ONTARIO

COUIt File No. CV-13-10370-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE - COMMERCIAL LIST
IN THE MATTER OF THE RECEIVERSHIP OF SHS SERVICES
MANAGEMENT INC.!GESTION DES SERVICES SHS INC. AND SHS
SERVICES LIMITED PARTNERSHIP
IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 47
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.O. 1990, c. C.43, AS AMENDED.
FACTUM OF THE RECEIVER
PRICEWATERHOUSECOOPERS INC.
(Fee Approval Motion retumable October 3, 2014)
McMILLAN LLP
Brookfield Place
181 Bay Street, Suite 4400
Toronto, ON, M5J 2T3
Wael Rostom LSUC# 43165S
Tel: 416.865.7790
Email: [email protected]
Brett Harrison LSUC# 44336A
Tel: 416.865.7932
Email: brett.harrison(wmcl11 i Ilan.ea
Fax: (416) 865-7048
Counsel for the Receiver
TO:
SERVICE LIST
-I -
PART I - INTRODUCTION
I.
On this motion the Receiver seeks an order approving the fees and disbursements
of the Receiver and its counsel arising from the performance of their duties during the
period of February 22, 2014 to August 31, 2014 (the "Receivership Fee Period").
I
PART II - THE FACTS
2.
On December 13, 2013 (the "Date of Appointment"), PricewaterhouseCoopers
Inc. ("PwC") was appointed as interim receiver under section 47 of the Banla'uptcy and
Insolvency Act (the "BIA") and receiver under section I 0 I of the Courts of Justice Act
(in both capacities referred to as the "Interim Receiver") of all of the assets,
undertakings and properties of SHS Services Management Inc.!Gestion des Services
SHS Inc. and SHS Services Limited Partnership (collectively, "SHS").
3.
On January 9, 2014, by order of this Court, PwC was discharged as Interim
Receiver and appointed as receiver under section 243 of the BrA (the "Receiver"),
without security, of the Property (the "Receivership Order").
A.
FEES AND DISBURSEMENTS OF THE RECEIVER AND ITS COUNSEL
4.
Pursuant to paragraphs 24 and 25 of the Receivership Order, the fees and
disbursements of the Receiver and its legal counsel are authorized to be paid on a
periodic basis subject to any final approval as ordered by the Comt.
I Capitalized terms not otherwise dclincd have the meanings ascribed to them in the Rcccivcr"s Ninth RCpOIi to the
Court dated September 12. 2014 (the "Ninth Report").
-2-
5.
The Receiver is seeking the approval of the COllli for the fees and disbursements
of the Receiver and its counsel, McMillan LLP ("McMillan"), in respect of performance
of their duties during the Receivership Proceedings during the Receivership Fee Period.
Ninth Report at para. 6.
6.
The Receiver and its counsel have agreed to a ten percent discount on their total
professional fees (the "Discount"). Subject to the Discount, during the Receivership Fee
Period, the Receiver incurred fees of $548,145.90 and disbursements of $4,512.54 (all
excluding BST). McMillan incurred fees of $340,426.35 and disbursements of
$5,75 I .44.
Ninth Report at para. 15.
7.
The fees charged were at the Receiver's and McMillan's respective standard
billing rates, subject to the Discount. The disbursements of the Receiver and McMillan
were charged in amounts that were less than or equal to their respective standard
charges.
Affidavit of Tracey Weaver, sworn September 12,2014, at para. II, Motion Record of the
Receiver. Tab 28, Affidavit ofWael RostOIll, sworn September 12,2014, at para. II, Motion
Record orthe Receiver. Tab 20.
8.
The fees and disbursements of both the Receiver and McMillan during the
Interim Receivership Fee Period and the Receivership Fee Period are reasonable in the
circumstances and have been validly incurred in accordance with the provisions of the
Appointment Order and the Receivership Order.
Ninth RepOlt at para. 19.
-3PART III - ISSUES AND THE LAW
9.
The sole issue on this motion is whether this COUlt should approve the fees and
disbursements of the Receiver and its legal counsel.
A.
THE RECEIVER'S ACTIVITIES, AND FEES AND DISBURSEMENTS,
SHOULD BE APPROVED
10.
The primary purpose of this receivership has been to facilitate the orderly sale of
SHS's business and Property and to design and implement a claims resolution process
that balances the interests of SHS's customers, contractors and primary creditors. The
activities of the Receiver, as set out in detail in the Ninth Report, were all necessary and
undertaken in good faith in ilutherance of the Receiver's duties and powers pursuant to
the Receivership Order. The Receiver submits that such activities should be approved by
this Court.
11.
This has not been a simple process. As highlighted in the Ninth Report, among
other things, the Receiver has been:
(a)
Pursuing a resolution of the Company's entitlement to certain pre-filing
customer payments and settling various claims to such funds asserted by Sears
Canada Inc. ("Sears") through extensive negotiation between the Receiver and
Sears and their respective legal counsel;
(b)
Completing the sale process to sell the Company's portfolio of residential
water heater and I-IV AC rental assets which permitted a continuation of services
for approximately 3,400 customers;
-4(c)
Completing the liquidation of the Company's remalI1lI1g product
inventory and certain tangible assets;
(d)
Working with SHS on the limited continuation by SHS of its business
activities which resulted in completion of services for approximately 350
customers;
(e)
Winding down the remaining operations of the Company, including
terminating leases and exiting premises in 12 Company locations across Canada;
(t)
Identifying and addressing a broad range of creditor claims made against
the Company, including property claims pursuant to sections 81 and 81.1 of the
BIA and claims of former employees pursuant to section 81.4 of the BIA, as well
as administering the lien and trust claims identification process approved by this
Court on March 11, 2014;
(g)
Reviewing the status of the Company's orders that were purchased by
third parties, and receiving payment for completed orders;
(h)
Communicating with Canada Revenue Agency ("CRA") and the various
provincial tax offices regarding completion of SI-IS's harmonized sales tax
returns for the period of the Receivership Proceedings to date;
(i)
Communications with CRA regarding completion of a payroll audit;
-5(j)
Terminating contracts for certain services that are no longer required by
SHS or the Receiver, including utilities for the premises which have now been
vacated, and correspondence with the various utility companies regarding
reconciling and finalizing the accounts of SHS or the Receiver related to the
Receivership Proceedings;
(k)
Communicating with the Commission des normes du travail du Quebec
(the "CNTQ") and their legal counsel with respect to amounts owed to SHS's
former employees resident in Quebec and the claim asserted by CNTQ against
SHS's estate;
(I)
Continuing the review and assessment of multiple proofs of claim filed by
SHS's former employees with respect to their entitlements pursuant to section
81.4 of the BIA and, where appropriate, issuing notices of disallowance of claim
to those employees who claimed in excess of the amounts owed to them pursuant
to S[-IS's payroll records;
(m)
Communications with Service Canada regarding proof of claims filed by
SHS's former employees in connection with the Wage Earner Protection
Program Act ("WEPPA") and continuing to record subrogation letters as they
are received fi'om Service Canada with respect to payments made to employees
under the WEPP A program, calculating amounts owed to former employees
pursuant to SHS's payroll records and provincial legislation for compliance
WEPPA requirements, and corresponding with former employees of SHS
regarding WEPP A compliance and assisting employees with application process;
-6-
(n)
Other administrative matters incidental to the administration of the estate,
managing the preservation of the Company's books and records, ongOll1g
banking and cash management; and
(0)
Responding to over 6,700 calls and 3,500 e-mail inquiries from
customers, former employees, installers, contractors, third party licensees and
various other interested parties.
Ninth Report at paras 8-10
12.
This Court should approve the fees and disbursements of the Receiver and
McMillan for the Receivership Fee Period. These fees and disbursements are fair and
reasonable in the circumstances, and reflect both the Receiver's and McMillan's
standard billing rates.
13.
The accounts of both the Receiver and McMillan meet the technical requirements
established by prior case law:
(a)
the accounts disclose in detail the name of each person who rendered
services, the date on which the services were rendered, the time expended each
day, the rate charged, and the total charges for each of the categories of services
rendered;
(b)
the accounts are in a form that can be easily understood by those affected
by the receivership or by the judicial officer required to assess the accounts; and
(c)
both the Receiver's and McMillan's accounts are verified by an affidavit.
-7COI?(ect;ol1ote!v Yours Il1c.. Re, 2002 CarsweliOnt 3002 (C.A.) at paras. 37-38 [Con(eclionately
Yours].
14.
A Receiver is entitled to be paid its fees and disbursements, along with those of
its counsel, where the amount charged is fair and reasonable in the circumstances. Courts
will consider the following factors in making this determination:
(a)
the nature, extent and value of the assets handled;
(b)
the complications and difficulties encountered;
(c)
the degree of assistance provided by the company, its officers or its
employees and the time spent;
(d)
the Receiver's knowledge, expertise and skill;
(e)
the diligence and thoroughness displayed;
(1)
the responsibilities assumed;
(g)
the results of the receiver's efforts; and
(h)
the cost of comparable serVICes when performed
111
a prudent and
economical manner.
Confee/ianale!y Yours at para. 42; Belyea v. Federal Business Development Bank, 1983
CarswellNB 27 (C.A.) at para. 9.
- 815.
Any assessment of whether the Receiver's account is fair and reasonable must
focus on the circumstances as they existed at the time the fees and disbursements were
incurred, and not with the benefit of hindsight.
BT-PR Realty Holdings Inc. v. Coopers & Lybrand. 1997 CarswellOnt 1246 (Sup. Ct.
(Commercial List» at para. 22 [BT-PR Reality Holdings].
16.
The Receiver has acted in good faith and in the interest of the creditors. Over the
course of the Receivership Proceedings, the Receiver has exercised the reasonable care,
supervision and control that an ordinary person would have given to SHS if it were his
or her own company.
BT-PR Reality Holdings at para. 22.
17.
The fees and disbursements of both the Receiver and McMillan retlect the finns'
standard billing rates and were validly incurred in accordance with the provisions of the
Appointment Order and the Receivership Order. Further, the Receiver and its counsel
have agreed to the Discount to reduce the cost to the estate caused by the complexity and
scale of issues managed by the Receiver during the Receivership Fee Period. In light of
the circumstances of the SI-IS Receivership, as set out further in the Ninth Report, this
Court should approve the payment of the fees and disbursements incurred by the
Receiver and McMillan.
PART IV - ORDER REQUESTED
18.
For the reasons set [Olih herein and in the Ninth Report, the Receiver respectfully
requests the granting of Order substantially in the form contained in the Receiver's
Motion Record.
-9ALL OF WHICH IS RESPECTFULLY SUBMITTED this 25 th day of September, 2014.
Counsel for the Receiver
- 10-
SCHEDULE "A"
LIST OF AUTHORITIES
1.
Confi!Ctionately Yours Inc., Re, 2002 CarswellOnt 3002 (C.A.)
2.
Belyea v. Federal Business Development Bank, 1983 CarswellNB 27 (C.A.)
3.
BT-PR Realty Holdings Inc. v. Coopers & Lybrand, 1997 CarswellOnt 1246
(Sup. Ct. (Commercial List))
IN THE MATTER OF THE RECEIVERSHIP OF SHS SERVICES MANAGEMENT INC.fGESTION DES SERVICES
SHS INC. AND SHS SERVICES LIMITED PARTNERSHIP
IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 47 OFTHE BANKRUPTCY AND INSOLVENCY
ACT, R.S.C. 1985, c. B-5, AS AMENDED; AND SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990, c. C.43,
AS AMENDED.
Court File No. CV-13-10370-00CL
ONTARIO
SUPERIOR COURT OF JUSTICE COMMERCIAL LIST
Proceeding commenced at Toronto
FACTUM OF THE RECEIVER
PRICEWATERHOUSECOOPERS INC.
(Fee Approval Motion ret. October 3, 2014)
McMILLAN LLP
181 Bay Street, Suite 4400
Brookfield Place
Toronto, ON M5J 2T3
WAELROSTOM
Tel: 416.865.7790
Email: waeI.rostom({umcmillan.ca
LSUC# 43165S
BRETT HARRISON
Tel: 416.865.7932
Email: brett.harrisonlalmcmillan.ca
LSUC# 44336A
Counsel/or the Receiver