Court File No. 31-208039-T ONTARIO SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST

Court File No. 31-208039-T
ONTARIO
SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST
IN THE MATTER OF THE BANKRUPTCY OF SHS SERVICES
MANAGEMENT INC. / GESTION DES SERVICES SHS INC. and SHS
SERVICES LIMITED PARTNERSHIP of the City of Toronto, in the Province of
Ontario
MOTION RECORD OF THE TRUSTEE
PRICEWATERHOUSE COOPERS INC.
MCMILLAN LLP
Brookfield Place
181 Bay Street, Suite 4400
Toronto, ON, M5J 2T3
Brett Harrison LSUC#: 44336A
Tel: (416) 865-7932
Fax: (416) 865-7048
Counsel for the Trustee
TO:
SERVICE LIST (ATTACHED)
LEGAL 23598879.1
INDEX
\
\
INDEX
Tab No.
1
Notice of Motion, returnable March 19, 2015
2
Trustee's First Report to the Court dated March 13, 2015
LEGAL 23598879.1
/
TAB 1
Court File No. 31-208039-T
ONTARIO
SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST
IN THE MATTER OF THE BANKRUPTCY OF SHS SERVICES
MANAGEMENT INC./GESTION DES SERVICES SHS INC. and SHS
SERVICES LIMITED PARTNERSHIP of the City of Toronto, in the Province of
Ontario
NOTICE OF MOTION
(returnable March 19,2015)
The Applicant, PricewaterhouseCoopers Inc. ("PwC") in its capacity as the
Court-appointed trustee pursuant to s. 243 of the Bankruptcy and Insolvency Act ("BIA")
(the "Trustee") of SHS Services Management Inc./Gestion des Service SHS Inc. and
SHS Services Limited Partnership (collectively, "SHS") will make a motion to a judge,
on Thursday, March 19, 2015 at 10:00am or as soon after that time as the motion can be
heard, at 330 University Avenue, Toronto, Ontario.
PROPOSED METHOD OF HEARING: The motion is to be heard orally.
THE MOTION IS FOR:
(a) An Order that the Paul Verhoeff and Stephen Verhoeff (the "Verhoeffs"), deliver
to the Trustee all documents listed in Schedule "A" to the Notices of
Appointment (as defined below) that are within their possession or power at least
seven days prior to the Examinations (defined below);
(b) An Order, pursuant to section 163(1) of the BIA requiring that the Verhoeffs
attend examinations under oath by the Trustee as persons reasonably believed to
have knowledge of the affairs of the bankrupt by April 1, 2015 (the
"Examinations");
(c) Costs of this motion on a substantial indemnity basis; and
(d) Such further and other relief as this Honourable Court deems just.
LEGAL 23579580.2
-2-
THE GROUNDS FOR THE MOTION ARE:
(a)
The moving party, the Trustee, was appointed as trustee of the estate of
the bankrupt, SHS, on July 31, 2014.
(b)
The Verhoeffs are both individuals resident in the province of Alberta.
The Verhoeffs were involved in the creation of SHS and are former
directors of SHS.
(c)
The Verhoeffs are persons likely to have knowledge of the affairs of SHS.
(d)
The Trustee indicated to the Verhoeffs its intention to examine them
pursuant to Section 163 of the BIA on or about January 23, 2015.
(e)
Following a request by counsel for the Verhoeffs, the Trustee agreed to
accommodate the Verhoeffs' schedule by conducting the examinations on
March 9, 2015.
(f)
The Trustee issued each of the Verhoeffs with a notice of appointment for
examination pursuant to Section 163 of the BIA (the "Notices of
Appointment").
(g)
The Notices of Appointment required the Verhoeffs to attend at the office
of counsel for the Trustee on March 9, 2013.
(h)
The Notices of Appointment required the Verhoeffs to bring to their
examinations certain documents in their possession or power that are
relevant to the affairs of SHS (the "Relevant Documents").
(i)
Despite the Notices of Appointment, the Verhoeffs did not attend at the
location and time set out in the Notices of Appointment.
(j)
The Verhoeffs have not delivered to the Trustee any of the Relevant
Documents.
LEGAL 23579580.2
3-
(k)
Section 163(1) of the BIA, which entitles a trustee in bankruptcy to
examine under oath any person reasonably believed to have knowledge of
the affairs of the bankrupt and to order any person liable to being so
examined to produce any books, documents, correspondence or paper in
that person's possession or power relating in all or in part to the
bankrupt's dealings or property; and
(1)
Such further and other grounds as counsel may advise and this
Honourable Court may permit.
THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing
of the motion:
(a)
The First Report of the Trustee to the Court, dated March 13, 2015; and
(b)
Such further and other evidence as counsel may advise and this
Honourable Court may permit.
March 13,2015
MCMILLAN LLP
Brookfield Place
181 Bay Street, Suite 4400
Toronto, ON, M5J 2T3
Brett Harrison LS#: 44336A
Tel: (416)865-7932
Fax: 416-865-7048
Stephen Brown-Okruhlik LS#: 66576P
Tel: (416)865-7043
Fax: 416-865-7048
Lawyers for the Applicant
TO: PALIARE ROLAND ROSENBERG
ROTHSTEIN LLP
155 Wellington Street West
35th Floor
Toronto, ON, M5V 3H1
Gordon Capern
Tel: (416) 646-4311
LEGAL 23579580.2
-4-
Email: [email protected]
Massimo (Max) Starnino
Tel: (416) 646-7431
Email: [email protected]
Lawyers for Installation Services Org.
Ltd., Paul Verhoeff and Stephen Verhoeff
LEGAL 23579580.2
IN THE MATTER OF THE BANKRPUTCY OF SHS SERVICES MANAGEMENT INC/GESTION DES SERVICES SHS INC. AND
SHS SERVICES LIMITED PARTNERSHIP
Court File No. 31-208039-T
IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 243 OF THE BANKRUPTCY AND INSOLVENCY ACT,
R.S.C. 1985, c. B-5, AS AMENDED; AND SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.0.1990, c. C.43, AS AMENDED
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
NOTICE OF MOTION
(RETURNABLE March 19, 2015)
MCMILLAN LLP
Brookfield Place
181 Bay Street, Suite 4400
Toronto, ON, M5J 2T3
Brett Harrison LS#: 44336A
Tel: 416-865-7932
Fax:416-865-7048
Stephen Brown-Okruhlik LS#: 66576P
Tel: 416-865-7043
Fax: 416-865-7048
Lawyers for the Applicant
LEGAL 23579580.2
TAB 2
Court File No. 31-208039-T
Court File No. 31-208040-T
SHS Services Management Inc. /
Gestion des Services SHS Inc.
SHS Services Limited Partnership
TRUSTEE'S FIRST REPORT TO THE COURT
M a r c h 13, 2015
Court File No. 31-208039-T
Court File No. 31-208040-T
ONTARIO
SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
IN THE MATTER OF THE BANKRUPTCY OF SHS SERVICES MANAGEMENT INC.
/ GESTION DES SERVICES SHS INC.
AND
IN THE MATTER OF THE BANKRUPTCY OF SHS SERVICES LIMITED
PARTNERSHIP
FIRST REPORT TO THE COURT
SUBMITTED BY PRICEWATERHOUSECOOPERS INC.
IN ITS CAPACITY AS TRUSTEE
TABLE OF CONTENTS
INTRODUCTION
2
TERMS OF REFERENCE
2
APPLICATION FOR THE EXAMINATION ORDER
3
RELIEF SOUGHT
6
APPENDICES
A.
B.
C.
D.
E.
F.
G.
Bankruptcy Orders
Notices issued February 11, 2015
Email delivering the Notices to the Verhoeffs
Revised Notices
Statement of Claim
March 6 Letter
Certificates of Non-Attendance
INTRODUCTION
1. On July 31, 2014, pursuant to an application made by Alaris Income Growth Fund
Partnership ("Alaris"), the Ontario Superior Court of Justice (Commercial List) issued
orders (the "Bankruptcy Orders") pursuant to the Bankruptcy and Insolvency
Act,
R.S.C. 1985, c B-3 as amended (the "BIA") adjudging each of SHS Services Management
Inc. / Gestion des Services SHS Inc. ("SHS") and SHS Services Limited Partnership ("SHS
LP" and collectively with SHS, the "Companies") bankrupt and PricewaterhouseCoopers
Inc. was appointed as trustee in bankruptcy (the "Trustee") of the Companies. The
Bankruptcy Orders were suspended for a period of 10 days and became effective on August
11, 2014 (the "Date of Appointment"). These proceedings are referred to as the
"Bankruptcy Proceedings". Copies of the Bankruptcy Orders are attached Appendix "A".
2. PricewaterhouseCoopers Inc. is also the receiver (in such capacity, the "Receiver") of the
Companies. Further information in respect of the receivership proceedings, and the reports
of the Receiver, are available on the Receiver's website at www.pwc.com/car-shs.
3. This report (the "First Report") is made in support of the Trustee's application for an order
of the Court (the "Examination Order") pursuant to section 163(1) of the BIA, compelling
the Verhoeffs to attend at an examination pursuant to the Revised Notices and to produce the
Examination Information (capitalized terms as defined below).
TERMS OF REFERENCE
4.
In preparing this report and conducting its analysis, the Trustee has obtained and relied
upon certain unaudited, draft and/or internal financial information of the Company, the
Company's books and records, and discussions with various parties including former SHS
employees retained on an interim basis by the Receiver (collectively, the "Records").
5.
Except as otherwise described in this report:
a) The Receiver has not audited, reviewed or otherwise attempted to verify the accuracy or
completeness of the Records in a manner that would wholly or partially comply with
Generally Accepted Auditing Standards pursuant to the Chartered Professional
Accountants Canada Handbook - Assurance; and
b) The Receiver has not conducted an examination or review of any financial forecast and
projections in a manner that would comply with the procedures described in the
Chartered Professional Accountants Canada Handbook - Assurance.
6.
Unless otherwise stated, all monetary amounts contained herein are expressed in Canadian
Dollars and exclude harmonized sales tax ("HST').
APPLICATION FOR THE EXAMINATION ORDER
BACKGROUND
7.
The Trustee reviewed the Records of the Companies to identify and evaluate transactions
(the "Voidable Transactions") that may be subject to review as fraudulent preferences,
transfers at undervalue, or other voidable transactions pursuant to the BIA and relevant
federal and provincial legislation.
8.
In the course of its review, the Trustee identified certain transactions that it considered to
be potentially Voidable Transactions.
These included certain dividends paid to the
shareholders of SHS at the time SHS commenced operations in early March 2013 (the
"Dividends").
9.
The shareholders of SHS (the "Shareholders") who received the Dividends consisted of:
a) Paul Verhoeff SHS Trust, which the Trustee understands is controlled by Paul
Verhoeff;
b) Stephen Verhoeff SHS Trust, which the Trustee understands is controlled by
Stephen Verhoeff (together with Paul Verhoeff, the "Verhoeffs");
c) Clemco SHS Inc., which the Trustee understands is controlled by Micheal
Clements; and
d) Theresa Lea SHS Trust, which the Trustee understands is controlled by Theresa
Lea.
10.
The Trustee consulted with the Verhoeffs to obtain information as part of its review of the
Voidable Transactions. The Trustee received limited disclosures from the Verhoeffs in the
course of these discussions.
li.
The Trustee reported its findings from the review of the Voidable Transactions to the
inspectors in the Bankruptcy Proceedings on January 7, 2015.
INSPECTOR RESOLUTION AND NOTICES OF
12.
EXAMINATION
On or about January 23, 2015, counsel for the Trustee discussed the intention to issue
Notices of Appointment for Examination with counsel for the Verhoeffs. The purpose of
the examinations is, inter alia, to obtain further information in respect of the Voidable
Transactions reviewed by the Trustee. The Trustee proposed that the examinations take
place in the following week. The Verhoeffs asked for a delay of the examinations at that
time given, inter alia, the need for the Verhoeffs to travel to Toronto to attend the
examination, as well as given their counsel's availability to attend. The Trustee agreed to
this delay in order to accommodate the Verhoeffs.
13.
By resolution of the inspectors dated February 10, 2015, the Trustee issued Notices of
Appointment for Examination (the "Notices") pursuant to section 163 of the BIA to the
Shareholders. Copies of the Notices issued to the Verhoeffs on February 11, 2015, are
attached as Appendix "B".
14.
Attached as Appendix "C" is the email sent by the Trustee's legal counsel to the Verhoeffs'
legal counsel delivering their respective Notices.
15.
Counsel for the Verhoeffs again asked that examinations be moved and the Trustee
agreed. As a result of these discussions, revised Notices of Appointment for Examination
(the "Revised Notices") were sent to the Verhoeffs' counsel on March 4, 2015, with the
revised examination scheduled for March 9, 2015 (the "March 9 Examination").
Copies of the Revised Notices and the email delivering same to the Verhoeffs' counsel is
attached as Appendix "D".
16.
Pursuant to the Notices and the Revised Notices, the Verhoeffs were requested to produce
certain information (the "Examination Information") as part of the March 9
Examination. The Examination Information requested is detailed in Schedule "A" of the
Notices.
SETTLEMENT DISCUSSIONS
17.
WITH SEARS
Concurrently with arranging to examine the Verhoeffs pursuant to the Revised Notices,
the Trustee, Sears Canada Inc. ("Sears") and Alaris (collectively the "Claimants"),
agreed to engage in without-prejudice discussions on a potential settlement of claims that
the Trustee may have against the Verhoeffs in respect of the Voidable Transactions, as
well as separate claims that Sears and Alaris have asserted against the Verhoeffs. An
initial settlement conference meeting between the Claimants and the Verhoeffs was held
in Toronto on March 2, 2015 (the "March 2 Meeting").
18.
As part of this process the Claimants made reasonable requests for additional information
(the "Voluntary Disclosure") from the Verhoeffs. The Verhoeffs have not to date
provided any of the Voluntary Disclosure.
STATEMENT
19.
OF CLAIM AND RESPONSE OF VERHOEFFS
Based on the information in its possession at the time, the Trustee issued a Statement of
Claim ("Statement of Claim") on February 27, 2015, to pursue the recovery of the
Dividends. The Statement of Claim was issued prior to the March 2 Meeting to preserve
the Trustee's right to pursue recovery of the Dividends within statutory limitation periods.
20.
On March 2, 2015, the Trustee's legal counsel provided the Verhoeffs' legal counsel with a
copy of a Statement of Claim. A copy of the Statement of Claim and the email delivering
same to the Verhoeffs' counsel is attached as Appendix "E".
21.
On March 6, 2015, the Verhoeffs' legal counsel issued a letter (the "March 6 Letter") via
email to the Trustee's legal counsel, indicating that the Verhoeffs would not be attending
the March 9 Examination. As well, for the first time, the March 6 Letter also raised
objections to the Examination Information requested as outlined in the Revised Notices.
A copy of the March 6 Letter, including the email sending same, is attached as Appendix
"F".
22. Attached as Appendix "G" are copies of the certificates evidencing that the Verhoeffs did
not attend the March 9 Examination.
REQUEST FOR EXAMINATION
23.
ORDER
Discussions have been ongoing since the March 2 Meeting regarding the provision of the
Voluntary Disclosure, the Examination Information, and the holding of the examinations.
As of the date of this report, these discussions have stalled and none of the requested
information has been provided.
24.
The Trustee is of the view that it is appropriate for the Court to make the Examination
Order, for the following reasons:
a) The Verhoeffs have, to date, refused to attend an examination duly requested by the
Trustee pursuant to section 163 of the BIA;
b) The Verhoeffs have refused to provide either the Examination Information or the
Voluntary Disclosure, which information is pertinent to the conduct of the
Bankruptcy Proceedings;
c) The delay of the Verhoeffs and their failure to provide this information has added
unnecessary cost and expense to the Bankruptcy Proceedings; and
d) The examination of the Verhoeffs is necessary to permit the Trustee to recommend
a further course of action to the inspectors in the Bankruptcy Proceedings with
regard to the Voidable Transactions.
25.
The Trustee respectfully submits that the requests for the Examination Information and
the Voluntary Disclosure are reasonable and appropriate in the circumstances.
RELIEF SOUGHT
26.
The Trustee respectfully requests that this Court grant the Examination Order.
All of which is respectfully submitted on this 13th day of March, 2015.
PricewaterhouseCoopers Inc.
In its capacity as Trustee of SHS Services Management Inc. / Gestion des Services SHS Inc. and
SHS Services Limited Partnership
MoUJt
Mica Arlette
Senior Vice President
Appendix "A"
Bankruptcy Orders
Court File No. 3 J - 0 / g - 3 4 * 0
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN BANKRUPTCY AND INSOLVENCY
INTfiE MATTER OF THE BANKRUPTCY OF SHS SERVICES MANAGEMENT
INC/GESTION DES SERVICES SHS INC. of the City of Toronto, in the Province of
Ontario
BANKRUPTCY ORDER
UPON the bankruptcy application of Alaris Income Growth Fund Partnership
("Alaris"), filed this day;
AND UPON reading the Bankruptcy Application and the Affidavit of Verification of
Michael
Ervin
sworn
July
15, 2014
attached
thereto,
and
the
Consent
of
PricewaterhouseCoopers Inc. ("PWC")to act as trustee in bankruptcy, filed;
AND UPON hearing submissions of counsel for Alaris
and counsel for
PricewaterhouseCoopers Inc., in its capacity as court-appointed receiver, without security,
over all of the assets, undertakings and property of SHS Services Management Inc./Gestion
des Services SHS Inc. ("SHS");
AND UPON it appearing to the Court that during the six month period immediately
prior to the date of this Bankruptcy Application, SHS ceased to meet its liabilities generally
as they become due, an act of bankruptcy,
THIS COURT ORDERS that any requirement for notice of this Bankruptcy
Application is hereby dispensed with so that this Bankruptcy Application is properly
returnable today and hereby dispenses with any or other service thereof.
THIS COURT ORDERS that SHS is hereby adjudged bankrupt and a Bankruptcy
Order is hereby made against the SHS.
THIS COURT ORDERS that PWC, of the City of Toronto, in the Province of
Ontario, be and is hereby appointed Trustee of the estate of the said bankrupt.
C1851I73.D0CX;!
'&
THIS COURT ORDERS that the notices sent by PWC in its capacity as interim
receiver of SHS to former employees of SHS pursuant to subsections 245(1) and 246(1) of the
BIA shall fulfill the obligations of PWC in its capacity as trustee in bankruptcy under
subsections 102(1) and 102(2) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3, as
amended (the "Notice Sections"), and PWC shall not be required to deliver additional notices
pursuant to the Notice Sections.
THIS COURT ORDERS that the Trustee and McMillan LLP as legal counsel to the
trustee, shall be entitled to the benefit of and hereby are granted a charge (the "Trustee's
Charge") on the assets of the estate and all proceeds thereof (collectively, the "Charged
Property"), as security for the fees and disbursements of the Trustee and its legal counsel
incurred both before and after the making of this Order in respect of the administration of the
estate.
THIS COURT ORDERS that the filing, registration or perfection of the Trustee's
Charge shall not be required, and that the Trustee's Charge shall be valid and enforceable for
all purposes, as against any right, title or interest filed, registered, recorded or perfected
subsequent to the Trustee's Charge coming into existence, notwithstanding any such failure to
file, register, record or perfect.
THIS COURT ORDERS that the Trustee's Charge shall constitute a charge on the
Charged Property and shall rank in priority to all other security interests, trusts, liens, charges
and encumbrances, statutory or otherwise (collectively, "Encumbrances") in favour of any
person.
THIS COURT ORDERS that the said Trustee give security in the amount to be fixed
by the Official Receiver pursuant to subsection 16(1) of the Bankruptcy and Insolvency Act,
RSC 1985, c B-3, as amended.
THIS COURT ORDERS that the costs of and incidental to this application and order
be paid to Alaris out of the assets of the estate upon taxation thereof or upon further order of
the Court.
C1851I73.DOCX;!
IN THE MATTER OF THE BANKRUPTCY OF SHS SERVICES MANAGEMENT
INC/GESTION DES SERVICES SHS INC. of the City of Toronto, in the Province of Ontario
fts)&ir\
*7?x. <f^h
a.U^eJc^^
^/il^TUnrs
ONTARIO
SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
Proceeding commenced at Toronto
OAX
<^L
kwrJl^rvf^
Court File No.
Sk+Jo^. ^ > ^ . J V J _ O I L *
APPLICATION RECORD OF
ALARIS INCOME GROWTH FUND PARTNRESHD?
FIELD LLP
400, 604-I S T Street S.W.
Calgary, AB
T2P 1M7
Douglas S. NisMmura
Tel: 403-260-8548
Fax: 403-264-7084
Email: [email protected]
Lawyer for Alaris Income Growth Fund
Partnership
LEGAL 22655883.1
Court File No 1l-ZQ$ro?<?-T~
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN BANKRUPTCY AND INSOLVENCY
HE MATTER OF THE BANKRUPTCY OF SHS SERVICES LIMITED
PARTNERSHIP of the City of Toronto, in the Province of Ontario
BANKRUPTCY ORDER
UPON the bankruptcy application of Alaris Income Growth Fund Partnership
("Alaris"), filed this day;
AND UPON reading the Bankruptcy Application and the Affidavit of Verification of
Michael
Ervin
sworn
July
15, 2014
attached
thereto,
and
the
Consent
of
PricewaterhouseCoopers Inc. ("PWC") to act as trustee in bankruptcy, filed;
AND UPON hearing submissions of counsel for Alaris
and counsel for
PricewaterhouseCoopers Inc., in its capacity as court-appointed receiver, without security,
over all of the assets, undertakings and property of SHS Services Limited Partnership
("SHS");
AND UPON it appearing to the Court that during the six month period immediately
prior to the date of this Bankruptcy Application, the SHS ceased to meet its liabilities
generally as they become due, an act of bankruptcy,
THIS COURT ORDERS that any requirement for notice of this Bankruptcy
Application is hereby dispensed with so that this Bankruptcy Application is properly
returnable today and hereby dispenses with any or other service thereof.
THIS COURT ORDERS that the SHS is hereby adjudged bankrupt and a
Bankruptcy Order is hereby made against the SHS.
THIS COURT ORDERS that PWC, of the City of Toronto, in the Province of
Ontario, be and is hereby appointed Trustee of the estate of the said bankrupt.
C1851169.DOCX;!
THIS COURT ORDERS that the notices sent by PWC in its capacity as interim
receiver of SHS to former employees of SHS pursuant to subsections 245(1) and 246(1) of the
BIA shall fulfill the obligations of PWC in its capacity as trustee in bankruptcy under
subsections 102(1) and 102(2) of the Bankruptcy and Insolvency Act, RSC 1985, c B-3, as
amended (the "Notice Sections"), and PWC shall not be required to deliver additional notices
pursuant to the Notice Sections.
THIS COURT ORDERS that the Trustee and McMillan LLP as legal counsel to the
trustee, shall be entitled to the benefit of and hereby are granted a charge (the "Trustee's
Charge") on the assets of the estate and all proceeds thereof (collectively, the "Charged
Property"), as security for the fees and disbursements of the Trustee and its legal counsel
incurred both before and after the making of this Order in respect of the administration of the
estate.
THIS COURT ORDERS that the filing, registration or perfection of the Trustee's
Charge shall not be required, and that the Trustee's Charge shall be valid and enforceable for
all purposes, as against any right, title or interest filed, registered, recorded or perfected
subsequent to the Trustee's Charge coming into existence, notwithstanding any such failure to
file, register, record or perfect.
THIS COURT ORDERS that the Trustee's Charge shall constitute a charge on the
Charged Property and shall rank in priority to all other security interests, trusts, liens, charges
and encumbrances, statutory or otherwise (collectively, "Encumbrances") in favour of any
person.
THIS COURT ORDERS that the said Trustee give security in the amount to be fixed
by the Official Receiver pursuant to subsection 16(1) of the Bankruptcy and Insolvency Act,
RSC 1985, c B-3, as amended.
THIS COURT ORDERS that the costs of and incidental to this application and order
be paid to Alaris out of the assets of the estate upon taxation thereof or upon further order of
the Court.
fa,/%»^*CJd -
C1851169.D0CX;!
IN THE MATTER OF THE BANKRUPTCY OF SHS SERVICES LIMITED PARTNERSHIP of
the City of Toronto, in the Province of Ontario
(Yl^JlM^
?/-2 vS-oSfCourt File No.
ONTARIO
SUPERIOR COURT OF JUSTICE
(COMMERCIAL TJST)
4
Proceeding commenced at Toronto
APPLICATION RECORD OF
ALARIS INCOME GROWTH FUND PARTNRESHD?
FD2LD LLP
400, 6 0 4 - I S T Street S.W.
Calgary, AB
T2P 1M7
Douglas S. Nishimura
Tel: 403-260-8548
Fax: 403-264-7084
Email: [email protected]
Lawyer for Alaris Income Growth Fund
Partnership
LEGAL 22656002.1
Appendix " B "
Notices issued F e b r u a r y 11, 2015
Estate no. 25-094462
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF
SHS Services Management Inc/Gestion des Services SHS Inc.
of the City of Toronto
in the Province of Ontario
NOTICE OF APPOINTMENT FOR EXAMINATION
TO: PAUL VERHOEFF, former director of SHS Services Management Inc/Gestion des
Services SHS Inc., a bankrupt
UnitH
7003 - 5th Street SE
Calgary, AB
T2H 2G2
YOU ARE REQUIRED TO ATTEND FOR AN EXAMINATION pursuant to
subsection 163(1) of the Bankruptcy and Insolvency Act on Friday, March 13, 2015, at
10:00 a.m. at the office of McMillan LLP, Suite 4400, 181 Bay Street, Toronto,
Ontario, M5J 2T3.
YOU ARE REQUIRED TO BRING WITH YOU and produce at the examination the
following documents and things referred to in:
All books, documents, correspondence or papers in your
possession or power relating in all or in part to payments made by
the Bankrupt to Installation Services Org. Ltd. ("ISO"), Paul
Verhoeff SHS Trust; Stephen Verhoeff SHS Trust; Clemco SHS
Inc.; or Theresa Lea SHS Trust (the "March 2013 Payments"), or
the approximately $2 million paid by the Bankrupt in December
2013 for employee related expenses, and more particularly, the
documents referred to in Schedule "A" attached.
Date: February 11, 2015.
MCMILLAN LLP
Barristers & Solicitors
181 Bay Street, Suite 4400
Toronto, Ontario
M5J2T3
Brett Harrison
LEGAL 23377578.2
tel: 416.865.7932
fax: 416.865.7043
email: [email protected]
Solicitors for the Trustee
Schedule "A"
You are required to bring with you as a former officer and/or director of SHS
Services Management Inc/Gestion des Services SHS Inc. ("SHS") and produce at the
examination the following without limitation:
1. Any shareholder agreements related to SHS or ISO.
2. Particulars of all shareholder loans made and/or repaid.
3. All correspondence related to the payment of dividends by SHS in the
course of its operations.
4. All correspondence related to payments made by SHS in the month
preceding the appointment of an interim receiver on December 13, 2013.
5. All correspondence related to the repayment terms of the equity and debt
financing of SHS under the Asset Transfer Agreement dated December 20,
2012.
6. All correspondence related to the repayment of ISO for monies advanced to
SHS.
7. Any documents evidencing the relationships between ISO and Paul
Verhoeff and Stephen Verhoeff.
8. All correspondence related to payments made in March of 2013 pursuant to
the Contribution Agreement dated March 1, 2013.
9. All documentation evidencing the amount of initial funding received by
SHS in March of 2013 from all sources, including the use of use such funds
10. All correspondence and documentation related to payments made to
shareholders of SHS or ISO.
LEGAL 23377578.2
11. All correspondence and documentation related to BDC Investment No.
047097-01 being a loan from Business Development Bank of Canada to
ISO, which was repaid on ISO's behalf by SHS on March 4, 2013.
12. Any evidence of costs incurred by ISO on behalf of SHS at any time, and
the reimbursement of same (where made) by SHS.
13. Any evidence or analysis made in respect of the nature and
purpose of the dividend payments by SHS in March 2013,
including but not limited to the use of these funds for purposes
oflSO.
14. All correspondence discussing potential Director or Officer
liability.
15. The Business Plan presented to Sears Canada Inc. at the time of
the acquisition of SHS evidencing the funds required for the
initial funding of SHS.
16. All documentation evidencing the $15M minimum threshold
for investments made by Alaris Royalty Corp..
LEGAL 23377578.2
Estate no. 25-094462
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF
SHS Services Management Inc/Gestion des Services SHS Inc.
of the City of Toronto
in the Province of Ontario
NOTICE OF APPOINTMENT FOR EXAMINATION
TO: STEPHEN VERHOEFF, former director of SHS Services Management Inc/Gestion
des Services SHS Inc., a bankrupt
UnitH
7003 - 5th Street SE
Calgary, AB
T2H 2G2
YOU ARE REQUIRED TO ATTEND FOR AN EXAMINATION pursuant to
subsection 163(1) of the Bankruptcy and Insolvency Act on Friday, March 13, 2015, at
10:00 a.m. at the office of McMillan LLP, Suite 4400, 181 Bay Street, Toronto,
Ontario, M5 J 2T3.
YOU ARE REQUIRED TO BRING WITH YOU and produce at the examination the
following documents and things referred to in:
All books, documents, correspondence or papers in your
possession or power relating in all or in part to payments made by
the Bankrupt to Installation Services Org. Ltd. ("ISO"), Paul
Verhoeff SHS Trust; Stephen Verhoeff SHS Trust; Clemco SHS
Inc.; or Theresa Lea SHS Trust (the "March 2013 Payments"), or
the approximately $2 million paid by the Bankrupt in December
2013 for employee related expenses, and more particularly, the
documents referred to in Schedule "A" attached.
Date: February 11,2015.
MCMILLAN LLP
Barristers & Solicitors
181 Bay Street, Suite 4400
Toronto, Ontario
M5J 2T3
Brett Harrison
LEGAL 23480706.1
tel: 416.865.7932
fax: 416.865.7043
email: [email protected]
Solicitors for the Trustee
Schedule "A"
You are required to bring with you as a former officer and/or director of SHS
Services Management Inc/Gestion des Services SHS Inc. ("SHS") and produce at the
examination the following without limitation:
1. Any shareholder agreements related to SHS or ISO.
2. Particulars of all shareholder loans made and/or repaid.
3. All correspondence related to the payment of dividends by SHS in the
course of its operations.
4. All correspondence related to payments made by SHS in the month
preceding the appointment of an interim receiver on December 13, 2013.
5. All correspondence related to the repayment terms of the equity and debt
financing of SHS under the Asset Transfer Agreement dated December 20,
2012.
6. All correspondence related to the repayment of ISO for monies advanced to
SHS.
7. Any documents evidencing the relationships between ISO and Paul
Verhoeff and Stephen Verhoeff.
8. All correspondence related to payments made in March of 2013 pursuant to
the Contribution Agreement dated March 1, 2013.
9. All documentation evidencing the amount of initial funding received by
SHS in March of 2013 from all sources, including the use of use such funds
10. All correspondence and documentation related to payments made to
shareholders of SHS or ISO.
LEGAL 23480706.1
11. All correspondence and documentation related to BDC Investment No.
047097-01 being a loan from Business Development Bank of Canada to
ISO, which was repaid on ISO's behalf by SHS on March 4, 2013.
12. Any evidence of costs incurred by ISO on behalf of SHS at any time, and
the reimbursement of same (where made) by SHS.
13. Any evidence or analysis made in respect of the nature and
purpose of the dividend payments by SHS in March 2013,
including but not limited to the use of these funds for purposes
of ISO.
14. All correspondence discussing potential Director or Officer
liability.
15. The Business Plan presented to Sears Canada Inc. at the time of
the acquisition of SHS evidencing the funds required for the
initial funding of SHS.
16. All documentation evidencing the $15M minimum threshold
for investments made by Alaris Royalty Corp..
LEGAL 23480706.1
Appendix "C"
Email delivering the Notices to the Verhoeffs
:,-^
*'- g
In the Matter of the Bankruptcy of SHS Services Management
Inc.
Brett Harrison to: [email protected]
02/11/2015 12:04 PM
Cc: Mica J. Arlette, "Stephen Brown-Okruhlik"
2 attachments
Notice of S.1€3 Examination of Paul Verhoeff pdf Notice of 5.163 Examination of Stephen Verhoeff.pdf
Max,
As per my voicemail, attached are the Notices of Appointment for Examination for Paul and Stephen
Verhoeff served upon you in account with the Rules of Civil Procedure . Please confirm that you accept
service by email. If we have not received confirmation by Friday we will serve by fax.
If possible we would appreciate receiving the requested documents in advance of the examination so
that we can try to avoid having your clients re-attend. If you have any questions regarding the notices
please call me to discuss.
Sincerely,
mcmillan
Brett Harrison
Partner
d 416.865.7932 | f 416,865.7048
[email protected]
Assistant: Wilma Leo | 416.865.7852 | [email protected]
M c M i l l a n LLP
Lawyers | Patent & Trade-mark Agents
Brookfield Place, 181 Bay Street, Suite 4400
Toronto, Ontario M5J 2T3
mcmillan.ca
CONFIDENT!Amy NOTICE: This email, including any attachments, may contain information that is confidential and privileged. Any
unauthorized disclosure, copying or use of this email is prohibited. If you are not the intended recipient, please notify us. by reply email
or telephone call and permanently delete this email and any copies immediately.
Please consider the environment before printing this e-mail,
McMillan is committed to providing electronic communications that are
relevant to you and your business. To sign up to receive other electronic
communications from us or to unsubscribe from receiving electronic messages
sent on behalf of McMillan, please visit the McMillan Online Subscription
Centre <http://www.mcmillan.ca/subscribeemail.aspx>.
McMillan s'engage a vous envoyer des communications electroniques appropriees
pour vous et votre entreprise. Pour vous abonner et recevoir des
communications electroniques de notre part, ou pour vous desabonner et ne plus
recevoir de telles communications, veuillez visiter le centre d'abonnement en
ligne de McMillan <http://www.mcmillan.ca/subscribeemail.aspx>.
Appendix "D"
Revised Notices
;
RE: SHS
'••#
Brett Harrison to: [email protected]
Cc: Mica J. Arlette, "Stephen Brown-Okruhlik"
This message has been replied to.
History;
2 attachments
03/04/2015 02:14 PM
Notice of Appointment for &arnination_{Stephen Verhoeff) ret. March 9, 2...pdf
Notice of Appointment for Examination (Paul Verhoeff)ret.March 9, 2015....pdf
Hi Max,
I just wanted to follow up on my email below. Attached are the revised Notices of Appointment for
Examination for March 9. Please let me know if your clients will be in a position to provide any of the
requested documents prior to the examination.
Thanks,
mcmillan
Brett Harrison
Partner
d 416.865.7932
[email protected]
Assistant: Wilma Leo | 416.865.7852 | [email protected]
)
"•
A
\ 7 ',C
T
cr
'<,
/
r At c
t
•
0
i
t
/
I
L
L
<
v I >ac
i
<(<(?<•(
)
0
'
i
< >
> i
. (
I
'
(
J lf(
O
i
»' ( I
U
1
'
L
C
•, L i \
1 ) - l
r
t i ironment before printing this e-mail.
From: Brett Harrison
Sent: Monday, March 02, 2015 3:45 PM
To: [email protected]
Cc: [email protected]
Subject: SHS
Max,
I spoke to Mica and it sounds as there has not been a resolution of the outstanding issues. As a result, I
just wanted to confirm that the s. 163 examinations of your client will be held at our offices
commencing at 10 am on March 9. To the extent possible it would be helpful to have the documents
requested before that.
I also wanted to provide you with a copy of the Statement of Claim which we have issued regarding the
dividend payments. Given that the tolling agreement was not signed last week we had it issued on
Friday to address any possible limitation issues there may be. Please let me know if you have any
questions regarding the claim.
Thanks,
mcmillan
Brett Harrison
Partner
d 416.865.7932 | f 416.865.7048
brett.harrison(a)mcmillan.ca
Assistant: Wilma Leo | 416,865,7852 | wilma,leo(amcmillan,ca
M c M i l l a n LLP
Lawyers | Patent & Trade-mark Agents
Brookfield Place, 181 Bay Street, Suite 4400
Toronto, Ontario M5J 2T3
mcmillan.ca
(,r)» I~>LN~ * r r ' o i<. c 71
) j 11 i ci. i! (It J in
on ) i
>t ( > of < '
i i( n iu
<
i c o
i I t
a id i i n <• t o )
i >
/ s
HI i<- p tilth t T C at
i
i '
v v, ( i i y <
fen'i
n
i «
r i ( K I I •> ' i i
<w i <
i
J
u
i <
O ') i J/ it
i
/ <
Please consider the environment before printing this e-mail.
McMillan is committed to providing electronic communications that are
relevant to you and your business. To sign up to receive other electronic
communications from us or to unsubscribe from receiving electronic messages
sent on behalf of McMillan, please visit the McMillan Online Subscription
Centre <http://www.mcmillan.ca/subscribeemail.aspx>.
McMillan s'engage a vous envoyer des communications electroniques appropriees
pour vous et votre entreprise. Pour vous abonner et recevoir des
communications electroniques de notre part, ou pour vous desabonner et ne plus
recevoir de telles communications, veuillez visiter le centre d'abonnement en
ligne de McMillan <http://www.mcmillan.ca/subscribeemail.aspx>.
•>•>.
Estate no. 25-094462
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF
SHS Services Management Inc/Gestion des Services SHS Inc.
of the City of Toronto, in the Province of Ontario
NOTICE OF APPOINTMENT FOR EXAMINATION
TO: PAUL VERHOEFF, former director of SHS Services Management Inc/Gestion des
Services SHS Inc., a bankrupt
UnitH
7003 - 5th Street SE
Calgary, AB
T2H 2G2
YOU ARE REQUIRED TO ATTEND FOR AN EXAMINATION pursuant to
subsection 163(1) of the Bankruptcy and Insolvency Act on Monday, March 9, 2015, at
10:00 a.m. at the office of McMillan LLP, Suite 4400, 181 Bay Street, Toronto,
Ontario, M5J 2T3.
YOU ARE REQUIRED TO BRING WITH YOU and produce at the examination the
following documents and things referred to in:
All books, documents, correspondence or papers in your possession or power
relating in all or in part to payments made by the Bankrupt to Installation
Services Org. Ltd. ("ISO"), Paul Verhoeff SHS Trust; Stephen Verhoeff SHS
Trust; Clemco SHS Inc.; or Theresa Lea SHS Trust (the "March 2013
Payments"), or the approximately $2 million paid by the Bankrupt in
December 2013 for employee related expenses, and more particularly, the
documents referred to in Schedule "A" attached.
Date: March 9, 2015.
MCMILLAN LLP
Barristers & Solicitors
181 Bay Street, Suite 4400
Toronto, ON M5J 2T3
Brett Harrison
tel: 416.865.7932
fax: 416.865.7043
email: [email protected]
Solicitors for the Trustee
Schedule "A"
You are required to bring with you as a former officer and/or director of SHS
Services Management Inc/Gestion des Services SHS Inc. ("SHS") and produce at the
examination the following without limitation:
1. Any shareholder agreements related to SHS or ISO.
2. Particulars of all shareholder loans made and/or repaid.
3. All correspondence related to the payment of dividends by SHS in the
course of its operations.
4. All correspondence related to payments made by SHS in the month
preceding the appointment of an interim receiver on December 13, 2013.
5. All correspondence related to the repayment terms of the equity and debt
financing of SHS under the Asset Transfer Agreement dated December 20,
2012.
6. All correspondence related to the repayment of ISO for monies advanced to
SHS.
7. Any documents evidencing the relationships between ISO and Paul
Verhoeff and Stephen Verhoeff.
8. All correspondence related to payments made in March of 2013 pursuant to
the Contribution Agreement dated March 1, 2013.
9. All documentation evidencing the amount of initial funding received by
SHS in March of 2013 from all sources, including the use of use such funds
10. All correspondence and documentation related to payments made to
shareholders of SHS or ISO.
11. All correspondence and documentation related to BDC Investment No.
047097-01 being a loan from Business Development Bank of Canada to
ISO, which was repaid on ISO's behalf by SHS on March 4, 2013.
12. Any evidence of costs incurred by ISO on behalf of SHS at any time, and
the reimbursement of same (where made) by SHS.
13. Any evidence or analysis made in respect of the nature and
purpose of the dividend payments by SHS in March 2013,
including but not limited to the use of these funds for purposes
of ISO.
14. All correspondence discussing potential Director or Officer
liability.
15. The Business Plan presented to Sears Canada Inc. at the time of
the acquisition of SHS evidencing the funds required for the
initial funding of SHS.
16. All documentation evidencing the $15M minimum threshold
for investments made by Alaris Royalty Corp..
Estate no. 25-094462
ONTARIO
SUPERIOR COURT OF JUSTICE
IN-BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF
SHS Services Management Inc/Gestion des Services SHS Inc.
of the City of Toronto, in the Province of Ontario
NOTICE OF APPOINTMENT FOR EXAMINATION
TO: STEPHEN VERHOEFF, former director of SHS Services Management Inc/Gestion
des Services SHS Inc., a bankrupt
UnitH
7003 - 5th Street SE
Calgary, AB
T2H 2G2
YOU ARE REQUIRED TO ATTEND FOR AN EXAMINATION pursuant to
subsection 163(1) of the Bankruptcy and Insolvency Act on Monday, March 9, 2015, at
10:00 a.m. at the office of McMillan LLP, Suite 4400, 181 Bay Street,'Toronto
Ontario, M5 J 2T3.
YOU ARE REQUIRED TO BRING WITH YOU and produce at the examination the
following documents and things referred to in:
All books, documents, correspondence or papers in your possession or power
relating in all or in part to payments made by the Bankrupt to Installation
Services Org. Ltd. ("ISO"), Paul Verhoeff SHS Trust; Stephen Verhoeff SHS
Trust; Clemco SHS Inc.; or Theresa Lea SHS Trust (the "March 2013
Payments"), or the approximately $2 million paid by the Bankrupt in
December 2013 for employee related expenses, and more particularly, the
documents referred to in Schedule "A" attached.
Date: March 4, 2015.
MCMILLAN LLP
Barristers & Solicitors
181 Bay Street, Suite 4400
Toronto, ON M5J 2T3
Brett Harrison
tel: 416.865.7932
fax: 416.865.7043
email: [email protected]
Solicitors for the Trustee
Schedule "A"
You are required to bring with you as a former officer and/or director of SHS
Services Management Inc/Gestion des Services SHS Inc. ("SHS") and produce at the
examination the following without limitation:
1. Any shareholder agreements related to SHS or ISO.
2. Particulars of all shareholder loans made and/or repaid.
3. All correspondence related to the payment of dividends by SHS in the
course of its operations.
4. All correspondence related to payments made by SHS in the month
preceding the appointment of an interim receiver on December 13, 2013.
5 All correspondence related to the repayment terms of the equity and debt
financing of SHS under the Asset Transfer Agreement dated December 20,
2012.
6. All correspondence related to the repayment of ISO for monies advanced to
SHS.
7. Any documents evidencing the relationships between ISO and Paul
Verhoeff and Stephen Verhoeff.
8. All correspondence related to payments made in March of 2013 pursuant to
the Contribution Agreement dated March 1, 2013.
9 All documentation evidencing the amount of initial funding received by
SHS in March of 2013 from all sources, including the use of use such funds
10. All correspondence and documentation related to payments made to
shareholders of SHS or ISO.
11 All correspondence and documentation related to BDC Investment No.
047097-01 being a loan from Business Development Bank of Canada to
ISO, which was repaid on ISO's behalf by SHS on March 4, 2013.
12. Any evidence of costs incurred by ISO on behalf of SHS at any time, and
the reimbursement of same (where made) by SHS.
13. Any evidence or analysis made in respect of the nature and
purpose of the dividend payments by SHS in March 2013,
including but not limited to the use of these funds for purposes
of ISO.
14. All correspondence discussing potential Director or Officer
liability.
15. The Business Plan presented to Sears Canada Inc. at the time of
the acquisition of SHS evidencing the funds required for the
initial funding of SHS.
16. All documentation evidencing the $15M minimum threshold
for investments made by Alaris Royalty Corp..
Appendix "E"
S t a t e m e n t of Claim
Wilma Leo
Brett Harrison
Monday, March 02, 2015 3:45 PM
[email protected]
mica.arlette@ca. pwc.com
SHS
SOC - PwC v. Verhoeff et al-.pdf
From:
Sent:
To:
Cc:
Subject:
Attachments:
Max,
I spoke to Mica and it sounds as there has not been a resolution of the outstanding issues. As a result, I just wanted to
confirm that the s. 163 examinations of your client will be held at our offices commencing at 10 am on March 9. To the
extent possible it would be helpful to have the documents requested before that.
I also wanted to provide you with a copy of the Statement of Claim which we have issued regarding the dividend
payments. Given that the tolling agreement was not signed last week we had it issued on Friday to address any possible
limitation issues there may be. Please let me know if you have any questions regarding the claim.
Thanks,
il,
mcmillan
Brett Harrison
Partner
d 416.865.7932 | f 416.865.7048
brett,harrison(p)mcmillan.ca
Assistant: Wilma Leo | 416.865.7852 | wilma.leo@mcmillan,ca
M c M i l l a n LLP
Lawyers | Patent & Trade-mark Agents
Brookfield Place, 181 Bay Street, Suite 4400
Toronto, Ontario M5J 2T3
mcmillan.ca
•inrnuihon that is confidential and privileged Any unaatii
ecipient, please notify <.is hy reply email or telephone cai;
,..y [y\e
e.n>-
>ero>» printing this e-Piiil.
Court File No.
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PRICEWATERHOUSECOOPERS INC., in its capacity as Trustee in Bankruptcy of
SI IS St.:< VICES MANAGMENT INC/GESTION DES SERVICE SHS INC. and SHS
SERVICES LIMITED PARTNERSHIP
Plaintiff
-andPA.I.-I. VERHOEFF, STEPHEN VERHOEFF, THERESA LEA, MICHAEL
Ci.j-MF\TS, PAUL VERHOEFF SHS TRUST, STEPHEN VERHOEFF SHS TRUST,
('! .1: MCO SHS INC., THERESA LEA SHS TRUST and INSTALLATION SERVICE
ORG. LTD
Defendant
STATEMENT OF CLAIM
TO THE DEFENDANTS
A LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the
plaintiff. The claim made against you is set out in the following pages.
IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer
acting for you must prepare a statement of defence in Form 18A prescribed by the Rules
of Civil Procedure, serve it on the plaintiffs lawyer or, where the plaintiff does not have
a lawyer, serve it on the plaintiff, and file it, with proof of service, in this court office,
WITHIN TWENTY DAYS after this statement of claim is served on you, if you are
served in Ontario.
If you are served in another province or territory of Canada or in the United
States of America, the period for serving and filing your statement of defence is forty
days. If you are served outside Canada and the United States of America, the period is
sixty days.
Instead of serving and filing a statement of defence, you may serve and file a
notice of intent to defend in Form 18B prescribed by the Rules of Civil Procedure. This
will entitle you to ten more days within which to serve and file your statement of
defence.
IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE
GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE
-2-
TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO
PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY
CONTACTING A LOCAL LEGAL AID OFFICE.
IF YOU PAY THE PLAINTIFF'S CLAIM, and $5,000 for costs, within the time
for serving and filing your statement of defence, you may move to have this proceeding
dismissed by the court. If you believe the amount claimed for costs is excessive, you
may pay the plaintiffs claim and $400.00 for costs and have the costs assessed by the
court.
TAKE NOTICE: THIS ACTION WILL AUTOMATICALLY BE DISMISSED
if it has not been set down for trial or terminated by any means within five years after the
action was commenced unless otherwise ordered by the court.
Date
February dft2Q 15
Issued by^—Local registrar
Address of 393 University Avenue
court office 10th Floor
Toronto, Ontario
M5G 1E6
TO:
PAUL VERHOEFF
10900-46 Street SE
Calgary, AB T2C 16Y
AND TO:
STEPHEN VERHOEFF
10900-46 Street SE
Calgary, ABT2C16Y
AND TO:
MICHEAL CLEMENTS
222 Cranleigh View SE
Calgary, AB T3M 0A2
AND TO:
THERESA LEA
10900 - 46 Street SE
Calgary, AB T2C 16Y
AND TO:
INSTALLATION SERVICES ORG. LTD
2800,715 - 5TH AVENUE SW
Calgary, AB T2P2X6
- 3-
CLAIM
1.
The Plaintiff, PricewaterhouseCoopers Inc. ("PwC" or the "Trustee") in its
capacity as trustee in bankruptcy of SHS Services Management Inc/Gestion des
Services SHS ("SHS") and SHS Services Limited Partnership ("SHS LP"), claims
against all of the Defendants:
(a)
that dividend payments declared by the directors of SHS on March 4,
2013
totalling
$8,000,000
(the
"Dividends")
were
fraudulent
conveyances under the Fraudulent Conveyance Act (Ontario);
(b)
in the alternative, that the Dividends were fraudulent conveyances under
the Fraudulent Preferences Act (Alberta), and the Statute of Elizabeth;
In accordance with subparagraphs (a) and (b) the Plaintiff seeks an order:
(c)
declaring that the Dividends were fraudulent transactions;
(d)
declaring that the Dividends are void or voidable as against the Trustee;
and
(e)
requiring the Defendants to immediately repay to SHS in cash all
amounts paid in accordance with Tranche 2 (as defined below) of the
Dividends.
2.
As against the Defendants Paul Verhoeff, Stephen Verhoeff and Micheal
Clements (the "Directors") the Plaintiff claims:
(a)
that the declaration of the Dividends by the Directors was oppressive,
unfairly prejudicial to and disregarded the interests of the creditors of
SHS (the "Creditors"); and
(b)
further and in the alternative, that in relation to the Dividends and, the
Directors are liable for breach of fiduciary duty and/or failing to exercise
care, diligence and skill that a reasonably prudent person would exercise
in performing their duties on behalf of SHS;
-4-
In accordance with subparagraphs (a) and (b) the Plaintiff seeks an order:
(c)
declaring that the Trustee has standing to bring a claim against the
Directors for oppressive conduct in accordance with sections 238 and 241
of the Canada Business Corporations Act ("CBCA");
(d)
declaring that the conduct of the Directors was oppressive or unfairly
prejudicial to or disregarded the interests of the Creditors;
(e)
setting aside the Dividends and declaring that SHS is entitled to be
compensated for the loss of $3,000,000 in accordance with Section
241(3)(h) and 0) of the CBCA;
(f)
declaring that the Directors are jointly and severally liable to SHS in the
amount of $3,000,000 in relation to the Dividends;
(g)
such further and other relief to remedy the oppressive conduct of the
Directors as may be fit and proper in the circumstances.
3.
As against the Defendants Paul Verhoeff SHS Trust, Stephen Verhoeff SHS
Trust, Clemco SHS Inc. and Theresa Lea SHS Trust (collectively, the "Shareholders")
and Installation Services Org. Ltd. ("ISO") the Plaintiff claims:
(a)
that the Defendant Shareholders and ISO are constructive trustees of the
Dividends and that the Dividends are held in trust for SHS;
(b)
that the Plaintiff has an equitable or beneficial interest in the Dividends or
any assets acquired by the Defendant Shareholders with money paid to
them pursuant to the Dividends;
(c)
that as a result of the Dividends the Shareholders and ISO were unjustly
enriched at the expense of SHS and the Creditors; and
(d)
that the Defendant ISO is in knowing receipt of money impressed with a
constructive trust; and
-5-
(e)
that the Defendant Shareholders or ISO hold money that is impressed
with a constructive trust for the benefit of SHS.
In accordance with subparagraphs (a) to (e) the Plaintiff seeks an order:
(f)
declaring that the Defendant Shareholders and ISO are in knowing receipt
of $3,000,000, which is trust property belonging to SHS;
(g)
declaring that the Defendant Shareholders and ISO were unjustly
enriched to the detriment of SHS and the Creditors in the amount of
$3,000,000;
(h)
declaring that $3,000,000 in the possession of ISO is impressed upon with
a constructive trust;
4.
In relation to all of the relief sought above, the Plaintiff seeks an order for:
(a)
pre and post-judgment interest in accordance with the provisions of the
Courts of Justice Act, R.S.O. 1990, c. C.43;
(b)
its costs in this action; and
(c)
such further and other relief as this Honourable Court may deem just.
THE PARTIES
5.
The Plaintiff PwC was appointed interim receiver of SHS and SHS LP pursuant
to an order of Regional Senior Justice Morawetz on December 13, 2013 (the "Interim
Receivership Order"). PwC was subsequently appointed receiver of SHS and SHS LP
by an order of Justice Brown on January 9, 2014 (the "Receivership Order") and
trustee in bankruptcy of SHS and SHS LP by order of Justice Wilton-Siegel on July 31,
2014 (the "Bankruptcy Order").
6.
The bankrupt SHS is a corporation incorporated pursuant to the CBCA.
6-
7.
The bankrupt SHS LP is a Limited Partnership formed pursuant to the
Partnerships Act (Alberta), in which SHS is the general partner and Alaris Income
Growth Partnership ("Alaris") is a limited partner.
8.
The Defendant Paul Verhoeff is an individual, residing in the province of
Alberta.
9.
The Defendant Stephen Verhoeff is an individual residing in the province of
Alberta.
10.
The Defendant Theresa Lea ("Lea") is an individual residing in the province of
Alberta.
11.
The Defendant Michael Clements ("Clements") is an individual residing in the
province of Alberta.
12.
Paul Verhoeff and Stephen Verhoeff were directors of SHS from the time SHS
was first established until their resignation in or around October of 2013. Clements was a
director of SHS from the time SHS was established until his resignation shortly after the
granting of the Interim Receivership Order. Collectively, Paul Verhoeff, Stephen
Verhoeff and Clements are the "Directors".
13.
The Defendant Paul Verhoeff SHS Trust is a trust controlled by Paul Verhoeff.
14.
The Defendant Stephen Verhoeff SHS Trust is a trust controlled by Stephen
Verhoeff.
15.
The Defendant Clemco SHS Inc. is a corporation. Clements is the sole principal
of Clemco SHS Inc.
16.
The Defendant Theresa Lea SHS Trust is a trust controlled by Lea.
17.
Together, Paul Verhoeff SHS Trust, Stephen Verhoeff SHS Trust, Clemco SHS
Inc. and Theresa Lea SHS Trust were the shareholders of SHS (the "Shareholders").
18.
The Defendant Installation Services Org. Ltd. ("ISO") is a corporation
incorporated under the laws of Alberta. Paul Verhoeff is a beneficial owner of shares in
ISO. Lea is the current or former Acting Vice-President of ISO.
BACKGROUND TO THE CREATION OF SHS AND SHS LP
19.
In 2012 Sears Canada Inc. ("Sears") and the Directors entered negotiations to
outsource certain of Sears' home installation services. As a consequence of these
negotiations, SHS was incorporated on November 19, 2012.
20.
SHS LP was formed pursuant to a limited partnership agreement between SHS
and Alaris, dated February 25,2013 (the "Limited Partnership Agreement").
21.
On December 20, 2012 SHS entered into a branded concession agreement with
Sears governing the business, assets, property and undertakings of SHS and SHS LP (the
"BCA").
22.
Under the BCA, SHS acquired the right from Sears to provide certain products
and services under the Sears brand name through prescribed channels in designated
markets.
23.
In conjunction with the BCA, Sears and SHS executed an asset transfer
agreement on December 20, 2012 (the "ATA") and a vendor take-back loan agreement
(the "VTBA"). Under the ATA, SHS acquired certain property from Sears. Under the
VTBA, Sears loaned SHS $5,676,525.80 (the "Sears Loan").
24.
In connection with the ATA, BCA and related agreements, SHS agreed to
maintain at all times a minimum of debt and equity financing of $18,000,000 (the "Debt
and Equity Obligations").
25.
In addition to the money borrowed under the VTBA, SHS borrowed $15,000,000
from Alaris (the "Alaris Loan") to meet its initial financing requirements. The Alaris
loan was secured by ISO under an indemnity and guarantee dated March 1,2013.
26.
The transition of ownership of the rights and assets governed by the BCA to SHS
occurred on March 3, 2013.
27.
On March 4, 2013 SHS received $15,000,000 of cash from Alaris, being the full
amount of the Alaris Loan.
IMPROPER DIVIDEND PAYMENTS
28.
Also on March 4, 2013, the first day of SHS's operations, the Directors declared
the Dividends.
29.
The Dividends were paid in two tranches, Tranche 1 and Tranche 2.
30.
Under Tranche 1, $5,000,000 was distributed to the Shareholders as follows:
31.
32.
(a)
$1,587,000 to Paul Verhoeff SHS Trust
(b)
$1,587,000 to Stephen Verhoeff SHS Trust
(c)
$ 1,587,000 to Clemco SHS Inc.
(d)
$239,000 to the Theresa Lea SHS Trust
Under Tranche 2, $3,000,000 was distributed to the Shareholders as follows:
(a)
$952,200 to Paul Verhoeff SHS Trust
(b)
$952,200 to Stephen Verhoeff SHS Trust
(c)
$952,200 to Clemco SHS Inc.
(d)
$ 143,400 to the Theresa Lea SHS Trust
The Trustee has been advised that the money received by the Shareholders under
the Tranche 1 distribution was invested in shares of Alaris (the "Alaris Shares"). The
Alaris Shares were later transferred to SHS.
9-
33.
The Trustee has been advised that the money received by the Shareholders under
the Tranche 2 distribution was used by the Shareholders to pursue various opportunities
and to cover various liabilities relating to their interests in ISO.
34.
The $3,000,000 distributed by SHS to the Shareholders under Tranche 2 of the
Dividends was never returned to SHS in cash or in kind. SHS never received any
compensation, consideration, asset, benefit or advantage as a consequence of or in
relation to Tranche 2 of the Dividends.
35.
Payment of the Dividends significantly diminished the liquidity position of SHS
and violated the Debt and Equity Obligations.
36.
In June of 2013 Sears discovered the violation of the Debt and Equity
Obligations after reviewing the financial statements of SHS. Sears responded by issuing
a notice of breach to SHS.
EARLY REPAYMENT OF THE SEARS LOAN
37.
In early September of 2013 SHS repaid the Sears Loan in full pursuant to an
early payment option under the VTBA despite its ongoing liquidity problems (the
"Early Repayment"). The Sears Loan was not yet due at that time.
38.
Following payment of the Dividends and the Early Repayment, by October of
2013 SHS faced the prospect that it would be unable to meet its obligations as they came
due and would therefore become insolvent. On October 31, 2013 SHS received an
emergency loan of $4,000,000 from Sears and Alaris to relieve its liquidity troubles (the
"Emergency Loan").
10-
PREFERENTIAL PAYMENTS ON THE EVE OF INSOLVENCY
39.
In the week preceding the Interim Receivership Order, the Directors caused
payments in the approximate amount of $2,500,000 by SHS to employees and trade
creditors of SHS to cover various of SHS's liabilities (the "Preferential Payments").
40.
Had the Preferential Payments not been made, the employees and trade creditors
of SHS would have been entitled to lesser amounts under the distribution scheme of the
Bankruptcy and Insolvency Act than they received. The Directors believed that they
could be personally liable to the employees and trade creditors of SHS for shortfalls in
the amounts paid to these parties after SHS became insolvent.
41.
The Directors caused the payment of the Preferential Payments so as to avoid
personal liability to employees and trade creditors of SHS following its insolvency.
42.
Further particulars of the Preferential Payments will be provided prior to trial.
INSOLVENCY OF SHS AND SHS LP
43.
Despite the Emergency Loan, SHS faced imminent default on certain financial
obligations in December of 2013.
44.
On December 13, 2013, Regional Senior Justice Morawetz granted the Interim
Receivership Order.
45.
On January 9, 2014, Justice Brown granted the Receivership Order.
46.
On July 31,2014, Justice Wilton-Siegel granted the Bankruptcy Order.
THE DIVIDENDS WERE FRAUDULENT CONVEYANCES
47.
The Directors declared the Dividends with the intention to defeat, hinder, delay
or defraud the Creditors. Accordingly, the Dividends constituted fraudulent conveyances
pursuant to the Fraudulent Conveyances Act (Ontario). Alternatively, the Dividends
constituted fraudulent conveyances pursuant to the Fraudulent Preferences Act (Alberta)
and the Statute of Elizabeth.
11-
48.
The Dividends bear a number of the badges of fraud, including:
(a)
The financial situation of SHS on March 3, 2013 did not favour the
declaration of the Dividends.
(b)
The Dividends were paid on the first day of SHS's operations, at a time
when SHS was indebted to numerous creditors.
(c)
SHS had not accumulated any profits at the time that the Dividends were
paid that would justify the payment.
(d)
At the time of the payment of the Dividends, SHS required considerable
liquidity to support its business operations. Payment of the Dividends put
undue pressure on the financial resources of SHS in its first year of
operations.
(e)
SHS required emergency loans within six months of the payment of the
Dividends.
(f)
The Dividends caused SHS to violate the Debt and Equity Obligations.
(g)
The Directors, who declared the Dividends, were also the direct and
indirect financial beneficiaries of the Dividends. The Shareholders and
the Directors are related parties. The Dividends constituted transfers
between related parties.
(h)
The benefit received by the Directors was unrelated to any service
provided to SHS or performance of their duties as directors of SHS.
(i)
The effect of the Dividends was to strip SHS of property that would
otherwise have been available to the Creditors.
(j)
The Dividends were declared and paid in secrecy. The Trustee has been
advised by Sears that it was only upon reviewing the financial statements
of SHS and upon making requests for further information that Sears was
12
alerted to the fact that SHS had paid the Dividends and violated the Debt
and Equity Obligations.
(k)
The Directors continue to benefit from the transferred property. The
Tranche 2 payments were never returned to SHS and were used for
various purposes that benefitted the Directors personally.
(1)
The Dividends were declared and paid with unusual haste. The Dividends
were declared on SHS's first day of operations.
(m)
The effect of the Dividends is to deprive the Creditors of $3,000,000 that
would otherwise form part of SHS's estate.
THE DIRECTORS BREACHED THEIR FIDUCIARY DUTY
49.
The Plaintiff pleads that the Directors breached their fiduciary duty by declaring
the Dividends and causing the Preferential Payments.
50.
The fiduciary duty required the Directors to act in the best interests of SHS while
managing and directing SHS's finances and not in their own self-interest. By declaring
the Dividends and causing the Preferential Payments, the Directors acted to advance
their own self-interest to the detriment of SHS and its stakeholders.
51.
The fiduciary duty required the Directors to consider the interests of all of SHS's
stakeholders, including the Creditors. The Directors breached their fiduciary duty by
failing to consider the interests of the Creditors when they declared the Dividends and
causing the Preferential Payments.
THE DIRECTORS BREACHED THEIR DUTY OF CARE BY DECLARING
THE DIVIDENDS AND CAUSING THE EARLY REPAYMENT
52.
The Plaintiff pleads that Directors at all times owed a duty of care to SHS, which
required them to exercise reasonable skill and care in administering the assets of SHS.
-13-
53.
The Directors were aware that SHS was bound by the Debt and Equity
Obligations. The Directors knew or ought to have known that it was necessary to
maintain a certain threshold of equity in SHS for it to carry on business.
54.
It was foreseeable that the Dividends would deprive SHS of liquidity and
undermine its operations in its first year of business.
55.
The Early Repayment was deleterious to the financial well-being of SHS. The
Early Repayment was unnecessary and did not benefit SHS.
56.
The Early Repayment contributed significantly to the financial hardships of SHS,
which ultimately resulted in its insolvency and bankruptcy.
57.
The Early Repayment was clearly contrary to the best interests of SHS.
58.
Causing the Early Repayment was not a decision that was within a range of
reasonable decisions available to the Directors in the circumstances.
59.
By causing the Early Repayment, the Directors failed to meet the standard of
care expected of a reasonable person exercising the responsibilities of a director of SHS
in the circumstances.
60.
The Directors are liable to SHS and the Creditors for breaching their duty of care
in relation to the Dividends and the Early Repayment.
PAYMENT OF THE DIVIDENDS WAS OPPRESSIVE
61.
The Plaintiff pleads that the actions of the Directors in relation to the Dividends
constituted oppressive conduct within the meaning of Section 241 of the CBCA.
62.
Payment of the Dividends was unfairly prejudicial to the interests of SHS by
depriving it of much needed liquidity. It was in SHS's best interest to maintain adequate
liquidity to carry on business particularly through the uncertainty of its first year of
operation.
14-
63.
The Creditors had an interest in SHS remaining solvent so that it could meet its
liabilities to the Creditors as they came due. By stripping the assets out of SHS, and
jeopardizing its solvency, the Directors unfairly prejudiced or disregarded the interests
of the Creditors.
THE SHAREHOLDERS WERE UNJUSTLY ENRICHED
64.
In the alternative to the causes of action plead above, the Plaintiff pleads that the
Shareholders were unjustly enriched by the Dividends to the corresponding deprivation
of the Creditors and that there is no juristic reason for the enrichment.
65.
By virtue of the Dividends, the Shareholders received $8 million from SHS. $3
million of the Dividends - the portion paid under Tranche 2 - were never returned to
SHS.
66.
The Shareholders were enriched collectively in the amount of $3 million by the
Dividends.
67.
The Creditors are deprived of $3 million that would otherwise be payable to them
by SHS or its estate but for the payment of the Dividends.
68.
Under the circumstances of SHS on March 4, 2013, there was no juristic reason
for the payment of the Dividends. SHS had not earned any profits. The payment of a
dividend on the first day of SHS's operations was entirely inappropriate and contrary to
the scheme of the CBCA.
69.
The Plaintiff pleads that the money paid to the Shareholders pursuant to Tranche
2 of the Dividends was and is impressed with a constructive trust in favour of SHS and
the Creditors (the "Trust Money").
ISO IS IN KNOWING RECEIPT OF TRUST FUNDS
70.
Following the receipt of the Trust Money by the Shareholders, the Trustee has
been advised that the Shareholders used the Trust Money for various purposes associated
with their interests in ISO.
15-
71.
Some or all of the Shareholders are related parties to ISO.
72.
ISO had real or constructive knowledge that the money received by it from the
Shareholders that was paid to the Shareholders under Tranche 2 of the Dividends was
impressed with a trust in favour of SHS or the Creditors. Accordingly, ISO holds the
Trust Money in constructive trust for the Creditors.
73.
Further particulars of the knowing receipt of ISO of the Trust Money will be
provided prior to trial.
74.
75.
The Plaintiff pleads and relies upon:
(a)
The Fraudulent Conveyances Act, R.S.O. 1990, c. F.29
(b)
The Fraudulent Preferences Act, R.S.A. 2000, c. F-24
(c)
The Statute of Elizabeth, 13 Eliz 1, c 5
(d)
The Canada Business Corporations Act, R.S.C. 1985, c. C-44, s. 2
(e)
The Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3
(i)
The Courts ofJustice Act, R.S.O. 1990, c. C.43
(g)
The inherent jurisdiction of this Honourable Court.
This claim may properly be served on the Defendants who reside outside of
Ontario pursuant to Rule 17.02 of the Rules of Civil Procedure, as it involves property in
Ontario, contracts made in Ontario, torts committed in Ontario and statutory claims
which may be brought in Ontario.
16
76.
The Plaintiff proposes that this action be tried at Toronto.
February 27,2015
MCMILLAN LLP
Brookfield Place
1.81 Bay Street, Suite 4400
Toronto, ON, M5J 2T3
Brett Harrison LS#: 44336A
Tel: 416-865-7932
Fax: 647-722-6756
Stephen Brown-Okruhlik LS: 66576P
Tel: 416-865-7043
Fax:416-865-7048
Lawyers for the Plaintiff
PRICEWATERHOUSECOOPERS INC., in its
capacity as Trustee in Bankruptcy of SHS
SERVICES MANAGEMENT INC/GESTION
DES SERVICE SHS INC., et al
Plaintiff
and
PAUL VERHOEFF, et al
Defendant
Court File No.
W'tf-S*&^2ONTARIO
SUPERIOR COURT OF JUSTICE
Proceeding commenced at Toronto
STATEMENT OF CLAIM
MCMILLAN LLP
Brookfield Place
181 Bay Street, Suite 4400
Toronto, ON, M5J 2T3
Brett Harrison LS#: 44336A
Tel: 416-865-7932
Fax: 647-722-6756
Stephen Brown-Okruhlik
Tel: 416-865-7043
Fax: 416-865-7048
Lawyers for the Plaintiff
Appendix " F "
M a r c h 6 Letter
rj
"'*-• ;'
Fwd: In the Matter of the Bankruptcy of SHS Services
Management Inc.
Brett Harrison to: Mica J. Arlette
03/06/2015 06:59 PM
Cc: "Stephen Brown-Okruhlik", "Wael Rostom"
This message has been replied to.
History:
4 attachments
ATTGOOQIhtai ATT00002htm MyScan.pdf ATT0»03.htm
I'm about to get on a flight to Toronto. Can we discuss this tomorrow?
Brett Harrison
Partner
d 416.865.7932
[email protected]
Assistant: Wilma Leo I 416.865.7852 [email protected]
CONFIDENTIAIITY NOTICE: This email, including any attachments, may contain information
that is confidential and privileged. Any unauthorized disclosure, copying or use of this email is
prohibited. If you are not the intended recipient, please notify us by reply email or telephone call
and permanently delete this email and any copies immediately.
Please consider the environment before printing this e-mail.
Begin forwarded message:
From: <[email protected]>
Date: March 6, 2015 at 4:18:24 PM MST
To: <[email protected]>
Cc: <[email protected]>,, <[email protected]>, <
[email protected]>
Subject: In the Matter of the Bankruptcy of SHS Services Management Inc.
Please see attached correspondence.
Massimo (Max) Starnino
Paliare Roland Rosenberg Rothstein LLP
155 Wellington Street West, 35 Floor
Toronto, Ontario, Canada
M5V3H1
t: 416.646.7431
f: 416.646.4301
c: 416.559.6834
From: Max Stamino [mailto:max.starnino(a)paliareroland.coml
Sent: Friday, March 06, 2015 5:55 PM
To: Max Stamino
Subject: Your Scan File Is Attached
Copitmk Scan Notification
McMillan is committed to providing electronic communications that are relevant to you and your business. To sign up to receive other electronic
communications from us or to unsubscribe from receiving electronic messages sent on behalf of McMillan, please visit the McMillan Online
Subscription Centre.
McMillan s'engage a vous envoyer des communications electroniques appropriees pour vous et votre entreprise. Pour vous abonner et recevoir des
communications electroniques de notre part, ou pour vous desabonner et ne plus recevoir de telles communications, veuillez visiter le centre
d'abonnement en liqne de McMillan.
Massimo (Max) Stamino
T
416.646.7431 Asst 416.646.7470
F
416.646.4301
E
pitiii
Willi
March 6, 2015
VIA PDF EMAIL
[email protected]
www.paliareroland.com
« ™ » _ * « _ « ^ ^ s ^ ^ ™ * ™
WITH PREJUDICE
B A R R I S T E R S
Chris G. Paliare
Ian J. Roland
Ken Rosenberg
Linda R. Rothstein
Richard P. Stephenson
Nick Coleman
Margaret L. Waddell
Donald K. Eady
Gordon D. Capern
Lily I. Harmer
Andrew Lokan
John Monger
Odette Soriano
Andrew C. Lewis
Megan E. Shortreed
Massimo Stamino
Karen Jones
Robert A. Centa
Nini Jones
Jeffrey Larry
Kristian Borg-Ollvier
Emily Lawrence
Denlse Sayer
Tina H. Lie
Jean-Claude Killey
Jodi Martin
Michael Fenrick
Jessica Latimer
Debra McKenna
Lindsay Scott
Alysha Shore
Gregory Ko
Denlse Cooney
COUNSEL
Stephen Goudge, Q.C.
Robin D. Walker, Q.C.
HONORARY COUNSEL
Ian G. Scott, Q.C, O.C.
(1934 -2006)
Brett G. Harrison,
McMillan LLP
Brookfield Place
181 Bay Street, Suite 4400
Toronto, ON M5J 2T3
Dear Mr. Harrison,
Re:
In the Matter of the Bankruptcy of SHS Services Management
Inc/Gestion des Services SHS Inc.
We are writing in respect of the Notices of Examination of Stephen Verhoeff and
Paul Verhoeff pursuant to s. 163 of the Bankruptcy and Insolvency Act (the
"Examinations"), returnable March 9, 2015, sent to us by email earlier this week.
We confirm that we will not be producing our clients for the Examinations on
March 9th in light of the bankruptcy trustee's disclosure, on Monday of this week,
that it had prepared a statement of claim and that it had issued the claim on
Friday of last week (the "Claim").
As you know, the purpose of a s . 163 examination is to provide information to
assist the trustee in carrying out its duty to administer the bankrupt estate by
collecting the property of the bankrupt and distributing the proceeds to its
creditors; a trustee needs to find out the extent of the property of the bankrupt
and whether there have been dispositions or dealings with that property which
should be challenged (Rieger Printing Ink Co., Re, [2009] O.J. No. 755). It is
also a long established rule in bankruptcy, however, that a trustee will typically
not be entitled to examine a party to an action commenced by the trustee; a
trustee is not entitled to "have anything like a dress rehearsal of the crossexamination in the action." (Franks Ex p. Gittins, Re, [1892] 1 Q.B. 646). It
appears from the Claim that the trustee has all the factual information it needs to
plead a cause of action; indeed it seems likely that the trustee has had this
information for quite some time. In these circumstances, we do not believe that
the trustee should be entitled to examine our clients with respect to the matters
raised in the action.
Furthermore, so the point is not lost, it appears to us that the document request
made by the trustee in the Notices of Examination is overbroad, extending
beyond the scope of s. 163. It is also lacking in any proportionality, and would
require our clients to produce literally hundreds and perhaps thousands of
documents, which would take considerable time to assemble and review at
considerable expense.
PALIARE ROLAND ROSENBERG ROTHSTEIN LLP
155 WELLINGTON STREET WEST 35TH FLOOR TORONTO ONTARIO M5V3H1 T 416.646.4300
Page 2
We understand that the trustee may have a different view, and may seek an
order compelling our clients' attendance at an examination. Our clients intend to
respond to that motion, and we trust that you will consult us with respect to
scheduling.
We note that we have been consulted by some of the other defendants named in
the Claim in respect of their representation, and we are considering whether we
can represent them as well.
Yours very truly,
PALIARE ROLAND> ROSENBERG ROTHSTEIN LLP
:^t^~- - -
->
Massimo (Max) Stamino
MS:sp
c:
A. Slaven
D. Nishimura
G. Capern
Client
Doc 1381051 v1
PALIARE ROLAND ROSENBERG ROTHSTEIN LLP
155 WELLINGTON STREET WEST 35TH FLOOR TORONTO ONTARIO M5V3H1 T 416.646.4300
Appendix "G"
Certificates of Non-Attendance
Estate No. 25-094462
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF
SHS Services Management Inc/Gestion des Services SHS Inc.
of the City of Toronto, in the Province of Ontario
Certificate of Non-Attendance
I, Robyn Arndt, Examiner, hereby certify:
That an appointment was issued for the 9th day of March, 2015, at the offices
of McMillan LLP, Suite 4400, Brookfield Place, 181 Bay Street, Toronto, Ontario, at
the hour of 10:00 a.m. for the examination of Paul Verhoeff and Stephen Verhoeff,
former directors of SHS Services Management Inc/Gestion des Services SHS Inc., a
bankrupt.
That at the said last above mentioned time and place, I was attended by
Brett Harrison, from the offices of McMillan LLP, appearing as solicitors for the
Trustee, who waited more than fifteen (15) minutes, but the said Paul Verhoeff and
Stephen Verhoeff did not appear, nor did anyone on their behalf.
Dated at Toronto this 9th day of March, 2015.
•T H(r
Robyn Arndt
Examiner
cW/
IN THE MATTER OF THE BANKRUPTCY OF SHS SERVICES MANAGEMENT INC/GESTION DES SERVICES SHS INC. and SHS
SERVICES LIMITED PARTNERSHIP
Court File No: 31-208039-T
IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 243 OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C.,
1985, c. B-5. AS AMENDED; AND SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.0.1990, c. C.43, AS AMENDED
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
MOTION RECORD
MCMILLAN LLP
Brookfield Place
181 Bay Street, Suite 4400
Toronto, ON, M5J 2T3
Brett Harrison LS#: 44336A
Tel: (416) 865-7932
Email: [email protected]
Fax: (416)865-7048
Stephen Brown-Okruhlik LS#66576P
Tel: 416-865-7036
Email: stephen.brown-okruhlik@mcmillan. ca
Fax: 416-865-7048
Lawyers for PricewaterhouseCoopers Inc. in its
capacity as Court-appointed trustee of SHS
Services Management Inc/Gestion des Services
SHS Inc. and SHS Services Limited Partnership
LEGAL 23598879.1