No. S-137734 Vancouver Registry IN THE SUPREME COURT OF BRITISH COLUMBIA

No. S-137734
Vancouver Registry
IN THE SUPREME COURT OF BRITISH COLUMBIA
IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT
R.S.C. 1985, c. C-36, AS AMENDED
AND
IN THE MATTER OF THE CANADA BUSINESS CORPORATIONS ACT
R.S.C., 1985, c. C-44 AS AMENDED
AND
IN THE MATTER OF THE BUSINESS CORPORATIONS ACT
SBC, 2002, C-57 AS AMENDED
AND
IN THE MATTER OF LEAGUE ASSETS CORPORATION AND THE
PETITIONERS LISTED IN APPENDIX “A”
(COLLECTIVELY “LEAGUE” OR THE “COMPANY”)
MONITOR’S FIRST REPORT TO COURT
[Prepared for the October 24, 2013 Court Hearing]
October 23, 2013
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
TABLE OF CONTENTS
1.
INTRODUCTION .................................................................................................... 1
2.
ACTIVITIES OF THE MONITOR TO DATE .............................................................2
3.
NET EQUITY IN ASSETS ........................................................................................3
4.
INVESTOR PROFILE .............................................................................................. 5
5.
INVESTOR REPRESENTATION ............................................................................. 5
6.
DIP CHARGE .......................................................................................................... 7
7.
CONCLUSIONS AND RECOMMENDATIONS ........................................................ 9
APPENDICES
A.
List of Petitioners
B.
Letter from Faskens regarding Representative Counsel Appointment
C.
Revised cash flow projection to November 17, 2013
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
1.
INTRODUCTION
1.1
On October 18, 2013, on the application of League Assets Corporation and those parties
listed in Appendix A (collectively referred to as “League” or the (Company”), the
Supreme Court of British Columbia (the “Court”) made an order (the “Initial Order”)
granting League protection from its creditors pursuant to the Companies’ Creditors
Arrangement Act (the “CCAA”). Under the Initial Order, PricewaterhouseCoopers Inc.
(“PwC”) was appointed Monitor of the Companies (the “Monitor”).
1.2
Pursuant to the Initial Order, among other things, all creditors were stayed from
commencing or continuing any proceedings against League until November 18, 2013, the
date set for the Comeback Hearing.
1.3
This is our first report as Monitor. It is not intended to be a comprehensive review of the
affairs of the Company. It is the intention of the Monitor to file a comprehensive report in
advance of the Comeback Hearing.
1.4
The purpose of this limited scope report is to provide the Court with the Monitor's views
on the following matters to be considered during the Court hearing scheduled for
October 24, 2013:
1.4.1
The Monitor’s application for the appointment of representative counsel to
represent the numerous individual investors who have invested money in the form
of debt or equity in various League investment entities (the “Investors”);
1.4.2
The Company's application for authorization for interim financing that is required
by League to continue operating together with a charge in support thereof (the
“DIP Charge”).
1.5
Unless otherwise stated, all monetary amounts noted herein are expressed in Canadian
dollars. Capitalized terms not otherwise defined herein are as defined in the Company's
application materials, including the first affidavit of Adam Gant dated October 16, 2013
(the "Gant Affidavit").
1.6
The Monitor has set up a website at www.pwc.com/car-leagueassets. All prescribed
materials filed by League and the Monitor relating to this CCAA proceeding are available
to creditors, Investors, and other interested parties in electronic format on the Monitor’s
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
website. The Monitor will make regular updates to the website to ensure creditors,
Investors, and interested parties are kept current and to add prescribed materials as
required.
2.
ACTIVITIES OF THE MONITOR TO DATE
2.1
Immediately following the Initial Order of the Court on October 18, 2013 the Monitor
began implementing a communication plan developed with League in an effort to notify
both League’s creditors and Investors of the Initial Order and the restructuring process
using the CCAA generally. In particular, the Monitor has completed the following:
2.1.1
Activated its website (www.pwc.com/car-Leagueassets) and all materials
circulated by the Company in these proceedings have now been posted to the
website.
2.1.2
Nearly completed its notice requirements pursuant to subsection 23(1)(a) of the
CCAA and as provided in paragraph 42 and 43 of the Initial Order. In particular:
2.1.2.1
A notice in the prescribed form along with a letter from League to its
creditors and its Investors is in the process of being mailed and will be
completed on October 24, 2013;
2.1.2.2
The Initial Order has been posted on the Monitor’s website along with a
list of creditors including their names, addresses and amounts; and
2.1.2.3
Notices are scheduled to be published in the Vancouver Sun on October
23, 2013 and October 30, 2013 and in the Globe and Mail on October
24, 2013 and October 30, 2013.
2.1.3
Responded to over 100 inquiries received through the Monitor’s dedicated phone
line and email address during the four days following the granting of the Initial
Order.
2.1.4
Scheduled and chaired a conference call held at 1:00pm pacific time on
October 23, 2013 for creditors and Investors. 462 callers participated in this call.
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
3.
2.2
Since its appointment, the Monitor has attended League’s Victoria, B.C. premises to
review its books and records and operations. League has cooperated with the Monitor in
providing unrestricted access to their books and records. Further, the Monitor has begun
the process of reviewing League’s receipts and planned disbursements and monitoring
League’s performance relative to the initial cash flow projections.
2.3
The Monitor has commenced dialoguing with lenders and investors. Based on
discussions to date, it is clear that these stakeholders do not have an informed
understanding of League’s operations and affairs. The complexity of League’s affairs
contributes to this lack of understanding which must be enhanced in order for these
stakeholders to participate effectively in the restructuring of League. The Monitor
anticipates that its reporting in advance of the Comeback Hearing will assist in enhancing
the stakeholder’s understanding of League’s affairs.
NET EQUITY IN ASSETS
3.1
Exhibit E to Adam Gant’s second affidavit sworn on October 22, 2013 contained a
summary of Leagues’ assets, mortgage debts and the implied equity available to the
creditors and Investors. Based on this information, there appears to be significant equity
available to League’s creditors and Investors. The table below contains the values based
on asset class:
($ millions)
Tangible Assets
Marketable Securities
Income producing properties
Development Properties
Total
Appraised
Value *
Mortgage Debt
Outstanding Implied Equity
23.9
226.0
249.9
145.7
395.6
* The value presented for development properties is the book value
18.1
149.8
167.9
16.8
184.7
5.8
76.2
82.0
128.9
210.9
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
3.2
The Monitor has performed a high level review of this schedule and noted the following:
3.2.1
There are 17 income producing properties and 4 development properties for a total
of 21 properties. There are 34 mortgage lenders some with charges on multiple
properties. This is a large number of assets and lending facilities to review in the
short period of time since the Monitor’s involvement with League.
3.2.2 There appears to be approximately $82 million in equity after taking into
consideration the mortgage debt outstanding in the tangible assets. The
Marketable Securities represent units in Partners REIT – a publicly traded REIT
and the stated value is based on a recent trading prices. Most of the income
producing property values are supported by appraisals. However, the Monitor
notes that most of the appraisals have been prepared for financing purposes which
based on our experience tend to be somewhat higher than the values recoverable
when the properties are sold on the market. Nevertheless, it appears that there is
significant positive equity available in these properties.
3.2.3 The values attributed to the development properties are book values which
represent the monies that League has spent to date to develop the property. Based
on our experience, if the development is not completed, the recovery for the
project typically will be substantially less than the costs incurred to date.
Recovery of the development costs will depend on avoidance of project cost overruns and realization from the sale of the property consistent with forecasts. In
light of the project delays experienced on the Colwood project due to funding
issues it is unlikely that the project costs for Colwood are fully recoverable even if
League completes the project. Therefore, the Monitor expects that the $129
million in equity in these properties is overstated but it is unclear at this time to
what degree.
3.3
The net equity in these assets will accrue to the general creditors and Investors. Therefore
the Monitor believes these creditors and Investors must be considered during the course
of League’s restructuring.
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
4.
5.
INVESTOR PROFILE
4.1
Based on a review of the investor lists, it is apparent that most of League’s Investors are
individuals. There are approximately 3,200 Investors who supplied approximately $352
million to League to fund its real estate properties and business operations.
4.2
The Monitor notes that these Investors contributed funds in the form of secured notes,
unsecured notes and equity to IGW REIT, League Opportunities Fund or ultimately to
one of the individual project limited partnerships either directly or through and RRSP
eligible investment vehicle. Furthermore, the notes and equity often have different
conversion, redemption or retraction features.
4.3
Based on the Monitor’s limited review of League’s financial affairs, it is apparent that
monies were frequently loaned from one entity to another within the group of entities.
Furthermore, certain entities guaranteed mortgage debts of other entities. For example,
the IGW REIT has provided loans of nearly $170 million to other entities and provided
guarantees of mortgage debt to other entities.
4.4
The intergroup lending, intergroup guarantees and the numerous forms of investments
give rise to additional complexity and likely numerous issues that must be resolved to
establish the fairness of any restructuring plan.
INVESTOR REPRESENTATION
5.1
There are a large number of Investors in League. The basis of these investments and the
resulting position of specific investors are varied and may be somewhat complicated to
assess. As a result, a comprehensive assessment of the Investor circumstances must be
performed before the separation or segregation issues with investor groupings can be
determined.
5.2
Most of the Investors are individuals and may be unfamiliar with insolvency proceedings
and therefore, disadvantaged in effectively participating in the restructuring. As a result,
some investors may opt to engage legal counsel to assist in the process. If multiple
counsel become involved, there will be an inefficient burden placed on League and the
Monitor in dealing with the various counsel and the costs will become duplicative,
thereby eroding recoveries that would otherwise flow to the Investors.
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
5.3
It appears to the Monitor that collectively, the Investors are the stakeholders to be most
keenly affected by this restructuring. To protect their interests and garner the equity
which the Monitor is hopeful will ultimately flow to them, they must be represented in
these proceedings in an efficient and effective manner. In this regard, the Monitor is
supportive of the investors having Representative Counsel (“Rep Counsel”) appointed
in these proceedings.
5.4
Since the date of the Initial Order, the Monitor approached the law firm of Fasken
Martineau DuMoulin LLP ("Faskens") to ascertain whether it would be willing to act as
Rep Counsel for the Investors. Faskens has agreed to act in this role if authorized by the
court. A letter from John Grieve of Faskens is attached to this report as Appendix B. As
set out in the letter, Mr. Grieve is a senior insolvency practitioner in Canada, has
significant large restructuring file expertise, and has also had significant experience in
dealing with the type of investors issues that will likely arise during the restructuring of
League. As a result, the Monitor is making an application to the Court for authorization to
have Faskens appointed as Rep Counsel on behalf of the Investors as a whole. Mr. Grieve
is cognizant, however, that while there may be commonality of interest among the
Investors now (in that they all need to understand the proceedings, their rights and their
limitations) further enquiry may lead to the identification of distinct groups of investors
and at that point further directions from the court will be sought.
5.5
In recognizing that the investors are collectively a distinctive and important stakeholder
in these proceedings, the Monitor scheduled and chaired an investor information
conference call at 1:00pm pacific time on October 23, 2013. The purpose of this call was
to inform investors of the implications of the CCAA, to advise them of the process
expected to take place going forward, and to answer basic questions they may have. The
Monitor introduced to the investors the concept of the Rep Counsel and introduced Mr.
Grieve who attended the call. Mr. Grieve provided a brief outline of his proposed role.
5.6
In addition, League and the Monitor have communicated with the British Columbia
Securities Commission ("BCSC") and its counsel to discuss the concept of Rep Counsel
for the Investors.
5.7
In order to provide fee protection for the Rep Counsel, the Monitor is proposing that a
charge of $250,000 be provided (the “Rep Counsel Charge”), although the ranking of
this charge at this stage would be subordinate to the proposed DIP charge. The notion of
Rep Counsel arose after the DIP financing was negotiated and there was insufficient time
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
to address with the DIP lender the possible priority of this charge. Accordingly, the Rep
Counsel Charge is proposed to be subordinate to the DIP charge at this time. At the
Comeback Hearing, it may be appropriate for the Administrative and the Rep Counsel
Charges to be combined and the conventional priority ranking would be negotiated with
the DIP lender if the DIP lender facility is approved by the Court.
6.
DIP CHARGE
Financing Requirements
6.1
In order to facilitate an efficient and orderly restructuring, League determined that it
required interim financing of approximately $31.5 million. The uses of the proposed
financing are detailed in the table below:
($ millions)
Net operating and restructuring costs for 13 weeks
Payment of property tax arrears
Mortgage payments for 13 weeks
Refinancing of TCC Mortgage Holdings Inc.
Total
Amount
5.0
3.5
5.0
18.0
31.5
Securing a DIP Lender
6.2
League, with the assistance of the Monitor, approached 11 parties to secure a DIP facility
in the amount of $31.5M on the basis that the DIP facility would benefit from a court
ordered charge in priority to all charges on Leagues assets other than the Administration
Charge, D&O Charge and property taxes arrears. Four expressions of interest (“EOI”)
were received and the remaining parties declined to submit EOIs.
6.3
League concluded that the expression of interest submitted by Maxam Capital
Corporation (“Maxam”) was the most competitive and involved the least deal risk. Some
of the key features include:
6.3.1
An 8% interest rate and a 2% commitment fee resulted in Maxam’s facility to be
the least costly of the four EOIs received; and
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
6.3.2 A term of up to 12 months which should be sufficient time in which League can
complete its restructuring.
6.4
This financing would allow League to keep all mortgages current through its restructuring
with the exception of the mortgage provided by TCC Mortgage Holdings Inc. (“TCC”).
League defaulted on TCC’s mortgage prior to the date of the Initial Order which resulted
in League being liable for default interest at a rate of 18% per annum. Therefore,
refinancing the TCC mortgage at the 8% offered by Maxam provided savings that would
be important to the restructuring.
Quantum of the DIP Charge
6.5
Subsequent to the date of the Initial Order, it became clear that the mortgage lenders
would need time and a better understanding of League’s complexity and possible
restructuring plan to consider supporting this refinancing. It is fair to report that the
initial response by mortgage lenders was unfavourable to League’s original DIP financing
approach. The Monitor and the Company took into consideration the feedback from the
mortgage lenders and as a result, League has limited its current application to a much
smaller DIP Charge until the Comeback Hearing.
6.6
League’s current application for a DIP Charge is restricted to $1.6 million. League revised
its cash flow forecast to determine its minimum cash requirements to meet operating and
restructuring cost obligations for the limited period to the Comeback Hearing. This
revised cash flow forecast and the Monitor’s comments thereon are attached as Appendix
C.
6.7
At the time of publication of this report, the DIP Credit Facility Commitment from
Maxam had not been finalized. The Monitor will report on this separately once it is
complete.
Priority and Allocation Concerns
6.8
The proposed DIP Charge and Rep Counsel Charges total $1.85 million and would prime
the existing secured creditors other than the two Enforcing Mortgagees as provided in the
Initial Order. The Monitor is sensitive to the concerns being raised by the mortgage
lenders with this priming. While the Monitor understands the concerns, the Monitor also
supports the priming on the basis that there appears to be equity in the properties such
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
that it is unlikely that the mortgage lenders will ultimately be impacted by these priority
charges.
7.
6.9
In the Monitor’s experience, DIP lenders will almost always require priority as part of
advancing new financing. The Monitor notes that all parties who submitted offers to
provide DIP financing required such a priority.
6.10
Also, the Monitor is aware that several of the mortgage lenders are concerned about the
allocation of the charges against discrete security that they hold. The Monitor
understands and is sympathetic to this concern. The Monitor is of the view that the
allocation of the charges should be carried out on an equitable and reasonable basis that
reflects the various factors that may impact the allocation. The Monitor is further of the
view that the allocation can be performed at the end of the administration should this
allocation become necessary. The allocation would be proposed by the Monitor based on
the facts and circumstances and after consultation with the various mortgage lenders.
Such allocation will also be subject to the supervision and ultimate approval of the Court.
CONCLUSIONS AND RECOMMENDATIONS
7.1
League is seeking approval of DIP Financing and a priority in the amount of $1.6 million
to allow it to make core payments and continue its operations until the Comeback
Hearing. If the financing is not approved, the current liquidity situation is such that
League will not be able to fund payroll on Friday, October 25th, which will require an
immediate cessation of operations and the accompanying liquidation of its assets in a
forced and distressed manner.
7.2
A forced and distressed liquidation is clearly not in the interests of the creditors or
Investors, nor is it in the interests of many of the mortgage lenders who do not enjoy first
mortgage security and whose security is spread across multiple properties and assets.
Such lenders will then be compelled to deal with complicated scenarios where their
recovery on one property will determine the extent to which they must rely on another
property for the recovery of their loans. If a liquidation of League’s assets is to occur, it is
imperative that such a liquidation should occur on an orderly and controlled basis.
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
7.3
The DIP financing and the appointment of Rep Counsel will facilitate League’s continued
operations until the Comeback Hearing. During this period:
7.3.1
The creditors and Investors will be represented and can become more informed;
7.3.2
The mortgage lenders can have the opportunity to be informed of the full extent of
the Company affairs and hold discussion with League surrounding scenarios in
which they might be prepared to continue their support; and,
7.3.3
League can develop its restructuring plan with the view to demonstrating to
stakeholders the viability of it.
If support is not forthcoming at that time, then alternative arrangements can be made to
preserve some of the equity for the benefit of stakeholders. A liquidation at this early
stage does not in the Monitor's view seem reasonable.
7.4
At the date of the Initial Order, two mortgage loans were in default. The vast majority of
other mortgage loans were paid current and the lenders had seemingly not taken steps to
request repayment or refinancing of their loans. The value of collateral for all the
mortgage loans is not likely to decline during the period from now until November 18th.
The real concern for mortgage lenders is the priority charges that might get allocated to
their collateral. In this regard, it appears that there is equity in the properties collectively
such that this risk and prejudice, if any, should be measured against the interests of the
Investors who appear to have a real stake in the restructuring of League.
7.5
At the Comeback Hearing, the Monitor will have more fully assessed the equity situation
in the assets and all stakeholders will be more informed of the overall situation.
7.6
Based on the balancing of interests and the appearance of significant equity in the assets,
the Monitor supports the DIP financing, the authorization of Representative Counsel, and
the related priority charges that accompany same.
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
This report is respectfully submitted this 23rd day of October, 2013.
PricewaterhouseCoopers Inc.
Court Appointed Monitor of
League Assets Corporation, et al
Michael J. Vermette, CA, CIRP
Senior Vice President
Neil Bunker, CA, CIRP
Vice President
APPENDIX A
List of Petitioners
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
List of Petitioners
Corporations
1.
0781591 B.C. Ltd.
2.
0811883 B.C. Ltd.
3.
0812307 B.C. Ltd.
4.
0827524 B.C. Ltd.
5.
0873201 B.C. Ltd.
6.
0891146 B.C. Ltd.
7.
0895249 B.C. Ltd.
8.
0895251 B.C. Ltd.
9.
0908150 B.C. Ltd.
10.
2128273 Ontario Inc.
11.
2146431 Ontario Inc.
12.
2148711 Ontario Inc.
13.
2164613 Ontario Inc.
14.
2164614 Ontario Inc.
15.
2246329 Ontario Limited
16.
2291088 Ontario Inc.
17.
2314845 Ontario Inc.
18.
473 Albert St. Office GP Inc.
19.
7667906 Canada Inc.
20.
8252220 Canada Inc.
21.
Arbutus Industrial Park Ltd.
22.
Colwood Belmont Developments Ltd.
23.
Colwood City Centre Corp.
24.
Colwood City Centre GP Inc.
25.
Colwood Jerome Developments Ltd.
26.
Colwood Sooke Developments Ltd.
27.
Colwood's Triumph GP Ltd.
28.
Cowichan District Financial Centre GP Inc.
29.
Cygnet Apartments GP Inc.
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
30.
Cygnet Properties GP Inc.
31.
Duncan City Centre GP Inc.
32.
Durham Portfolio GP Inc.
33.
Fort St. John Retail GP Inc.
34.
Gatineau Centre Development GP Inc.
35.
Gatineau Centre Real Estate Development Corporation
36.
IGW Cash Management Fund Ltd.
37.
IGW Diversified Redevelopment Fund GP Inc.
38.
IGW Energy Capital GP Inc.
39.
IGW Industrial GP Inc.
40.
IGW Mortgage Investment Corporation
41.
IGW Properties GP I Inc.
42.
IGW Public GP Inc.
43.
IGW REIT GP Inc.
44.
IGW Residential Capital GP Inc.
45.
Jesken Development GP Inc.
46.
Jesken Investment GP Inc.
47.
LAPP Global Asset Management Corp.
48.
League Acquisition Corp.
49.
League Assets Corp.
50.
League Assets GP Inc.
51.
League Assets International Inc.
52.
League Capital Markets Ltd.
53.
League Capital Partners Ltd.
54.
League Debt Corp.
55.
League Financial Partners Inc.
56.
League Founding Limited Partner Ltd.
57.
League Holdings Corp.
58.
League Investment Fund Ltd.
59.
League Investment Services Inc.
60.
League Opportunity Fund Ltd.
61.
League Realty Advisory Ltd.
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
62.
League Realty Services Ltd.
63.
League REIT Investco Inc.
64.
Londondale Shopping Centre GP Inc.
65.
Market Square Properties GP Inc.
66.
Member-Partners' Consolidated Properties GP Inc.
67.
North Vernon Properties Inc.
68.
Partners Equity Finance Inc.
69.
Residences At Quadra Village GP Inc.
70.
Stoney Range Industrial GP Inc.
71.
Sundel Square Ltd.
72.
Tsawassen Retail Power Centre GP Inc.
73.
Tyee Plaza GP Inc.
74.
Village Green Holdings #2 Ltd.
75.
Village Green Holdings #3 Ltd.
76.
Zeus Energy Ltd.
Limited Partnerships
77.
473 Albert St. Office Limited Partnership
78.
Colwood City Centre Limited Partnership
79.
Colwood's Triumph Limited Partnership
80.
Cowichan District Financial Centre Limited Partnership
81.
Duncan City Centre Limited Partnership
82.
Durham Portfolio Limited Partnership
83.
Fort St. John Retail Limited Partnership
84.
Gatineau Centre Development Limited Partnership
85.
IGW Diversified Redevelopment Fund Limited Partnership
86.
IGW Energy Capital Limited Partnership
87.
IGW Industrial Limited Partnership
88.
IGW Properties Limited Partnership I
89.
IGW Public Limited Partnership
90.
IGW REIT Limited Partnership
91.
IGW Residential Capital Limited Partnership
LEAGUE ASSETS CORPORATION, ET AL
MONITOR’S FIRST REPORT TO COURT
October 23, 2013
92.
Jesken Development Limited Partnership
93.
Jesken Investment Limited Partnership
94.
League Assets Limited Partnership
95.
Londondale Shopping Centre Limited Partnership
96.
Market Square Properties Limited Partnership
97.
Member-Partners' Consolidated Properties Limited Partnership
98.
North Vernon Properties Limited Partnership
99.
Redux Duncan City Centre Limited Partnership
100.
Residences At Quadra Village Limited Partnership
101.
Stoney Range Industrial Limited Partnership
102.
Tsawassen Retail Power Centre Limited Partnership
103.
Tyee Plaza Limited Partnership
104.
Village Green Holdings Limited Partnership
Real Estate Investment Trusts
105.
League IGW Real Estate Investment Trust
APPENDIX B
Letter from Faskens regarding Representative
Counsel Appointment
APPENDIX C
Revised cash flow projection to
November 17, 2013
League Assets Corporation
CCAA Cash Flow Forecast
For the Period October 21, 2013 to November 17, 2013
Review of the Monitor
1. The Cash Flow Statement below has been prepared by League for the purpose described in
Note 1, using the Probable and Hypothetical Assumptions set out in Notes 2 to 12
2. The Monitor’s review of the Cash Flow Statement consisted of inquiries, and discussion related
to information supplied to the Monitor by certain management and employees of the Group.
Since Hypothetical Assumptions need not be supported, the procedures with respect to them
were limited to evaluating whether they were consistent with the purpose of the Cash Flow
Statement. The Monitor has also reviewed the support provided by management of League for
the Probable Assumptions and the preparation and presentation of the Cash Flow Statement.
3. Based on the Monitor’s review, nothing has come to our attention that causes us to believe
that, in all material respects:
a. The Hypothetical Assumptions are not consistent with the purpose of the Cash Flow
Statement:
b. As at the date of this report, the Probable Assumptions developed by management are
not suitably supported and consistent with the plans of the Companies or do not
provide reasonable basis for the Cash Flow Statement, given the Hypothetical
Assumptions; or
c. The Cash Flow Statement does not reflect the Probable and Hypothetical Assumptions.
4. Since the Cash Flow Statement is based on Assumptions regarding further events, actual results
will vary from the information presented even if the Hypothetical Assumptions occur, and the
variations may be material. Accordingly, we express no assurance as to whether the Cash Flow
Statement will be achieved. We express no opinion or other form of assurance with respect to
the accuracy of any financial information presented in this report, or relied upon by us in
preparing this report.
5. The Cash Flow Statement has been prepared solely for the purpose described in Note 1 of the
Cash Flow Statement, and readers are cautioned that it may not be appropriate for other
purposes.
League Assets Corporation
CCAA Cash Flow Forecast
For the Period October 21, 2013 to November 17, 2013
In CAD$ thousands
Period start date
Period end date
Receipts - Operating
League Assets Corp
Partners REIT
LP Income
IGW REIT
LP Income
Total Receipts
Disbursements - Operating
League Assets Corp
Corporate Operating Expenses
Project Funding
Subtotal - League Assets Corp
IGW REIT
Project Funding
Subtotal - IGW REIT
Total Disbursements - Operating
21-Oct-13
27-Oct-13
28-Oct-13
3-Nov-13
-
237
179
-
908
1,324
4-Nov-13
10-Nov-13
11-Nov-13
17-Nov-13
TOTAL 30 DAYS
-
-
237
179
367
367
207
207
1,482
1,898
(690)
(690)
(197)
(16)
(213)
(690)
(690)
(103)
(103)
(1,679)
(16)
(1,695)
(108)
(108)
(797)
(213)
(108)
(108)
(797)
(108)
(108)
(210)
(323)
(323)
(2,018)
(430)
(4)
(121)
Net Operating Cash Flows
(797)
Disbursements Non-Operating
Restructuring & Financing Costs
Total Disbursements - Non Operating
(338)
(338)
(411)
(411)
(351)
(351)
(351)
(351)
(1,450)
(1,450)
(1,135)
(1,135)
(1,135)
699
(436)
(436)
(781)
(1,217)
(1,217)
(354)
(1,571)
(1,571)
(1,571)
OPENING CASH
Net Receipts (Disbursements)
ENDING CASH
1,110
League Assets Corporation
Notes to the CCAA Cash Flow Forecast
For the Period October 21, 2013 to November 17, 2013
1. The purpose of this Cash Flow Statement is to determine the liquidity requirements for the
Group during the initial stage of the CCAA proceedings.
2. The Cash Flow Statement is presented on a combined basis for the entities listed in
Appendix A of this report.
3. The Cash Flow Statement assumes no additional funds are raised from Investors.
4. The Cash Flow Statement is based on the assumptions that League will continue operations
in the normal course, except where otherwise stated in these assumptions.
5. League provides management services to Partners REIT pursuant to a management
agreement.
6. LP income represents income received from investments that generate positive cash flow.
Project funding represents funds that must be advanced to investments that do not
generate positive cash flow. The cash flow of the Duncan and Colwood properties have
been removed to account for the provisions of the Initial Order.
7. League is not paying any mortgage payments.
8. Property tax arrears of approximately $3.4m remain unpaid.
9. Corporate Operating Expenses mainly represents wages of employees. Payroll of
approximately $550,000 is paid fortnightly. Employee wages represents salaries, wages,
vacation, benefits, current pension obligations, current EI expense and other post-employee
benefits. Hourly payroll, salary costs and benefits are based on historical costs. All employee
costs are paid in the normal course of operations.
10. League has reduced various corporate operating expenses such as a 100% reduction in
training and recruitment, 60%-50% reduction in travel, marketing and IT expenses and a
25% reduction in telephone and internet expenses.
11. Restructuring and Financing Fees represent the estimated fees for legal counsel and the
Monitor and the costs of the DIP financing.
12. No interest or dividends payments are made to Investors.