OF AN THE PURSUANT RECEIVER/RECEIVER

File No. Cl-14-01-927 53
THE QUEEN'S BENCH
Winnipeg Centre
IN THE MATTER OF:
APPOINTMENT OF AN INTERIM
RECEIVER/RECEIVER PURSUANT TO
THE
SECTIONS 47 AND 246 OF THE B,ANKRUPTCY
AND /NSOLVENCY ACL R.S.C. 1985 c. B-3, AS
AMENDED
BETWEEN
ROYAL BANK OF CANADA,
plaintiff,
-andTHE AXE HOUGHTON GROUP INC., ARBACO LTD.,
AMERICAN GOMFORT DISTRIBUTION INC.,
AMERICAN COMFORT WORLDWIDE, LLC,
BENTEL DIRECT LIMITED PARTNERSHIP and
ADI MANAGEMENT INC. IN ITS CAPACITY AS GENERAL
PARTNER OF BENTEL DIRECT LIMITED PARTNERSHIP and
631328I MANITOBA LTD.,
defendants
NOTICE OF MOTION
before the Honourable Justice Dewar
HEAR| NG DATE: Friday, October 23,2015 at 9:00 a.m.
FILLMORE RILEY LLP
Barristers, Solicitors & Trade-Mark Agents
1700 - 360 Main Street
Winnipeg, Manitoba
R3C 323
Telephone:
Facsimile:
204-957-8319
204-957-0319
M¡CHAEL J. DOW
AARON W.K. CHALLIS
File No. 40065-2497MJD
FRDOCS 5356433.5
File No. Cl-14-01-927 53
THE QUEEN'S BENCH
Winnipeg Centre
THE
APPOINTMENT OF AN INTERIM
RECEIVER/RECEIVER PURSUANT TO
IN THE MATTER OF
SECTIONS 47 AND 246 OF THE B,ANKRUPTCY
AND /NSOLVENCY ACTi R.S.C. 1985 c. B-3, AS
AMENDED
BETWEEN
ROYAL BANK OF CANADA,
plaintiff,
-andTHE AXE HOUGHTON GROUP INC., ARBACO LTD.,
AMERICAN COMFORT DISTRIBUTION INC.,
AMERICAN COMFORT WORLDWIDE, LLC,
BENTEL DIRECT LIMITED PARTNERSHIP and
ADI MANAGEMENT INC. IN ITS CAPACITY AS GENERAL
PARTNER OF BENTEL DIRECT LIMITED PARTNERSHIP and
6313281 MANITOBA LTD.,
defendants.
NOTICE OF MOTION
PricewaterhouseCoopers lnc. (the "Receiver"), receiver of the defendants, will
make a motion before the Honourable Mr. Justice Dewar on Friday, October 23,2015 at
9:00 a.m., or as soon after that time as the motion can be heard, at the Law Courts
Building, Broadway and Kennedy Street, Winnipeg, Manitoba.
THE MOTION IS FOR:
1
An order that the time for service of the notice of motion be abridged
if
necessary, that service thereof is deemed good and sufficient, and othenruise
dispensing with service on any person.
FRDOCS 5356433.5
-22
An order that the Receiver may provide to the plaintiff or its agent, the police, or
other investigatory official who provides a written request to the Receiver, any
findings, analyses, Records (as defined in the receivership order entered herein
on December 23, 2014) or other information within its knowledge or possession
related
to the Receiver's investigations, as generally commented on in the
Receiver's First Report dated October 19, 2015, filed herein, including, into the
apparent posting of fictitious accounts receivables, the improper recognition of
certain supplier credits, and the irregular reporting of ceftain other accounting
information by one
(collectively the
3
"l
or more of the defendants to the plaintiff or
othenruise
rregular Reporting").
An order that the Receiver may, in its discretion, discontinue any further
investigations into the lrregular Reporting in its continued administration of the
receivership.
4.
An order that in the event the plaintiff determines to pursue, strictly on its own
behalf and at its own cost, further investigations and reporting into the lrregular
Reporting, the plaintiff may make such request of PricewaterhouseCoopers lnc.
and PricewaterhouseCoopers lnc. may perform such further investigations and
reporting as agent of the plaintiff and not as receiver and manager of the
defendants.
5
An order approving the actions taken by the Receiver to date as reported in the
Receiver's First Report, filed herein.
FRDOCS 5356433.5
-3-
THE GROUNDS FOR THE MOTION ARE:
1
On December 23, 2014, the Receiver was appointed receiver of all the assets,
undertakings and properties of the defendants.
2
It is timely for the Receiver to report to this Honourable Court.
3
Given the facts set out in the Affidavits of Andrew C. Holmes and Jeffrey
B.
Johnson, both sworn December 10, 2014 previously filed herein, the Receiver
has conducted a preliminary investigation into the lrregular Reporting. As set out
in the Receiver's Report, the Receiver has determined that there may be merit to
the plaintiff's allegations.
4.
It appears clear that the plaintiff, a secured creditor with a paramount interest in
all the defendants' assets, undertakings and properties will suffer a substantial
shortfall.
5
The shortfall may have been exacerbated by the lrregular Repoding.
6
Given said shortfall, investigations into the lrregular Reporting, and possible
recoveries resulting therefrom, will most likely be for the benefit of the plaintiff
and not for the benefit of the general body of creditors.
7
ln the circumstances, it is reasonable that further investigations, if any, into the
lrregular Reporting, occur at the behest and be at the expense of the plaintiff.
I
Such further and other grounds as counsel may advise and this Honourable
Court may allow.
FRDOCS 5356433.5
-4-
THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of
this motion:
1.
2.
3.
4.
affidavit of Andrew C. Holmes, sworn December 10,2014;
affidavit of Jeffrey B. Johnson, sworn December 10,2014;
First Receiver's Report, dated, October 19,2015; and
such further and other material as counsel may advise and this Honourable Court
will allow.
FILLMORE RILEY LLP
1700 - 360 Main Street
Winnipeg, Manitoba R3C 323
MIGHAEL J. DOW
AARON W.K. CHALLIS
Telephone : 204-957 -8319
Counsel for the Receiver
TO
Taylor McCaffrey LLP
TO
gth Floor 4OO St. Mary Avenue
Winnipeg, MB R3C 4K5
Attention: David R.M. Jackson/
Sam A. Gabor
Aikins, MacAulay & Thorvaldson
30th Floor - 360 Main Street
Winnipeg, MB R3C 4G1
Attention: Bruce Taylor
TO
Monk Goodwin LLP
800 - 444 SI. Mary Avenue
Winnipeg, MB R3C 3T1
TO:
Gowlings Lafleur Henderson LLP
One Main Street West
Hamilton, OnL LBP 425
Attention: Louis A. Frapporti
TO:
Leven Tadman Golub
- 330 St. Mary Ave.
Winnipeg, MB R3C 325
Attention: Mara L. Koven-
Attention: Erica Haughey
TO:
Double A Ventures Ltd.
675 Queenston Street
Winnipeg, MB R3N 0X6
Attention: Abraham Anhang
7OO
Lapointe
TO:
Manitoba Justice
Civil Legal Services
730 - 405 Broadway
Winnipeg, MB R3C 3L6
Attention: Marjorie Webb
Sean Boyd
FRDOCS 5356433.5
TO
Department of Justice
391 - 310 Broadway
Winnipeg, MB R3V 056
Attention: Denyse T. Gote
-5-
TO:
Thompson Dodman Sweatman
2200 - 201 Portage Avenue
Winnipeg, MB R3B 313
Attention: Ross McFadyen
FRDOCS 5356433 5