Court File Number: 32-1896275 Estate Number: 32-1896275 Estate Number: 32-1896278

Court File Number: 32-1896275
Estate Number: 32-1896275
Estate Number: 32-1896278
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE CONSOLIDATED MATTERS OF THE NOTICE OF INTENTION TO MAKE A
PROPOSAL UNDER THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS
AMENDED OF
XS CARGO LIMITED PARTNERSHIP
&
XS CARGO GP INC.
MOTION RECORD
(MOTION OF KARPREILLY CAPITAL PARTNERS, L.P. UNDER SECTION 243 OF THE
BANKRUPTCY AND INSOLVENCY ACT AND SECTION 101 OF THE COURTS OF JUSTICE
ACT)
(Returnable on November 13, 2014)
STIKEMAN ELLIOTT LLP
40th Floor
1155 Réne Lévesque Blvd. West
Montréal, Canada H3B 3V2
Guy P. Martel
Tel: (514) 397-3163
Fax: (514) 397-3222
5300 Commerce Court
199 Bay St.
Toronto, Canada M5L 1B9
Kathryn Esaw LSUC#: 58264F
Tel: (416) 869-6820
Fax: (416) 947-0866
Lawyers to the Applicants
#11176963
Court File Number: 32-1896275
Estate Number: 32-1896275
Estate Number: 32-1896278
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE CONSOLIDATED MATTERS OF THE NOTICE OF INTENTION TO MAKE A
PROPOSAL UNDER THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS
AMENDED OF
XS CARGO LIMITED PARTNERSHIP
&
XS CARGO GP INC.
SERVICE LIST
GENERAL
STIKEMAN ELLIOTT LLP
1155 René-Lévesque Ouest
40th Floor
Montreal, QC H3B 3V2
Guy P. Martel
Tel:
(514) 397-3163
Fax:
(514) 397-3493
Email:
[email protected]
Danny Duy Vu
Tel:
(514) 397-6495
Fax:
(514) 397-5428
Email:
[email protected]
5300 Commerce Court West
199 Bay Street
Toronto, ON M5L 1B9
Lawyers for XS Cargo GP Inc. and XS Cargo
Limited Partnership
#11176963
Maria Konyukhova
Tel:
(416) 869-5230
Fax:
(416) 869-0445
Email:
[email protected]
XS CARGO LIMITED PARTNERSHIP
7400 Bramalea Road
Unit A
Mississauga, ON L5S 1X1
Neville Lewis
Tel:
(905) 362-0657
Fax:
(780) 413-4297
Email:
[email protected]
PRICEWATERHOUSECOOPERS INC.
1250 René-Lévesque Blvd. West
Suite 2800
Montréal, QC H3B 2G4
Philippe Jordan
Tel:
(514) 205-5232
Email:
[email protected]
PwC Tower
18 York Street, Suite 2600
Toronto, Ontario
M5J 0B2
Gregory Prince
Tel:
(416) 814-5752
Email:
[email protected]
Trustee
Tracey Weaver
Email:
[email protected]
FASKEN MARTINEAU DUMOULIN LLP
333 Bay Street,
Suite 2400
Toronto, Ontario M5H 2T6
Stuart Brotman
Tel:
(416) 865-5419
Fax:
(416) 364-7813
Email:
[email protected]
Counsel to the Trustee
AIRD & BERLIS LLP
Brookfield Place, 181 Bay Street
Suite 1800, Box 754
Toronto, ON M5J 2T9
Ken R. Rosenstein
Tel:
(416) 865-3427
Fax:
(416) 863-1515
Email:
[email protected]
Lawyers for the Canadian Imperial Bank of
Commerce
Sam Babe
Tel:
(416) 865-7718
Fax:
(416) 863-1515
Email:
[email protected]
KPMG INC.
333 Bay Street, Suite 4600
Bay Adelaide Centre
Toronto, Ontario
M5H 2S5
Financial advisor to the Canadian Imperial Bank
of Commerce
#11176963
Nicholas Brearton
Tel:
(416) 777-3768
Fax:
(416) 777-3364
Email:
[email protected]
GARDINER ROBERTS LLP
Scotia Plaza, 40 King West
Suite 3100
Toronto, ON M5H 3Y2
Jonathan H. Wigley
Tel:
(416) 865-6655
Fax:
(416) 865-6636
Email:
[email protected]
Lawyers for the
OSLER, HOSKIN & HARCOURT LLP
100 King Street West
1 First Canadian Place
Suite 6200, P.O. Box 50
Toronto, ON M5X 1B8
Lawyers for the
Tracy Sandler
Tel:
(416) 862-5890
Fax:
(416) 862-6666
Email:
[email protected]
John Valley
Tel:
(416) 862-5671
Fax:
(416) 862-6666
Email:
[email protected]
PPSA CREDITORS (OTHER THAN CIBC)
“Mezzanine Lenders”:
William Gray
Tel:
(403) 266-7639
fax:
(403) 263-6840
Email:
[email protected]
FAMOUS BRANDS INC.
926 5th avenue SW
Suite 900
Calgary AB T2P ON7
Mike McKenna
Email:
[email protected]
KARPREILLY CAPITAL PARTNERS, L.P.
KARPREILLY GP, LLC
KARPREILLY DIRECT, LLC
104 Field Point Road,
Greenwich CT 06830
William Logan
BUTLER, MARK L.,
1701 Newille Road,
Carlisle Pennsylvania 17013
Mark L. Butler
Email:
[email protected]
BACHYNSKI, GERRY
1030 Skyvalley Crescent
Oakville ON L6M 3L2
Gerry Bachynski
Email:
[email protected]
BRITAIN, SEAN
30 West 63rd Street
New York, NY 10023
Sean Britain
Email:
[email protected]
#11176963
Email:
[email protected]
Chris Reilly
Email:
[email protected]
CBSC Capital Inc.
100-1235 North Sevice Road
Oakville, ON L6M 2W2
Tel:
Fax:
Email:
Ollie’s Bargain Outlet, Inc.
6295 Allentown Boulevard,
Suite 1,
Harrisburg PA 17112
Howard Freedman
Tel:
(717) 657-2300
Fax:
(717) 901-3064
Email:
[email protected]
Integrated Distribution Systems LP o/a Wajax
Equipment
26313 Township Road, 531A
Acheson AB T7X 5A3
Mike Belaire
Tel:
(780) 948-5497
Fax:
Email:
[email protected]
De Lage Landen Financial Services Canada Inc.
3450 Superior Court,
Unit 1
Oakville ON L6L 0C4
Faseeh Ahmad
Tel:
(905) 901-6534
Fax:
(877) 901-6460
Email:
[email protected]
Leggat National Leasing
2207 Fairview St.,
Burlington ON l7R 3Y3
JD Hooper
Tel:
(905) 333-3700
Fax:
(905) 333-0102
Email:
[email protected]
Xerox Canada Ltd.
33 Bloor St. East,
3rd Floor,
Toronto ON M4W 3H1
Jasdeep Girn
Tel:
(416) 972-7011
Fax:
Email:
[email protected]
C. Keay Investments Ltd.
(dba Ocean Trailers)
9076 River Road
Delta, B.C. V4G 1B5
Marianna de Ader
Email:
[email protected]
(877) 523-5515
(877) 500-5360
[email protected]
GOVERNMENT AGENCIES
CANADA REVENUE AGENCY
C/O DEPARTMENT OF JUSTICE
The Exchange Tower
130 King Street West, Suite 3400
Toronto, ON M5X 1K6
Diane Winters
Tel:
(416) 973-3172
Fax:
(416) 973-0809
Email:
[email protected]
Attorney General of Canada
MINISTRY OF FINANCE (ONTARIO)
Legal Services Branch
6th Floor, 33 King Street West
Oshawa, ON L1H 8H5
#11176963
Kevin O’Hara
Tel:
(905) 436-4510
Fax:
(866) 888-3850
Email:
[email protected]
MINISTRY OF FINANCE (BRITISH COLUMBIA)
C/O MINISTRY OF JUSTICE – LEGAL SERVICES
BRANCH
4th Floor, 1675 Douglas Street
PO Box 9289 Stn Prov Govt
Victoria, BC V8W 9J7
David Hatter
Email:
[email protected]
MINISTRY OF FINANCE (ALBERTA)
TREASURY BOARD AND FINANCE
TAX AND REVENUE ADMINISTRATION DIVISION
2nd Fl. Sir Frederick W. Haultain Building
9811-109 Street
Edmonton, AB
T5k 2L5
Ian Ayton
Tel:
(780) 427-9403
Fax:
(780) 422-0899
Email:
[email protected]
MINISTRY OF FINANCE (SASKATCHEWAN)
PROVINCIAL SALES TAX BRANCH
2350 Albert St, Regina,
SK S4P 4A6
Nancy Perras
Tel:
(306) 787-7785
Fax:
(306) 798-4035
Email:
[email protected]
NEWFOUNDLAND DEPARTMENT OF FINANCE
P.O. Box 8700
Main Floor, East Block Confederation Building
St. John's, NL A1B 4J6
Donna Brewer
Tel:
(709) 729-2946
Email:
[email protected]
CANADA REVENUE AGENCY
C/O DEPARTMENT OF JUSTICE
The Exchange Tower
130 King Street West, Suite 3400
Toronto, ON M5X 1K6
Diane Winters
Tel:
(416) 973-3172
Fax:
(416) 973-0809
Email:
[email protected]
Heather Wellman
Email:
[email protected]
Attorney General of Canada
MINISTRY OF FINANCE
Legal Services Branch
6th Floor, 33 King Street West
Oshawa, ON L1H 8H5
MINISTRY OF THE ATTORNEY GENERAL (ONTARIO)
McMurtry-Scott Building
720 Bay Street, 8th Floor
Toronto, ON M7A 2S9
#11176963
Kevin O’Hara
Tel:
(905) 436-4510
Fax:
(866) 888-3850
Email:
[email protected]
OTHERS
BLANEY MCMURTRY LLP
1500 – 2 Queen Street East
Toronto, ON M5C 3G5
John C. Wolf
Tel:
(416) 593-2994
Fax:
(416) 596-2044
Email:
[email protected]
Lawyers for the Ambassador Centre Inc. and
Ambassador Centre (2) Inc.
Bradley Philipps
Tel:
(416) 593-3940
Fax:
Email:
[email protected]
OFFICE OF THE SUPERINTENDENT OF BANKRUPTCY
OF CANADA
Melissa Govy
Tel:
Fax:
Email:
[email protected]
#11176963
Court File Number: 32-1896275
Estate Number: 32-1896275
Estate Number: 32-1896278
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE CONSOLIDATED MATTERS OF THE NOTICE OF INTENTION TO MAKE A
PROPOSAL UNDER THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS
AMENDED OF
XS CARGO LIMITED PARTNERSHIP
&
XS CARGO GP INC.
INDEX
TAB
Document
1.
Notice of Motion of Karpreilly Capital Partners, L.P. under Section 243 of the
Bankruptcy and Insolvency Act and Section 101 of the Courts Of Justice Act,
returnable on November 13, 2014
2.
Affidavit of Ryan Greene, sworn November 10, 2014
3
A
Exhibit "A" -
Order of Justice Penny of the Ontario Superior Court of Justice
(Commercial List) rendered on August 6, 2014
B
Exhibit "B" -
Order of Justice Pattillo of the Ontario Superior Court of Justice
(Commercial List) rendered on August 29, 2014
C
Exhibit "C" -
Order of Justice Penny of the Ontario Superior Court of Justice
(Commercial List) rendered on September 19, 2014
D
Exhibit "D" -
Order of Justice Penny of the Ontario Superior Court of Justice
(Commercial List) rendered on October 7, 2014
E
Exhibit "E" -
Proposal of XS Cargo dated October 30, 2014
F
Exhibit "F" -
Consent of PricewaterhouseCoopers to act as Receiver dated
November 7, 2014
Draft Order
#11176963
TAB 1
Court File Number: 32-1896275
Estate Number: 32-1896275
Estate Number: 32-1896278
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE CONSOLIDATED MATTERS OF THE NOTICE OF INTENTION TO MAKE A
PROPOSAL UNDER THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS
AMENDED OF
XS CARGO LIMITED PARTNERSHIP
&
XS CARGO GP INC.
NOTICE OF MOTION
(MOTION OF KARPREILLY CAPITAL PARTNERS, L.P. UNDER SECTION 243
OF THE BANKRUPTCY AND INSOLVENCY ACT AND SECTION 101 OF THE
COURTS OF JUSTICE ACT)
(Returnable November 13, 2014)
KarpReilly Capital Partners, L.P (the "Applicant") will make a motion to the
Court, on November 13, 2014, at 10:00 am 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:
1.
An Order, substantially in the form attached to the Motion Record:
#11175249
-2-
(a)
abridging, or if necessary, dispensing with service of this Notice of
Application and Application Record and stating that all parties entitled
to service of this Notice of Application have been duly served and that
further service on any other parties be dispensed with;
(b)
appointing PricewaterhouseCoopers Inc. ("PwC") as receiver (in such
capacity, the "Receiver") of all the assets, undertakings and properties
of XS Cargo Limited Partnership ("XS LP") and XS Cargo GP Inc. ("XS
GP", and together with XS LP, "XS Cargo" or the "Debtors") pursuant
to section 243(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3,
as amended (the "BIA") and section 101 of the Courts of Justice Act,
R.S.O. 1990, c.C-43, as amended (the "CJA") (the "Receivership Order");
and
(c)
2.
such further and other relief as this Honourable Court deems just.
The grounds for the motion are:
(a)
XS Cargo is a Canadian discount retailer that operates through XS LP, a
limited partnership formed between XS GP and XSC Canada Holdings
Inc. XS Cargo offers a wide variety of goods, from furniture, to
electronics, to housewares and kitchenware.
(b)
XS Cargo's first secured creditor was until recently the Canadian
Imperial Bank of Commerce ("CIBC") with whom XS Cargo had
entered into a Credit Agreement (as, amended on September 24, 2013,
the "CIBC Credit Agreement") pursuant to which the following secured
loans were made available to XS LP:
(i)
a
revolving
loan
in
an
aggregate
principal
amount
CDN$18,000,000 (and CDN$20,000,000 for the month of
#11175249
-3-
September to October (inclusive) for 2011 and 2012) (the
"Revolving Loan"); and
(ii)
a
term
loan
in
an
aggregate
principal
amount
of
CDN$10,000,000, to be repaid in quarterly instalments (the
"Term Loan").
(c)
On or about May 12, 2014, CIBC issued notices of default and
reservation of rights to XS Cargo notifying it of the occurrence of
certain events of default under the CIBC Credit Agreement
(collectively, the "Specified Events of Default"). As a result of such
Specified Events of Default, CIBC also issued to XS Cargo a letter
demanding the full payment of unpaid principal amount of all
obligations outstanding as at that date under the Revolving Loan and
the Term Loan as well as a Notice of Intention to Enforce Security
pursuant to subsection 244(1) of the BIA.
(d)
As at July 30, 2014, the total outstanding amount owed under the CIBC
Credit Agreement amounted to approximately $5.9 million. CIBC has
since then been repaid in full in the context of the Liquidation (as
defined below).
(e)
XS Cargo's second secured creditor is a group formed of KarpReilly
Direct, LLC, KarpReilly Capital Partners, L.P., Mark L. Butler, Gerry
Bachynski, Sean Britain (collectively, the "KarpReilly Group") and
Famous Brands Inc. ("Famous Brand", collectively with the KarpReilly
Group, the "Mezzanine Lenders") with whom XS Cargo entered into a
Loan Agreement (the "Mezzanine Loan Agreement") pursuant to
which advances were made to XS LP:
#11175249
-4-
(i)
$3,000,000 advance by the KarpReilly Group (the "KarpReilly
Loan"); and
(ii)
$1,000,000 advance by Famous Brands (the "Famous Brands
Loan").
(f)
As at July 26, 2014, the total outstanding amount owed under the
Mezzanine Loan Agreement, excluding interest and fees accrued after
that date, was $4.1 million for the KarpReilly Loan and $1.4 million for
the Famous Brands Loan. No amounts have been paid on account of
these loans since that date.
(g)
On July 30, 2014, XS LP and its general partner, XS GP, each filed a
Notice of Intention to Make a Proposal (collectively, the "NOIs") under
section 50.4(1) of the BIA. PwC was appointed as trustee to the
proposal proceedings of each of XS LP and XS GP (in such capacities,
the "Proposal Trustee").
(h)
The filing of the NOIs were made in a context where XS LP and, de
facto, its general partner, XS GP, had each become insolvent, and XS
LP’s senior lender, CIBC, had advised them that it was no longer
willing to continue to finance their operations except in the context of a
court-supervised sale, refinancing and investment solicitation process
(the "SISP").
(i)
Since XS Cargo had not been able at that time to secure agreements for
a refinancing of its indebtedness toward CIBC, on July 30, 2014, prior to
filing the NOIs, XS Cargo entered into an Accommodation Agreement (the
"Accommodation Agreement") with CIBC pursuant to which XS Cargo
agreed to file the NOIs with a view of conducting a SISP.
#11175249
-5-
(j)
On September 15, 2014, after having received several offers in respect of
its business and/or assets in the context of the SISP, XS Cargo accepted
a hybrid offer and entered into the following agreements, both of which
were subject to court approval:
(i)
an Agency Agreement (the "Agency Agreement") with Tiger
Capital Group, LLC ("Tiger" or the "Agent") pursuant to which
the Agent agreed to act as XS Cargo’s exclusive agent in the
present proceedings for the limited purpose of liquidating XS
Cargo’s assets related to its 50 stores (the "Liquidation"), subject
to the option granted to the Purchaser (as defined below) under
the APA (as defined below); and
(ii)
an Asset Purchase Agreement (the "APA") with 9014454 Canada
Inc. (the "Purchaser") pursuant to which the Purchaser was
granted an option to purchase, as a going concern, certain assets
relating to up to 29 Stores, as further described in the APA. Such
option was to be exercised by no later than October 1, 2014.
(k)
On September 19, 2014, the Honourable Justice Penny of the Ontario
Superior Court of Justice (Commercial List) granted an order (the
"Approval and Vesting Order") approving, inter alia, the transactions
contemplated under Agency Agreement and the APA.
(l)
On September 26, 2014, XS Cargo was, however, advised by the
Purchaser that due to its inability to secure necessary financing, it
would not go forward with the transaction contemplated under the
APA. As a result, the Agent would pursue the Liquidation of all 50
stores of XS Cargo, in accordance with the terms and conditions set
forth under the Agency Agreement.
#11175249
-6-
(m)
The Agency Agreement provides that the Liquidation shall be
completed on or before November 30, 2014, following which XS Cargo
and the Agent shall, within a period of thirty days thereafter, jointly
prepare a final reconciliation of, inter alia, all proceeds received and
expenses incurred in the context of the Liquidation.
(n)
On October 30, 2014, XS Cargo filed a proposal to be submitted to XS
Cargo's creditors pursuant to the provisions of the BIA (the "Proposal").
Under the Proposal, the KarpReilly Loan is to be treated as an excluded
claim.
(o)
On November 7, 2014, given that the Liquidation is well underway
with Tiger and given the filing of the Proposal, the directors of XS GP
have indicated their intention to resign on November 15, 2014, pending
the nomination of a receiver.
(p)
Given the circumstances, the appointment of a receiver to complete the
Liquidation and the implementation of the Proposal is necessary for the
protection of the interests of the Applicant, and is just and convenient
in the circumstances.
(q)
Section 243(1) of the BIA;
(r)
Section 101 of the CJA;
(s)
Rules 3.02, 16.08, 38 and 41 of the Rules of Civil Procedure; and
(t)
Such further and other grounds as counsel may advise and this
Honourable Court may permit.
3.
The following documentary evidence will be used at the hearing of the
motion:
#11175249
-7-
(a)
The affidavit of Ryan Greene, sworn November 10, 2014 and the
exhibits attached thereto; and
(b)
Such further and other materials as counsel may advise and this
Honourable Court may permit.
November 10, 2014
STIKEMAN ELLIOTT LLP
Barristers & Solicitors
40th Floor
1155 Réne Lévesque Blvd. West
Montréal, Canada H3B 3V2
Guy P. Martel
Tel: (514) 397-3163
Fax: (514) 397-3222
5300 Commerce Court West
199 Bay Street
Toronto, Canada M5L 1B9
Kathryn Esaw LSUC#: 58264F
Tel: (416) 869-6820
Fax: (416) 947-0866
Lawyers for the Applicant
TO:
THE SERVICE LIST
#11175249
IN THE MATTER OF THE NOTICE OF INTENTION TO MAKE A PROPOSAL UNDER THE BANKRUPTCY AND
INSOLVENCY ACT, R.S.C. 1985, c. B-3 OF XS CARGO LIMITED PARTNERSHIP AND OF XS CARGO GP INC.
Court File No. 32-1896275
MOTION OF KARPREILLY CAPITAL PARTNERS, L.P. UNDER SECTION 243 OF THE BANKRUPTCY AND
INSOLVENCY ACT AND SECTION 101 OF THE COURTS OF JUSTICE ACT
ONTARIO
SUPERIOR COURT OF JUSTICE
Proceeding commenced at Toronto
NOTICE OF APPLICATION
STIKEMAN ELLIOTT LLP
Barristers & Solicitors
40th Floor
1155 René-Lévesque Blvd. West
Montréal, QC H3B 3V2
Guy P. Martel
Tel: (514) 397-3163
Fax: (514) 397-3222
5300 Commerce Court West
199 Bay Street
Toronto, ON M5L 1B9
Kathryn Esaw LSUC#: 58264F
Tel: (416) 869-6820
Fax: (416) 947-0866
Lawyers for the Applicant
#11175249
TAB 2
TAB 2A
TAB 2B
TAB 2C
TAB 2D
TAB 2E
Court File Number: 32 1896275
-
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF THE PROPOSAL UNDER THE BANKRUPTCY AND
INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED OF:
XS CARGO LIMITED PARTNERSHIP
Estate Number: 32 1896275
-
IN THE MATTER OF THE PROPOSAL UNDER THE BANKRUPTCY AND
INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED OF:
XS CARGO GP INC.
Estate Number: 32-1896278
CONSOLIDATED PROPOSAL
ARTICLE 1
INTERPRETATION
1.1
Definitions
For all purposes relating to the present Proposal, the following terms shall have the
following meanings:
a)
"BIA" means the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as
amended.
b)
"Business Day" means any day except Saturday, Sunday or any day on
which banks are generally not open for business in the City of Toronto,
Ontario.
c)
"Claim" means any right of any Person against XS LP or XS GP in
connection with any indebtedness, liability or obligation, including
claims that are liquidated, unliquidated, fixed, contingent, matured,
unmatured, legal, equitable, present, future, known, unknown, disputed,
-2-
undisputed or whether by guarantee, by surety, by subrogation or
otherwise incurred and whether or not such a right is executory in nature.
d)
"Court" means the Ontario Superior Court of Justice (Commercial List).
e)
"Creditors' Meeting" means the meeting of Unsecured Creditors to be
held for the purpose of considering and voting upon this Proposal, and
any adjournment of such meeting.
"Crown" means Her Majesty in right of Canada or a province of Canada.
g)
"Crown Claims" means all Claims of the Crown described in
section 60(1.1) of the BIA that were outstanding on the Filing Date, as
accepted by the Trustee or approved by the Court.
h)
"Disputed Claim" means any Claim which has been received by the
Trustee in accordance with the terms of this Proposal and the BIA but has
not been accepted as proven or which is being disputed in whole or in
part by the Trustee, or any other person entitled to do so and has not been
resolved by agreement or by Order of the Court.
i)
"Disputed Creditor" means a Person holding a Disputed Claim to the
extent of its Disputed Claim.
j)
"Effective Date" has the meaning ascribed to it in Section 5.3.
k)
"Employee Claims" means Claims of the employees of XS Cargo to be
paid in accordance with Section 60(1.3) of the BIA.
1)
"Excluded Claims" means any and all Claims of the KarpReilly Group.
m)
"Filing Date" means July 30, 2014, being the date of the filing of the
Notice of Intention to Make a Proposal by each of XS LP and XS GP.
n)
"Landlord" means a landlord to any real property lease to which XS
Cargo was a party to as at the Filing Date.
o)
"Landlord Claims" means any Claim of any Landlord arising from a
disclaimer or resiliation of the Landlord's lease by XS Cargo, which shall
be calculated in accordance with Section 3.3.
13)
"Liquidation" means the ongoing liquidation of the assets and business of
XS Cargo including, without limitation, under and pursuant to the
Agency Agreement between XS Cargo and Tiger Capital Group LLC
approved by the Court on September 19, 2014. The Liquidation shall be
completed no later than December 15, 2014.
-3-
q)
"KarpReilly Group" means, collectively, KarpReilly Direct, LLC
KarpReilly Capital Partners, L.P, Mark L. Butler, Gerry Bachynski and
Sean Britain.
r)
"KERP Claims" means the Claims of the beneficiaries of the "KERP
Charge" (as such terms are defined in the Order of Justice Penny dated
August 6, 2014), to the extent such Claims are secured by such KERP
Charge.
s)
"Official Receiver" means the officer appointed pursuant to Section 12(2)
of the BIA.
t)
"Person" is to be broadly interpreted and includes an individual, a
corporation, a partnership, a trust, an unincorporated organization, the
government of a country or any political subdivision thereof, or any
agency or department of any such government, and the executors,
administrators or other legal representatives of an individual in such
capacity.
u)
"Post-Filing Claims" means any Claim arising in respect of services
rendered, goods supplied or other consideration given to XS Cargo after
the Filing Date, including KERP Claims.
v)
"Preferred Claims" means any Claim, including any Employee Claim, as
described in Section 136(1)(a) through 136(1)0) of the BIA, being such
Claim directed by the BIA to be paid in priority to all Unsecured Claims
in the distribution of the property of XS Cargo.
w)
"Preferred Creditor" means a Person holding a Preferred Claim, to the
extent of its Preferred Claim.
x)
"Professional Fees" means all proper fees, expenses, liabilities and
obligations of the Trustee and legal fees, accounting fees and consulting
fees on and incidental to the proceedings arising out of the Proposal,
including advice to XS Cargo in connection with the Proposal.
3')
"Proof of Claim" means the form delivered by the Trustee to creditors of
XS Cargo in accordance with the BIA.
z)
"Proposal" means this Proposal, as varied, amended, modified or
supplemented in accordance with the provisions hereof and the BIA.
aa)
"Proposal Approval Order" means an order from the Court, in form and
substance satisfactory to XS Cargo and the Trustee approving and
sanctioning this Proposal in accordance with the provisions hereof and of
the BIA.
-4-
bb)
"Proven Unsecured Claim" means the amount or any portion of the
amount of the Unsecured Claim of an Unsecured Creditor as accepted by
the Trustee or finally determined for distribution purposes in accordance
with the provisions of the BIA or any applicable orders from the Court.
cc)
"Related Persons" has the meaning ascribed to it in Section 4(2) of the
BIA.
dd)
"Required Majority" means a majority in number representing not less
than two-thirds in value of all Claims of creditors entitled to vote and
who are present and voting at the Creditors' Meeting (whether in person,
by proxy or by voting letter) in accordance with the voting procedures
established by this Proposal and the BIA. The creditors entitled to vote at
the Creditors' Meeting shall be the Unsecured Creditors.
ee)
"Restructuring Claims" means any Claim resulting from the disclaimer or
repudiation of any contract by XS Cargo after the Filing Date, including
the Landlord Claims as well as the portion of the Claims of employees
whose employment was terminated after the Filing Date which exceed
the Employee Claims.
ff)
"Secured Claims" means the Claims of the Secured Creditors to the extent
of the value of the security held by the Secured Creditors, as accepted by
the Trustee or approved by the Court.
gg)
"Secured Creditors" has the meaning ascribed to it in Section 2 of the BIA,
inasmuch as the security would be opposable to a bankruptcy trustee if
XS Cargo had become bankrupt at the Filing Date and includes the
holders of charges created and ordered by the Court in the context of XS
Cargo's proposal proceedings under the BIA.
hh)
"Trustee" means PricewaterhouseCoopers Inc., in its capacity as trustee to
the notice of intention of XS LP and XS GP and not in its personal
capacity.
ii)
"Trustee's Certificate" has the meaning ascribed to it in Section 53.
jj)
"Unsecured Claims" means all Claims (other than Secured Claims, PostFiling Claims, Crown Claims, Preferred Claims and Excluded Claims)
and all Restructuring Claims. Notwithstanding the foregoing, the
difference between the Claim of any Secured Creditor and the amount
received by such Secured Creditor from the proceeds of the Liquidation
shall be considered as an Unsecured Claim. For greater certainty,
Excluded Claims shall not be considered as Unsecured Claims.
-5-
kk)
"Unsecured Creditor" means a Person holding an Unsecured Claim, to
the extent of its Unsecured Claim.
ll)
"Unsecured Creditors Class" means all Unsecured Creditors and
Preferred Creditors, who are grouped together for the purposes of
considering and voting on this Proposal in accordance with the
provisions of this Proposal and the BIA.
1.2
mm)
"XS Cargo" means collectively, XS LP and XS GP.
nn)
"XS Holdings" means XSC Canada Holdings Inc.
oo)
"XS LP" means XS Cargo Limited Partnership.
pp)
"XS GP" means XS Cargo GP Inc.
Date of Any Action
In the event that any date on which any action is required to be taken under this
Proposal by any of the parties is not a Business Day, the action shall be required to be
taken on the next proceeding day which is a Business Day.
1.3
Time
All times expressed in this Proposal are local time Toronto, Ontario, Canada, uriless
stipulated otherwise. Time is of the essence in this Proposal.
1.4
Statutory Ref erenc es
Any reference in this Proposal to a statute includes all regulations made thereunder and
all amendments to such statutes or regulations in force from time to time.
1.5
Monetary References
All references to currency and to "$" are to Canadian dollars, unless otherwise indicated.
1.6
Gender and Number
Any reference in this Proposal to gender includes all genders. Words importing the
singular number only include the plural and vice versa.
1.7
Certain Phrases
In this Agreement, the words "including", "includes" and "include" and any derivatives
of such words mean "including (or includes or include) without limitation". The
expressions "Article", "Section" and other subdivision followed by a number, mean and
refer to the specified Article, Section or other subdivision of this Agreement.
-
6
-
ARTICLE 2
PROPOSAL
2.1
Basket Amount
XS Holdings shall remit to the Trustee an amount of $250,000 (the "Basket Amount"),
which Basket Amount will be free and clear of all charges.
2.2
Proposed Payments
Subject to the terms and conditions set forth in this Proposal, XS Cargo proposes to pay
the following amounts, as follows:
a)
Professional Fees: The Professional Fees will be paid in full by XS Cargo
as they become due in priority to all other Claims.
b)
Post-Filing Claims: Post-Filing Claims will be paid in full by XS Cargo in
the ordinary course of business and on regular trade terms, or as may
otherwise be arranged with the holders of such Post-Filing Claims.
c)
Employee Claims: Employee Claims will be paid immediately upon
approval of the Court of this Proposal.
d)
Crown Claims: The Crown Claims, without interest, will be paid in full
within 90 days after issuance of the Proposal Approval Order, or as may
otherwise be arranged with the Crown.
e)
Secured Claims: The Secured Claims will be paid from the proceeds of the
Liquidation in accordance with applicable law.
f)
Preferred Claims: Except for Employee Claims, the Preferred Claims,
without interest, will be paid in full out of the Basket Amount, in priority
to the Unsecured Claims, within 90 days after issuance of the Proposal
Approval Order, or as may otherwise be arranged with individual
Preferred Creditors.
Unsecured Claims: The holders of Proven Unsecured Claims will receive,
from the Basket Amount, after payment of the Preferred Claims, a pro
rata and pari passu share of the balance of their Unsecured Claims.
2.3
Excluded Claims
This Proposal is not, and shall not be, made in respect of the Excluded Claims.
-
7
-
ARTICLE 3
CLASSIFICATION OF CREDITORS, VALUATION OF CLAIMS AND RELATED
MATTERS
3.1
Class of Creditors
For the purpose of considering and voting upon and receiving distributions under this
Proposal, there shall be one class of creditors, being the Unsecured Creditors Class.
3.2
Creditors' Meeting, Proxies and Voting Letters
Proxies as provided for in the BIA indicating a Person authorized to act on behalf of an
Unsecured Creditor may be submitted to the Trustee (who, subject to the consent of the
Official Receiver, will chair the Creditors' Meeting) at, or any time prior to, the
commencement of the Creditors' Meeting. Voting letters as provided for in the BIA
submitted to the Trustee prior to the Creditors' Meeting must indicate whether the
Unsecured Creditor wishes to cast its vote in favour of or against the Proposal. Voting
letters that do not indicate either preference will be deemed to indicate a vote in favour
of the Proposal. Persons in attendance at the Creditors' Meeting shall cast their vote in
the manner prescribed by the Trustee and the BIA. All votes will be recorded and
tabulated by the Trustee, who may seek the assistance of the Court with respect to any
dispute arising from or out of the tabulation of votes. A quorum shall be constituted for
the Creditors' Meeting or any adjournment thereof if there is one Unsecured Creditor,
entitled to vote, present in person or by proxy or if one Unsecured Creditor, entitled to
vote, has submitted a voting letter in accordance with the provisions of the BIA and this
Proposal. If the requisite quorum is not present at the Creditors' Meeting or if the
Creditors' Meeting has to be postponed for any reason, then the Creditors' Meeting shall
be adjourned by the Trustee to such date, time and place as determined by the Trustee.
3.3
Landlord Claims
Landlords that have Landlord Claims will be entitled to file proofs of claims for: (i) any
unpaid amounts owing as at the Filing Date; and (ii) the actual loss resulting from the
disclaimer or repudiation of any leases of real property. All Landlord Claims are
Unsecured Claims under this Proposal.
3.4
Claims for Voting Purposes
Each Unsecured Creditor shall be entitled to a single vote valued at the amount of its
Proven Unsecured Claim. If the amount of the Unsecured Claim of a Disputed Creditor
is not finally determined prior to the date of the Creditors' Meeting, the Disputed
Creditor shall be entitled to vote at the Creditors' Meeting on the portion of its
Unsecured Claim, if any, that has been accepted by the Trustee for voting purposes
without prejudice to the rights of XS Cargo, the Trustee and the Disputed Creditor to
have the quantum of the Disputed Creditor's Unsecured Claim finally determined for
the purposes of receiving its share of the Basket Amount.
-8-
3.5
Approval by Unsecured Creditors
In order to be approved, the Proposal must receive the affirmative vote of the Required
Majority.
3.6
Modification of the Proposal
Subject to the consent of the Trustee, at any time prior to the Creditors' Mee ting, XS
Cargo reserves the right at any time to file any modification, amendment or supplement
of and to the Proposal, by way of an amended proposal, and file such amended proposal
with the Official Receiver as soon as practical, in which case any such amended proposal
or proposals shall, for all purposes, be and be deemed to be part of and incorporated
into the Proposal. At the Creditors' Meeting, the Trustee shall provide all Unsecured
Creditors in attendance with details of any modifications, amendments or supplements
of and to the Proposal prior to the vote being taken to approve the Proposal. After the
Creditors' Meeting (and both prior to and subsequent to the Proposal Approval Order)
and subject to the consent of the Trustee, XS Cargo may at any time and from time to
time vary, amend, modify or supplement the Proposal if the Court determines that such
variation, amendment, modification or supplement is of a minor, immaterial or technical
nature or would not be materially prejudicial to the interest of any of the Unsecured
Creditors under the Proposal and is necessary in order to give effect to the substance of
the Proposal or the Proposal Approval Order.
ARTICLE 4
RELEASES
4.1
Release in Favour of XS Cargo
On the Effective Date, all Unsecured Claims shall, as against XS Cargo be deemed to be
fully and finally satisfied, settled and discharged and no Unsecured Creditor shall have
any further right, remedy or Claim against XS Cargo.
4.2
Release in Favour of the Directors
In accordance with Section 50(13) of the BIA, the acceptance of the Proposal by the
creditors affected by this Proposal shall, on the Effective Date, release definitively the
directors and officers of XS Cargo from any and all claims, liability or obligation for
which they may be liable by law in their capacity as directors or officers, in respect of
any debt of XS Cargo which arose before the Filing Date, except for claims that relate to
contractual rights of one or more creditors arising from contracts with one or more
directors or officers or claims that are based on allegations of misrepresentation made by
directors to creditors or of wrongful or oppressive conduct by directors. It is understood
however that nothing herein shall be interpreted as an acknowledgment of any claim,
liability or obligation on the part of the directors or officers of XS Cargo, any such claim,
liability or obligation being specifically denied.
-9-
4.2
Release in Favour of XS Holdings
On the Effective Date, XS Holdings, its employees, directors and officers shall be
released and discharged from any and all demands, claims, actions, causes of action,
counterclaims, suits, debts, sums of money, accounts, covenants, damages, judgments,
orders, including for injunctive relief or specific performance and compliance orders,
expenses, executions, encumbrances and other recoveries on account of any liability,
obligation, demand or cause of action of whatever nature which any Secured Creditor,
Unsecured Creditor or Person may be entitled to assert, whether known or unknown,
matured or unmatured, foreseen or unforeseen, existing or hereafter arising, based in
whole or in part on any omission, transaction, agreement, guarantee, surety, duty,
responsibility, indebtedness, liability, obligation, dealing or other occurrence existing or
taking place on or prior to Effective Date that are in any way relating to, arising out of or
in connection with the Claims or in any way related to XS Cargo, all to the full extent
permitted by applicable law, provided that nothing herein shall release or discharge XS
Holdings, its employees, directors and officers if any such party is judged by the
expressed terms of a judgment rendered on a final determination on the merits to have
committed criminal, fraudulent or other willful misconduct.
ARTICLE 5
CONDITIONS AND EFFECTIVE DATE
5.1
Funding
This Proposal is conditional upon XS Holdings funding the Basket Amount.
5.2
Conditions Precedent to the Implementation of the Proposal
The implementation of the Proposal and distribution thereunder is subject to the
satisfaction of the following conditions precedents:
5.3
a)
The Proposal is approved by the Required Majority;
b)
The Proposal Approval Order has been issued and has not been stayed
and there is no outstanding appeal therefrom.
c)
All other actions, documents and agreements necessary to implement the
Proposal as required herein shall have been effected and executed,
including the funding contemplated under Section 5.1.
Trustee's Certificate and Effective Date
Upon the satisfaction that the conditions precedent set out in Section 5.2 have been met
and that distributions in accordance with the Proposal have been made, the Trustee will
file with the Court a certificate confirming same (the "Trustee's Certificate"). The date of
filing of the Trustee's Certificate shall be deemed to be the "Effective Date".
- 10 -
ARTICLE 6
BINDING EFFECT
6.1
Binding Effect
On the Effective Date, this Proposal will become effective and binding on and enure
to the benefit of XS Cargo and all creditors affected by this Proposal and all other
Persons named or referred to in, or subject to, this Proposal, and their respective
heirs, executors, administrators and other legal representatives, successors and
assigns.
ARTICLE 8
GENERAL
8.1
Capacity of the Trustee
PricewaterhouseCoopers Inc. is acting in its capacity as Trustee under this Proposal
and not in its personal capacity, and shall not incur any liabilities or obligations in
connection with this Proposal or in respect of the business or obligations of XS
Cargo, whether existing as at the Date of Proposal or incurred subsequent thereto
and no Person shall have any Claim against PricewaterhouseCoopers Inc. in respect
thereof.
8.2
Settlements and Preferences
The provisions of Section 91 to 101, inclusively, of the BIA and any similar provision
of any federal or provincial statute shall not apply to this Proposal.
8.3
Further Assurances
Each of the Persons named or referred to in, or subject to, this Proposal will execute
and deliver all such documents and instruments and do all such acts and things as
may be necessary or desirable to carry out the full intent and meaning of this
Proposal and to give effect to the transactions contemplated herein.
8.4
Governing Law
This Proposal will be governed by and construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein.
[Signature page follows]
- 12 -
DATED AT TORONTO, this 29th day of October, 2014
XS CARGO LIMITED PARTNERSHIP
Per:
i
(r
XS CARGO GP INC.
Per:
WITNESS:
//(0-1- 4
WITNESS:
TAB 2F
Court File Number: 32-1896275
Estate Number: 32-1896275
Estate Number: 32-1896278
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE CONSOLIDATED MATTERS OF THE NOTICE OF INTENTION TO MAKE A
PROPOSAL UNDER THE BANKR UPTCY AND INSOL VENCY ACT, R.S.C. 1985, c. B-3, AS
AMENDED OF
XS CARGO LIMITED PARTNERSHIP &
XS CARGO GP INC.
MOTION OF KARPREILLY CAPITAL PARTNERS, L.P. UNDER SECTION 243
OF THE BANKRUPTCY AND INSOL VENCY ACT AND SECTION 101 OF THE
COURTS OFJUSTICEACT
CONSENT TO ACT
Pursuant to Section 243(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985,
c. B-3, as amended and Section ioi of the Courts of Justice Act, R.S.O. 1990, C-43, as
amended, PricewaterhouseCoopers Inc. ("PwC") hereby consents to act as receiver of
all the assets, undertakings and properties of every nature and kind whatsoever and
wherever situate, including all proceeds thereof, of XS Cargo Limited Partnership.
and XS Cargo GP Inc., in accordance with an order substantially in the form of the
order included in the application record of KarpReilly Capital Partners, L.P., dated
November 7, 2014, as such order may be amended in a manner satisfactory to PwC.
Dated at Toronto, Ontario this
J'
day of November, 2014.
PricewaterhouseCoopers Inc.
.....................
Per
/Ti
(
I
Greg Princ
Senior Vice President
Errort Unknown document property name.
IN THF MATTER OF I] IL NOTICE OF INFENIION 10 MAKF A PROPOSAL UNDLR I HE BANKRUPTCY ANI)
INSOLVENCY AC!, R.S.C. 1985, . B3 OF XS CARGO 1 IMI I El) PAR! NERSI TIP AN!) OF XS ( \RGO GP INC.
Court File No. 32-1896275
MOTION OF KARPREJI LY CAPITAL, PARS NERS, 1 .1'. UNDFR SECTION 243 OF THE BANKRUPTCY ANI)
INSOLVENCY ACT AND SECTION 101 OF 11 IL COURTS OFJUSTICF AC)
ONTARIO
SUPERIOR COURT OF JUSTICE
Proceeding commenced at Toronto
CONSENT
STIKEMAN ELLIOTT LLP
Barristers & Solicitors
40tI Floor
1155 Rene-Lvesque Blvd. West
Montreal, QC H3B 3V2
Guy P. Martel
Tel: (514) 397-3163
Fax: (514) 397-3222
5300 Commerce Court West
199 Bay Street
Toronto, ON M5L I B9
Kathryn Esaw LSUC#: 58264F
Tel: (416) 869-6820
Fax: (416) 947-0866
Lawyers for the Applicant
Errort Unknown document property name.
TAB 3
Court File Number: 32-1896275
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE HONOURABLE
JUSTICE
)
)
)
THURSDAY, THE 13th
DAY OF NOVEMBER, 2014
IN THE CONSOLIDATED MATTERS OF THE NOTICE OF INTENTION TO MAKE A
PROPOSAL UNDER THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS
AMENDED OF
XS CARGO LIMITED PARTNERSHIP
&
XS CARGO GP INC.
MOTION OF KARPREILLY CAPITAL PARTNERS, L.P. UNDER SECTION 243 OF
THE BANKRUPTCY AND INSOLVENCY ACT AND SECTION 101 OF THE COURTS
OF JUSTICE ACT
ORDER
THIS MOTION made by KarpReilly Capital Partners, L.P. (the "Applicant") for an
Order pursuant to section 243(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as
amended (the "BIA") and section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as
amended (the "CJA") appointing PricewaterhouseCoopers Inc. ("PwC") as receiver (in such
capacities, the "Receiver") without security, of all of the assets, undertakings and properties of
XS Cargo Limited Partnership ("XS LP") and XS Cargo GP Inc. ("XS GP", and together with
XS LP, "XS Cargo" or the "Debtors") acquired for, or used in relation to a business carried on
by the Debtors, was heard this day at 330 University Avenue, Toronto, Ontario.
#11175744
-2ON READING the affidavit of Ryan Greene sworn November 10, 2014 and the Exhibits
thereto and on hearing the submissions of counsel for the Applicant, no one else appearing
although duly served as appears from the affidavit of service of Katherine Esaw sworn
November 10, 2014 and on reading the consent of PwC to act as the Receiver,
SERVICE
1.
THIS COURT ORDERS that the time for service of the Notice of Motion and the Motion
is hereby abridged and validated so that this motion is properly returnable today and hereby
dispenses with further service thereof.
APPOINTMENT
2.
THIS COURT ORDERS that pursuant to section 243(1) of the BIA and section 101 of
the CJA, PwC is hereby appointed Receiver, without security, of all of the assets, undertakings
and properties of the Debtors acquired for, or used in relation to a business carried on by the
Debtors, including all proceeds thereof (the "Property").
RECEIVER’S POWERS
3.
THIS COURT ORDERS that the Receiver is hereby empowered and authorized, but not
obligated, to act at once in respect of the Property and, without in any way limiting the generality
of the foregoing, the Receiver is hereby expressly empowered and authorized to do any of the
following where the Receiver considers it necessary or desirable:
(a)
to take possession of and exercise control over the Property and any and
all proceeds, receipts and disbursements arising out of or from the
Property;
(b)
to receive, preserve, and protect the Property, or any part or parts thereof,
including, but not limited to, the changing of locks and security codes, the
relocating of Property to safeguard it, the engaging of independent
security personnel, the taking of physical inventories and the placement of
such insurance coverage as may be necessary or desirable;
#11175744
-3(c)
to manage, operate, and carry on the business of the Debtors, including the
powers to enter into any agreements, incur any obligations in the ordinary
course of business, cease to carry on all or any part of the business, or
cease to perform any contracts of the Debtors;
(d)
to engage consultants, appraisers, agents, experts, auditors, accountants,
managers, counsel and such other persons from time to time and on
whatever basis, including on a temporary basis, to assist with the exercise
of the Receiver's powers and duties, including without limitation those
conferred by this Order;
(e)
to purchase or lease such machinery, equipment, inventories, supplies,
premises or other assets to continue the business of the Debtors or any part
or parts thereof;
(f)
to receive and collect all monies and accounts now owed or hereafter
owing to the Debtors and to exercise all remedies of the Debtors in
collecting such monies, including, without limitation, to enforce any
security held by the Debtors;
(g)
to settle, extend or compromise any indebtedness owing to the Debtors;
(h)
to execute, assign, issue and endorse documents of whatever nature in
respect of any of the Property, whether in the Receiver's name or in the
name and on behalf of the Debtors, for any purpose pursuant to this Order;
(i)
to initiate, prosecute and continue the prosecution of any and all
proceedings and to defend all proceedings now pending or hereafter
instituted with respect to the Debtors, the Property or the Receiver, and to
settle or compromise any such proceedings. The authority hereby
conveyed shall extend to such appeals or applications for judicial review
in respect of any order or judgment pronounced in any such proceeding;
#11175744
-4(j)
to market any or all of the Property, including advertising and soliciting
offers in respect of the Property or any part or parts thereof and
negotiating such terms and conditions of sale as the Receiver in its
discretion may deem appropriate;
(k)
to sell, convey, transfer, lease or assign the Property or any part or parts
thereof out of the ordinary course of business,
(i)
without the approval of this Court in respect of any transaction not
exceeding $250,000.00, provided that the aggregate consideration
for all such transactions does not exceed $1,000,000.00; and
(ii)
with the approval of this Court in respect of any transaction in
which the purchase price or the aggregate purchase price exceeds
the applicable amount set out in the preceding clause;
and in each such case notice under any applicable Personal Property
Security Act (or other similar legislation) shall not be required, and any
applicable provincial Bulk Sales Act and any other equivalent federal or
provincial legislation shall not apply.
(l)
to apply for any vesting order or other orders necessary to convey the
Property or any part or parts thereof to a purchaser or purchasers thereof,
free and clear of any liens or encumbrances affecting such Property;
(m)
to report to, meet with and discuss with such affected Persons (as defined
below) as the Receiver deems appropriate on all matters relating to the
Property and the receivership, and to share information, subject to such
terms as to confidentiality as the Receiver deems advisable;
(n)
to register a copy of this Order and any other Orders in respect of the
Property against title to any of the Property;
(o)
to apply for any permits, licences, approvals or permissions as may be
required by any governmental authority and any renewals thereof for and
#11175744
-5on behalf of and, if thought desirable by the Receiver, in the name of the
Debtors;
(p)
to enter into agreements with any trustee in bankruptcy appointed in
respect of the Debtors, including, without limiting the generality of the
foregoing, the ability to enter into occupation agreements for any property
owned or leased by the Debtors;
(q)
to exercise any shareholder, partnership, joint venture or other rights
which the Debtors may have; and
(r)
to take any steps reasonably incidental to the exercise of these powers or
the performance of any statutory obligations.
and in each case where the Receiver takes any such actions or steps, it shall be exclusively
authorized and empowered to do so, to the exclusion of all other Persons (as defined below),
including the Debtors, and without interference from any other Person.
4.
The Receiver is hereby authorized and directed to pursue, for and on behalf of the
Debtors, approval and implementation of the Proposal filed by the Debtors on October 30, 2014
and to exercise all of the rights of the Debtors thereunder and in respect thereof including,
without limitation, the right to make amendments to the Proposal in accordance with the terms of
the Proposal and applicable law.
DUTY TO PROVIDE ACCESS AND CO-OPERATION TO THE RECEIVER
5.
THIS COURT ORDERS that (i) the Debtors, (ii) all of its current and former directors,
officers, employees, agents, accountants, legal counsel and shareholders, and all other persons
acting on its instructions or behalf, and (iii) all other individuals, firms, corporations,
governmental bodies or agencies, or other entities having notice of this Order (all of the
foregoing, collectively, being "Persons" and each being a "Person") shall forthwith advise the
Receiver of the existence of any Property in such Person's possession or control, shall grant
immediate and continued access to the Property to the Receiver, and shall deliver all such
Property to the Receiver upon the Receiver's request.
#11175744
-66.
THIS COURT ORDERS that all Persons shall forthwith advise the Receiver of the
existence of any books, documents, securities, contracts, orders, corporate and accounting
records, and any other papers, records and information of any kind related to the business or
affairs of the Debtors, and any computer programs, computer tapes, computer disks, or other data
storage media containing any such information (the foregoing, collectively, the "Records") in
that Person's possession or control, and shall provide to the Receiver or permit the Receiver to
make, retain and take away copies thereof and grant to the Receiver unfettered access to and use
of accounting, computer, software and physical facilities relating thereto, provided however that
nothing in this paragraph 5 or in paragraph 6 of this Order shall require the delivery of Records,
or the granting of access to Records, which may not be disclosed or provided to the Receiver due
to the privilege attaching to solicitor-client communication or due to statutory provisions
prohibiting such disclosure.
7.
THIS COURT ORDERS that if any Records are stored or otherwise contained on a
computer or other electronic system of information storage, whether by independent service
provider or otherwise, all Persons in possession or control of such Records shall forthwith give
unfettered access to the Receiver for the purpose of allowing the Receiver to recover and fully
copy all of the information contained therein whether by way of printing the information onto
paper or making copies of computer disks or such other manner of retrieving and copying the
information as the Receiver in its discretion deems expedient, and shall not alter, erase or destroy
any Records without the prior written consent of the Receiver. Further, for the purposes of this
paragraph, all Persons shall provide the Receiver with all such assistance in gaining immediate
access to the information in the Records as the Receiver may in its discretion require including
providing the Receiver with instructions on the use of any computer or other system and
providing the Receiver with any and all access codes, account names and account numbers that
may be required to gain access to the information.
8.
THIS COURT ORDERS that the Receiver shall provide each of the relevant landlords
with notice of the Receiver’s intention to remove any fixtures from any leased premises at least
seven (7) days prior to the date of the intended removal. The relevant landlord shall be entitled
to have a representative present in the leased premises to observe such removal and, if the
landlord disputes the Receiver’s entitlement to remove any such fixture under the provisions of
#11175744
-7the lease, such fixture shall remain on the premises and shall be dealt with as agreed between any
applicable secured creditors, such landlord and the Receiver, or by further Order of this Court
upon application by the Receiver on at least two (2) days notice to such landlord and any such
secured creditors.
NO PROCEEDINGS AGAINST THE RECEIVER
9.
THIS COURT ORDERS that no proceeding or enforcement process in any court or
tribunal (each, a "Proceeding"), shall be commenced or continued against the Receiver except
with the written consent of the Receiver or with leave of this Court.
NO PROCEEDINGS AGAINST THE DEBTORS OR THE PROPERTY
10.
THIS COURT ORDERS that no Proceeding against or in respect of the Debtors or the
Property shall be commenced or continued except with the written consent of the Receiver or
with leave of this Court and any and all Proceedings currently under way against or in respect of
the Debtors or the Property are hereby stayed and suspended pending further Order of this Court.
NO EXERCISE OF RIGHTS OR REMEDIES
11.
THIS COURT ORDERS that all rights and remedies against the Debtors, the Receiver, or
affecting the Property, are hereby stayed and suspended except with the written consent of the
Receiver or leave of this Court, provided however that this stay and suspension does not apply in
respect of any "eligible financial contract" as defined in the BIA, and further provided that
nothing in this paragraph shall (i) empower the Receiver or the Debtors to carry on any business
which the Debtors is not lawfully entitled to carry on, (ii) exempt the Receiver or the Debtors
from compliance with statutory or regulatory provisions relating to health, safety or the
environment, (iii) prevent the filing of any registration to preserve or perfect a security interest,
or (iv) prevent the registration of a claim for lien.
NO INTERFERENCE WITH THE RECEIVER
12.
THIS COURT ORDERS that no Person shall discontinue, fail to honour, alter, interfere
with, repudiate, terminate or cease to perform any right, renewal right, contract, agreement,
licence or permit in favour of or held by the Debtors, without written consent of the Receiver or
leave of this Court.
#11175744
-8CONTINUATION OF SERVICES
13.
THIS COURT ORDERS that all Persons having oral or written agreements with the
Debtors or statutory or regulatory mandates for the supply of goods and/or services, including
without limitation, all computer software, communication and other data services, centralized
banking services, payroll services, insurance, transportation services, utility or other services to
the Debtors are hereby restrained until further Order of this Court from discontinuing, altering,
interfering with or terminating the supply of such goods or services as may be required by the
Receiver, and that the Receiver shall be entitled to the continued use of the Debtors' current
telephone numbers, facsimile numbers, internet addresses and domain names, provided in each
case that the normal prices or charges for all such goods or services received after the date of this
Order are paid by the Receiver in accordance with normal payment practices of the Debtors or
such other practices as may be agreed upon by the supplier or service provider and the Receiver,
or as may be ordered by this Court.
CONTINUATION OF LIQUIDATION
14.
THIS COURT ORDERS that the Sale contemplated in the Amended and Restated
Agency Agreement made as of September 19, 2014 by and between XS Cargo and Tiger Capital
Group, LLC (the “Agency Agreement”), as approved by Order of this Court in these
proceedings made on September 19, 2014, shall continue notwithstanding the appointment of the
Receiver hereby, and the Receiver is directed to perform the obligations, and to exercise the
rights and benefits, of the Debtors under the Agency Agreement.
DISTRIBUTION TO MEZZANINE LENDERS
15.
THIS COURT ORDERS that the Receiver is authorized and directed to make:
(a)
distribution(s) from time to time of the funds in its hands to KarpReilly
Direct, LLC, KarpReilly Capital Partners, L.P., Mark L. Butler, Gerry
Bachynski, Sean Britain (collectively, the "KarpReilly Group") and
Famous Brands Inc. ("Famous Brand", collectively with the KarpReilly
Group, the "Mezzanine Lenders") in such amounts as the Receiver deems
appropriate, which amounts shall not exceed, in the aggregate, the amount
#11175744
-9of the outstanding indebtedness owing to the Mezzanine Lenders under
and pursuant to the Mezzanine Loan Agreement dated June 3, 2011 among
XS LP as Borrower, XS GP and XSC Canada Holdings Inc. as
Guarantors, and the Mezzanine Lenders as Lenders.
RECEIVER TO HOLD FUNDS
16.
THIS COURT ORDERS that all funds, monies, cheques, instruments, and other forms of
payments received or collected by the Receiver from and after the making of this Order from any
source whatsoever, including without limitation the sale of all or any of the Property and the
collection of any accounts receivable in whole or in part, whether in existence on the date of this
Order or hereafter coming into existence, shall be deposited into one or more new accounts to be
opened by the Receiver (the "Post Receivership Accounts") and the monies standing to the
credit of such Post Receivership Accounts from time to time, net of any disbursements provided
for herein, shall be held by the Receiver to be paid in accordance with the terms of this Order or
any further Order of this Court.
EMPLOYEES
17.
THIS COURT ORDERS that all employees of the Debtors shall remain the employees of
the Debtors until such time as the Receiver, on the Debtors' behalf, may terminate the
employment of such employees. The Receiver shall not be liable for any employee-related
liabilities, including any successor employer liabilities as provided for in section 14.06(1.2) of
the BIA, other than such amounts as the Receiver may specifically agree in writing to pay, or in
respect of its obligations under sections 81.4(5) or 81.6(3) of the BIA or under the Wage Earner
Protection Program Act.
PIPEDA
18.
THIS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal
Information Protection and Electronic Documents Act, the Receiver shall disclose personal
information of identifiable individuals to prospective purchasers or bidders for the Property and
to their advisors, but only to the extent desirable or required to negotiate and attempt to complete
one or more sales of the Property (each, a "Sale"). Each prospective purchaser or bidder to
whom such personal information is disclosed shall maintain and protect the privacy of such
#11175744
- 10 information and limit the use of such information to its evaluation of the Sale, and if it does not
complete a Sale, shall return all such information to the Receiver, or in the alternative destroy all
such information. The purchaser of any Property shall be entitled to continue to use the personal
information provided to it, and related to the Property purchased, in a manner which is in all
material respects identical to the prior use of such information by the Debtors, and shall return all
other personal information to the Receiver, or ensure that all other personal information is
destroyed.
LIMITATION ON ENVIRONMENTAL LIABILITIES
19.
THIS COURT ORDERS that nothing herein contained shall require the Receiver to
occupy or to take control, care, charge, possession or management (separately and/or
collectively, "Possession") of any of the Property that might be environmentally contaminated,
might be a pollutant or a contaminant, or might cause or contribute to a spill, discharge, release
or deposit of a substance contrary to any federal, provincial or other law respecting the
protection, conservation, enhancement, remediation or rehabilitation of the environment or
relating to the disposal of waste or other contamination including, without limitation, the
Canadian Environmental Protection Act, the Ontario Environmental Protection Act, the Ontario
Water Resources Act, or the Ontario Occupational Health and Safety Act and regulations
thereunder (the "Environmental Legislation"), provided however that nothing herein shall
exempt the Receiver from any duty to report or make disclosure imposed by applicable
Environmental Legislation. The Receiver shall not, as a result of this Order or anything done in
pursuance of the Receiver's duties and powers under this Order, be deemed to be in Possession of
any of the Property within the meaning of any Environmental Legislation, unless it is actually in
possession.
LIMITATION ON THE RECEIVER’S LIABILITY
20.
THIS COURT ORDERS that the Receiver shall incur no liability or obligation as a result
of its appointment or the carrying out the provisions of this Order, save and except for any gross
negligence or wilful misconduct on its part, or in respect of its obligations under sections 81.4(5)
or 81.6(3) of the BIA or under the Wage Earner Protection Program Act. Nothing in this Order
#11175744
- 11 shall derogate from the protections afforded the Receiver by section 14.06 of the BIA or by any
other applicable legislation.
RECEIVER'S ACCOUNTS
21.
THIS COURT ORDERS that the Receiver and counsel to the Receiver shall be paid their
reasonable fees and disbursements, in each case at their standard rates and charges unless
otherwise ordered by the Court on the passing of accounts, and that the Receiver and counsel to
the Receiver shall be entitled to the benefit of the Administrative Charge created by the Order of
this Court in these proceedings dated August 6, 2014, as security for such fees and
disbursements, both before and after the making of this Order in respect of these proceedings.
22.
THIS COURT ORDERS that the Receiver and its legal counsel shall pass its accounts
from time to time, and for this purpose the accounts of the Receiver and its legal counsel are
hereby referred to a judge of the Commercial List of the Ontario Superior Court of Justice.
23.
THIS COURT ORDERS that prior to the passing of its accounts, the Receiver shall be at
liberty from time to time to apply reasonable amounts, out of the monies in its hands, against its
fees and disbursements, including legal fees and disbursements, incurred at the standard rates
and charges of the Receiver or its counsel, and such amounts shall constitute advances against its
remuneration and disbursements when and as approved by this Court.
SERVICE AND NOTICE
24.
THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the
“Protocol”) is approved and adopted by reference herein and, in this proceeding, the service of
documents made in accordance with the Protocol (which can be found on the Commercial List
website
at
http://www.ontariocourts.ca/scj/practice/practice-directions/toronto/e-service-
protocol/) shall be valid and effective service. Subject to Rule 17.05 this Order shall constitute
an order for substituted service pursuant to Rule 16.04 of the Rules of Civil Procedure. Subject to
Rule 3.01(d) of the Rules of Civil Procedure and paragraph 21 of the Protocol, service of
documents in accordance with the Protocol will be effective on transmission. This Court further
orders that a Case Website shall be maintained in accordance with the Protocol with the
following URL ‘http://www.pwc.com/car-xscargo’.
#11175744
- 12 25.
THIS COURT ORDERS that if the service or distribution of documents in accordance
with the Protocol is not practicable, the Receiver is at liberty to serve or distribute this Order, any
other materials and orders in these proceedings, any notices or other correspondence, by
forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery or facsimile
transmission to the Debtors' creditors or other interested parties at their respective addresses as
last shown on the records of the Debtors and that any such service or distribution by courier,
personal delivery or facsimile transmission shall be deemed to be received on the next business
day following the date of forwarding thereof, or if sent by ordinary mail, on the third business
day after mailing.
GENERAL
26.
THIS COURT ORDERS that the Receiver may from time to time apply to this Court for
advice and directions in the discharge of its powers and duties hereunder.
27.
THIS COURT ORDERS that nothing in this Order shall prevent the Receiver from acting
as a trustee in bankruptcy of the Debtors.
28.
THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal,
regulatory or administrative body having jurisdiction in Canada or in the United States to give
effect to this Order and to assist the Receiver and its agents in carrying out the terms of this
Order.
All courts, tribunals, regulatory and administrative bodies are hereby respectfully
requested to make such orders and to provide such assistance to the Receiver, as an officer of this
Court, as may be necessary or desirable to give effect to this Order or to assist the Receiver and
its agents in carrying out the terms of this Order.
29.
THIS COURT ORDERS that the Receiver be at liberty and is hereby authorized and
empowered to apply to any court, tribunal, regulatory or administrative body, wherever located,
for the recognition of this Order and for assistance in carrying out the terms of this Order, and
that the Receiver is authorized and empowered to act as a representative in respect of the within
proceedings for the purpose of having these proceedings recognized in a jurisdiction outside
Canada.
#11175744
- 13 30.
THIS COURT ORDERS that the Applicant shall have its costs of this motion, up to and
including entry and service of this Order, provided for by the terms of the Applicant's security or,
if not so provided by the Applicant's security, then on a substantial indemnity basis to be paid by
the Receiver from the Debtors' estate with such priority and at such time as this Court may
determine.
31.
THIS COURT ORDERS that any interested party may apply to this Court to vary or
amend this Order on not less than seven (7) days' notice to the Receiver and to any other party
likely to be affected by the order sought or upon such other notice, if any, as this Court may
order.
________________________________________
#11175744
IN THE MATTER OF THE NOTICE OF INTENTION TO MAKE A PROPOSAL UNDER THE BANKRUPTCY AND
INSOLVENCY ACT, R.S.C. 1985, c. B-3 OF XS CARGO LIMITED PARTNERSHIP AND OF XS CARGO GP INC.
Court File No. 32-1896275
MOTION OF KARPREILLY CAPITAL PARTNERS, L.P. UNDER SECTION 243 OF THE BANKRUPTCY AND
INSOLVENCY ACT AND SECTION 101 OF THE COURTS OF JUSTICE ACT
ONTARIO
SUPERIOR COURT OF JUSTICE
Proceeding commenced at Toronto
ORDER
STIKEMAN ELLIOTT LLP
Barristers & Solicitors
40th Floor
1155 René-Lévesque Blvd. West
Montréal, QC H3B 3V2
Guy P. Martel
Tel: (514) 397-3163
Fax: (514) 397-3222
5300 Commerce Court West
199 Bay Street
Toronto, ON M5L 1B9
Kathryn Esaw LSUC#: 58264F
Tel: (416) 869-6820
Fax: (416) 947-0866
Lawyers for the Applicant
#11175744
Court File No. 32-1896275
IN THE CONSOLIDATED MATTERS OF THE NOTICE OF INTENTION TO MAKE A PROPOSAL
UNDER THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3 OF XS CARGO LIMITED
PARTNERSHIP AND OF XS CARGO GP INC.
MOTION OF KARPREILLY CAPITAL PARTNERS, L.P. UNDER SECTION 243 OF THE
BANKRUPTCY AND INSOLVENCY ACT AND SECTION 101 OF THE COURTS OF JUSTICE ACT
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceedings commenced at Toronto
MOTION RECORD
(MOTION OF KARPREILLY CAPITAL PARTNERS, L.P.
UNDER SECTION 243 OF THE BANKRUPTCY AND
INSOLVENCY ACT AND SECTION 101 OF THE COURTS
OF JUSTICE ACT)
(Returnable on November 13, 2014)
STIKEMAN ELLIOTT LLP
40th Floor
1155 René-Lévesque Blvd. West
Montréal, QC H3B 3V2
Guy P. Martel
Tel.: (514) 397-3163
Fax: (514) 397-3222
5300 Commerce Court
199 Bay Street
Toronto, ON M5L 1B9
Kathryn Esaw LSUC#: 58264F
Tel: (416) 869-6820
Fax: (416) 947-0866
Counsels to the Applicants
#11176963