77;
12 voting letters totaling $637,441.48, were filed with the Proposal Trustee.
2 additional voting letters totaling $26,433.24 were marked as "Objected" pursuant to subsection
10 8(3) as their claims have been considered equity claims and under section 54.1 are not entitled to
vote.
Results of the Vote on the Proposal
The Chairperson asked all those in attendance that before the motion to approve the Company's Amended
Proposal was held, was there any other motions that any creditor wished to propose or any further questions
from creditors. There were no further questions or comments raised by those in attendance.
The Chairperson informed the Meeting that the votes had been tabulated prior to the meeting indicating
approval of the Proposal as the required majority in number and two thirds in value of voting creditors had
been achieved.
The Chairperson proceeded to give the results of the vote, which were as follows:
3
12
12 $
In favor
Against
Abstain
Total
MajorityTh # equirement
2/3 value reqirernert
637,441
637,441
100.0% ACCEPTED
100.0% ACCEPTED
The Chairperson disclosed that 2 votes from Equity Claims had been submitted; however, have been excluded
from the calculation of the vote in accordance with section 54.1.
Resolution on Accentance of 174gQ4Q'5 Proposal
Mr. Chomiak moved that:
the Amended Proposal of 1749049 Alberta Ltd. be accepted, approved, agreed to and authorized.
The motion was seconded by Mr. MacLean. There was no opposition to the motion.
iT WAS RESOLVED that the Amended Proposal be accepted, approved, agreed to and authorized by the
unsecured creditors.
Court ApDroval of the Proposal
The Chairperson advised those in attendance that, in accordance with the provisions of BIA, the Proposal
Trustee would now make an application to Court for Court approval of the Proposal and that once a hearing
date had been scheduled notice of same would be sent to all creditors who had filed proofs of claim with the
Proposal Trustee, in accordance with the provisions of the BIA.
Appointment of inspectors
The creditors did not seek to appoint inspectors.
Adjournment
There being no further business, the Proposal Trustee moved to adjourn the Meeting, which motion was
seconded by Mr. Chomiak. The Meeting was adjourned at 10:36 a.m.
Don MacLean, Chairperson
Senior Vice President, PricewaterhouseCoopers Inc.
4