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Court File No. CV- 13-10009-O0CL
S I F'J- S SUPERIORi
COMMERCIAL LIST
I •THE MATTEROF
AND I *F THE JOHN FORSYTH SHIRT COMPANY LTD., FORSYTH HOLDINGS, INC.
and FORSYTH OF CANADA, INC.
APPLICATION 1UNDER]
Ilk govi
AIRD & BERLIS LLP Barristers and Solicitors Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: rengli shgairdberlis.com
Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversa@airdberlis.com
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
1aIt4!1O1DUUIU
TO: AIRD & BERLIS LLP Brookfield Place 181 Bay Street, Suite 1800 Toronto, ON M5J 2T9
D. Robb English Tel: 416-865-4748 Fax: 416-863-1515 Email: reng1ish(airdber1is.corn
Ian Aversa Tel: 416-865-3082 Fax: 416-863-1515 Email: iaversa(dairdberlis.com
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
AND TO: BDO CANADA LIMITED 123 Front Street, Suite 1200 Toronto, ON M5J 2M2
Blair Davidson / Steven Welker / Gary Cerrato Tel: 416-865-0210 / 416-775-7812 / 416-369-6058 Fax: 416-865-0904 Email: bdavidson@bdo.ca / swelker@bdo.ca / gcerrato(bdo .ca
Monitor
AND TO: DAVIS LLP 100 King Street West, Suite 6000 Toronto, ON M5X 1E2
Bruce Darlington / Susan Friedman I Rebecca Gosevitz Tel: 416-365-3529 / 416-365-3503 / 416-365-3402 Fax: 416-369-5210 / 416-777-7415 / 416-777-7408 Email: bdarIington(2idavis.ca / sffiedman@davis.ca / rgosevitz(davis.ca
Lawyers for the Monitor
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AND TO: RICHARDS, LAYTON & FINGER One Rodney Square 920 North King Street Wilmington, Delaware 19801 U.S.A.
Russell C. Silberglied / L. Katherine Good / Robert C. Maddox Tel: 302-651-7545 / 302-651-7640 / 302-651-7551 Fax: 302-498-7545 Email: Silberglied(r1f corn / gppd@rlf.com / maddox@rlf corn
U.S. lawyers for the Monitor
AND TO: GOODMANS LLP Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7
Joe Latham Tel: 416-597-4211 Fax: 416-979-1234 Email: jlatharn@goodrnans.ca
Jean Anderson Tel: 416-597-4297 Fax: 416-979-1234 Email: j anderson(goodmans.ca
Caroline Descours Tel: 416-597-6275 Fax: 416-979-1234 Email: cdescoursc2igoodmans.ca
Lawyers for Wells Fargo Capital Finance Corporation Canada and Wells Fargo Capital Finance, LLC
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AND TO: OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C. 23 0 Paiic. tenuc New York, New York 10169-0075 U.S.A.
Daniel Fiorillo / James Cretella Tel: 212-905-3616 / 212-905-3611 Fax: 212-682-6104 Email: dfiorilloç2i),oshr. corn / jçete11a@oshr.corn
U.S. lawyers for Wells Fargo Capital Finance Corporation Canada and Wells Fargo Capital Finance, LLC
AND TO: BLAKE, CASSELS & GRAYDON LLP Commerce Court West 199 Bay Street, Suite 4000 Toronto, ON M5L 1A9
Pamela L. J. Huff! Jenna Willis Tel: 416-863-2958 / (312) 739-3610 Fax: 416-863-2653 /(312) 739-3611 Email: parnela.huff@blakes.com / jpna.wilIis@blakes .com
Lawyers for Manunion Investments Limited, 2414394 Ontario Inc., 2414395 Ontario Inc. and Forsyth US. Acquisition Company Inc.
AND TO: MCKENNA LONG & ALDRIDGE LLP 303 Peachtree Street, NE Suite 5300 Atlanta, GA 30308
Wayne Bradley / Jonathan Picard Tel: (404) 527-4044 / (404) 527-8522 Fax: (404) 527-3644 / (404) 527-4198 Email: wbrad1ey(mckenna1ong.com / jpicard(d/mckennalong.com
U.S. Lawyers for Manunion Investments Limited, 2414394 Ontario Inc., 2414395 Ontario Inc. and Forsyth US. Acquisition Company Inc.
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AND TO: DENTONS CANADA LLP 77 King Street West, Suite 400 Toronto-Dominion Centre Toronto, ON M5K OA1
John Salmas / Ryan Middleton Tel: (416) 863-4737 / (416) 361-2367 Fax: (416) 863-4592 Email: john.salrnas@dentons.com / ryan.middleton@dentons. corn
Lawyers for Salus Capital Partners, LLC
AND TO: WATSON JACOB McCREARY LLP Barristers and Solicitors 509 - 4711 Yonge Street Toronto, ON M2N 6K8
J. David Watson / Amy Stein / David P. Jacobs Tel: (416) 226-0055 Fax: (416) 226-0910 Email: dwatson@wj rn-law. ca / astein@wj rn-law.ca / dj acobs@wj rn-law.ca
Lawyers for Workers United Canada Council and its Local 1058C
AND TO: TORYSLLP Barristers and Solicitors 79 Wellington Street West Toronto, ON M5K 1N2
Scott A. Bomhof Tel: (416) 865-7370 Fax: (416) 865-7380 Email: sbomhof@torys.com
Lawyers for Richard Pearlman
AND TO: MAGRATH'S LAW CHAMBERS 20 Carlton Street, #126 Toronto, ON M5B 2H5
Gavin Magrath Tel: (416) 931-0463 Fax: (888) 816-8861 Email: gavin(magraths .ca
Lawyer for Hellmann Worldwide Logistics Inc.
AND TO: DEPARTMENT OF JUSTICE The Exchange Tower 130 King Street West, Suite 3400 Toronto, ON M5X 1K6
Diane Winters Tel: (416) 973-3172 Fax: (416) 973-0810 Email: diane.winters(j ustice. gc .ca
Kevin J. O'Hara Email: kevin.ohara@ontario.ca
AND TO: WORKERS UNITED ONTARIO COUNCIL, and its LOCAL 2643 317 Adelaide Street West, Suite 1005 Toronto, ON M5V 1P9
Tel: (416) 510-0887 Fax: (416) 510-0891 Email: info @workersunitedunion.ca
AND TO: GE VFS CANADA LIMITED PARTNERSHIP 2300 Meadowvale Boulevard, Suite 200 Mississauga, ON L5N 5P9
AND TO: OLIVER MORANTE c/o 6789 Airport Road Mississauga, ON L4V 1N2
AND TO: HARRIS HESTER c/o 6789 Airport Road Mississauga, ON L4V 1N2
-5-
AND TO: ORLANDO CORPORATION 6205 Airport Road, Suite 500 Building E Mississauga, ON L4V 1B3
David Stewart Tel: (905) 677-5480 ext. 354 Fax: (905) 677-1851 Email: stewartdorlandocorp.com
AND TO: IBM CANADA LIMITED 3600 Steeles Avenue East, F4 Markham, ON L3R 9Z7
AND TO: 6789 AIRPORT ROAD IIOLDINGS LTD. 2005 Sheppard Avenue East, Suite #500 Toronto, ON M2J 5B4
AND TO: STEVRON HOLDINGS LIMITED 6205 Airport Road, Suite 500 Mississauga, ON L4V 1E3
Larry Parent - Insolvency Officer Tel: 1-866-668-8297 ext: 18562 Fax: 905-436-4524 Email: 1arry.parent(fin.gov.on.ca
AND TO: INTERNAL REVENUE SERVICE P.O. Box 7346 Philadelphia, Pennsylvania 19101-7346
AND TO: GEORGIA DEPARTMENT OF REVENUE Bankruptcy Section P.O. Box 161108 Atlanta, Georgia 30321
11
ATTN: Office of Counsel Building 9 W A Harriman Campus Albany, New York 12227
AND TO: CRISP COUNTY TAX COMMISSIONER 210 S. 7th Street South Cordele, Georgia 31015
AND TO: CITY OF CORDELE, GA 501 North 7th St. Cordele, Georgia 31015
AND TO: HILCO CAPITAL LP 5 Revere Drive, Suite 510 Northbrook, Illinois 60062
17760980.3
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VLJ*Z1
Court File No, CV-13-10009-OOCL
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COMPROMISE1. .. 1
JflTII!. 1• • 1 1; 1 1 1
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Notice of Motion 1
Draft Approval and Vesting Order 2
Draft Approval and Vesting Order blacklined to Model Approval and Vesting Order 3
Draft Discharge Order 4
Affidavit of Harris Hester sworn May 5, 2014 5
Exhibit "A" - Initial Order dated February 22, 2013 A
Exhibit "B" - Affidavit of Harris Hester sworn February 20, 2013 B (without exhibits)
Exhibit "C" - U.S. Recognition Orders dated March 18, 2013 C
Exhibit "D" - Stay Extension Order dated March 21, 2013 D
Exhibit "E" - Stay Extension Order dated May 27, 2013 E
Exhibit "F" - Creditors' Meeting Order, Claims Process and Bar Order F and Stay Extension and DIP Credit Agreement Order, each dated May 31, 2013
Exhibit "G" - Sanction Order dated July 11, 2013 G
Exhibit "H" - U.S. Order Recognizing and Enforcing Canadian Court H Sanction Order dated August 21, 2013
Exhibit "I" - Stay Extension Order dated September 26, 2013
Exhibit "J" - Monitor's Certificate dated October 10, 2013
Exhibit "K" - Letter from Monitor dated January 14, 2014 K
Exhibit "L" - Letter from Monitor dated February 4, 2014 L
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Court File No. CV-13-10009-00CL
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The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada,
Inc. (collectively, the "Applicants") will make a motion to a judge presiding over the
Commercial List on Tuesday, May 13, 2014 at 10:00 a.m., 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.
1. THE MOTION IS FOR an Order, including, among other things:
(a) if necessary, abridging the time for service and filing of this notice of motion and
the motion record or, in the alternative, dispensing with same;
(b) approving the asset purchase agreement among The John Forsyth Shirt Company
Ltd. and Forsyth of Canada, Inc. (collectively, the "Vendors"), as vendors, and
2414395 Ontario Inc. (the "Canadian Purchaser") and Forsyth U.S. Acquisition
Company Inc. (the "US Purchaser" and, together with the Canadian Purchaser,
the "Purchasers"), as purchasers, dated May 5, 2014 (the "APA"), and vesting
the Vendors' right, title and interest in and to the Purchased Assets (as defined in
2
the APA) in the Purchasers, upon the filing by BDO Canada Limited ( "BDO"), in
its capacity as the Court-appointed monitor of the Applicants (in such capacity,
the "Monitor"), of a certificate with this Court (the "Monitor's Certificate ")
certifying, among other things, that the transaction contemplated by the APA (the
"Transaction") has been completed to the satisfaction of the Monitor;
(c) authorizing and directing the Monitor to establish, hold and maintain certain
reserves (the "Reserves") as cash collateral from the proceeds from the sale of the
Purchased Assets to satisfy claims secured by the Administration Charge and the
D&O Charge (as such terms are defined in the Initial Order granted by the
Honourable Justice Wilton-Siegel on February 22, 2013 in these proceedings (the
"Initial Order")) ;
(d) authorizing and empowering the Monitor to make distributions from the Reserves
to the beneficiaries of the Administration Charge and the D&O Charge;
(e) discharging the Administration Charge once the Monitor determines that all
claims secured by such charge have been fully and finally determined and all
applicable payments have been made;
(f) discharging the D&O Charge upon the earlier of: (A) the date on which the
Monitor determines that all claims secured by such charge have been fully and
finally determined and all applicable payments have been made; and (B) six
months from the date of the Monitor's Certificate;
(g) discharging the DIP Charge (as defined in the Initial Order);
(h) following the completion of the Transaction, authorizing the Applicants to
execute, deliver and file any document, including, without limitation, any articles
of reorganization, required in order to effect a change of the corporate name of
each of the Applicants;
9
(i) approving the Fifth Report of the Monitor (the "Fifth Report"), and the
Confidential Supplement to the Fifth Report of the Monitor (the "Confidential
Supplement"), and approving the actions of the Monitor described therein;
(j) sealing the Confidential Supplement to the Fifth Report until further order of this
Court;
(k) approving the fees and disbursements of the Monitor and its counsel, including an
accrual for fees and disbursements to be incurred to the completion of these
proceedings (the "CCAA Proceedings ");
(1) discharging BDO as Monitor and releasing BDO from any and all liability that
BDO has or may hereafter have by reason of, or in any way arising out of, the acts
or omissions of BDO while acting in its capacity as Monitor, upon the filing by
the Monitor of a certificate (the "Monitor's Discharge Certificate ") with this
Court certifying that all matters to be attended to in connection with the CCAA
Proceedings have been completed to the satisfaction of the Monitor;
(m) terminating the CCAA Proceedings, upon the filing of the Monitor's Discharge
Certificate with this Court; and
(n) such further and other relief as counsel may advise and this Court may permit.
(a) the Applicants are collectively in the business of manufacturing, distributing and
selling apparel in both Canada and the United States of America;
(b) on February 22, 2013, this Court issued the Initial Order granting the Applicants
protection from their creditors under the Companies' Creditors Arrangement Act,
R.S.C. 1985, c. C-36, as amended (the "CCAA") in the CCAA Proceedings;
4
(c) pursuant to the Initial Order, the Applicants obtained debtor-in-possession
financing under the terms of the DIP Commitment Letter dated February 20, 2013
among Wells Fargo Capital Finance Corporation Canada and Wells Fargo Capital
Finance, LLC (together, "Wells Fargo ") and the Applicants (the "DIP
Commitment Letter ") ;
(d) on March 18, 2013, orders were entered by the United States Bankruptcy Court
for the Southern District of New York (the "US Court") in Case No. 13-10526
(the "US Recognition Proceedings "), among other things, recognizing the Initial
Order and these CCAA Proceedings as foreign main proceedings;
(e) on March 21, 2013, upon a motion by the Applicants, this Court granted an order,
among other things: (i) extending the Stay Period (as defined in the Initial Order)
to and including May 29, 2013; and (ii) approving the First Report of the Monitor
dated March 18, 2013 and the actions of the Monitor described therein;
(f) on May 27, 2013, upon a motion by the Applicants, this Court granted an order
extending the Stay Period to and including May 31, 2013. The balance of the
Applicants' relief was adjourned to May 31, 2013;
(g) on May 31, 2013, upon a motion by the Applicants, this Court granted, among
other things:
(i) the Creditors' Meeting Order, which established the process by which the
Applicants' creditors would meet on June 26, 2013 and vote on the
Consolidated Plan of Compromise and Arrangement of the Applicants
dated May 16, 2013 (as restated, supplemented or amended from time to
time, the "Plan");
(ii) the Claims Process and Bar Order, which established a claims bar date of
June 21, 2013 and a process to solicit: (i) claims arising before February
22, 2013; and (ii) certain claims arising after February 22, 2013 but which
arise in connection with the restructuring or repudiation by the Applicants
5
of contracts, leases or other arrangements to which the Applicants were
party; and
(iii) an order: (i) extending the Stay Period to and including July 12, 2013; (ii)
approving the Second Report of the Monitor dated May 17, 2013 and the
Supplementary Report of the Second Report dated May 30, 2013, and the
actions of the Monitor described therein; and (iii) approving the
Amendment to the DIP Commitment Letter dated May 17, 2013;
(h) at the meeting of creditors on June 26, 2013, 95% of the Applicants' creditors
holding 98% of the value of votes cast voted in favour of the Plan;
(i) on July 11, 2013, upon a motion by the Applicants, this Court granted an order
(the "Sanction Order"), among other things: (i) extending the Stay Period to and
including September 30, 2013; (ii) sanctioning and approving the Plan; (iii)
approving the Second Amending Agreement to the DIP Commitment Letter dated
July 9, 2013; and (iv) approving the Third Report of the Monitor dated July 4,
2013 and the Supplement to the Third Report dated July 9, 2013, and the actions
of the Monitor described therein;
(j) on August 21, 2013, the US Court entered an order, among other things,
recognizing and enforcing the Sanction Order;
(k) on September 26, 2013, upon a motion by the Applicants, this Court granted an
order, among other things: (i) extending the Stay Period to and including October
18, 2013; (ii) approving the Fourth Report of the Monitor dated September 24,
2013 and the Supplementary Report to the Fourth Report dated September 25,
2013, and the actions of the Monitor described therein; and (iii) approving the
Third DIP Extension Agreement to the DIP Commitment Letter dated September
24, 2013;
0
l the rear
(1) the Plan was structured such that the Applicants':
(i) unsecured creditors (other than Employee Claimants (as defined in the
Plan)) with Proven Distribution Claims (as defined in the Plan) of $5,000
or less, or those who elected to reduce their claims to $5,000 or less,
would receive a fixed distribution based on a formula in the Plan in a
specific time frame;
(ii) unsecured creditors (other than Employee Claimants) with Proven
Distribution Claims exceeding $5,000 but less than $3,000,000 would
receive two separate distributions on or before the Interim Distribution
Date and the Second Distribution Date (each as defined in the Plan),
respectively, each equal to 10% of such creditor's Proven Distribution
Claim;
(iii) unsecured creditors (other than Employee Claimants) with Proven
Distribution Claims exceeding $3,000,000 would receive a distribution
equal to 10% of their Proven Distribution Claim on the Interim
Distribution Date and a promissory note issued by the Applicants on the
Plan Implementation Date, which provides payment tranches based on
formulae set out in section 4.2(c)(ii) of the Plan;
(iv) Employee Claimants with Proven Distribution Claims of $1,000 or less
would receive the amount of their Proven Distribution Claims on the
Interim Distribution Date;
(v) Employee Claimants with Proven Distribution Claims greater than $1,000
but less than $3,250 would receive $1,000 on the Interim Distribution
Date, an additional payment equal to the lesser of $1,000 or the balance of
such Proven Distribution Claim on or before the Second Distribution Date,
7
and the balance, if any, of such Proven Distribution Claim on or before
January 15, 2016, to a maximum of $3,250;
(vi) Employee Claimants with Proven Distribution Claims greater than $3,250
but less than or equal to $16,250 would receive payments on each of the
Initial Distribution Date, the Second Distribution Date and January 15,
2016, as applicable, pursuant to formula set out in section 4.3(c) of the
Plan; and
(vii) Employee Claimants with Proven Distribution Claims exceeding $16,250
would receive two payments equal to 10% of such Proven Distribution
Claim paid on the Interim Distribution Date and the Second Distribution
Date, respectively;
Replacement Lender
(m) paragraph 7.2(j) of the Plan required the Applicants to establish funding
arrangements to repay the amounts owing to Wells Fargo under the DIP
Commitment Letter;
(n) on October 10, 2013, the Vendors entered into a credit agreement (the "Salus
Credit Agreement ") with Salus Capital Partners, LLC ( "Salus") which, among
other things, provided the financing required to repay the Applicants'
indebtedness to Wells Fargo under the DIP Commitment Letter;
(o) the Applicants' indebtedness to Wells Fargo under the DIP Commitment Letter
was repaid from a portion of the credit facilities provided under the Salus Credit
Agreement on October 10, 2013;
(p) on October 10, 2013, the Monitor filed a certificate with this Court certifying: (i)
that the conditions precedent set out in section 7.2 of the Plan have been satisfied
or waived in accordance with the Plan; and (ii) that the Plan Implementation Date
(as defined in the Plan) is October 11, 2013;
Post Plan Implementation Date
(q) the Stay Period expired on October 18, 2013;
(r) in the Fall of 2013, the Applicants' managed their operations with the lending
arrangements provided by Salus, however, sales did not meet expectations in the
fourth quarter, which resulted in operating losses and decreased availability;
(s) late in 2013, Salus commissioned an inventory appraisal by Gordon Brothers
Group, which appraisal presented orderly liquidation values for the Applicants'
inventory that were significantly lower than past appraisals and resulted in a
reduction of the Vendors' availability under the Salus Credit Agreement in
January, 2014;
(t) the combination of the two factors described above created a situation wherein the
Applicants could not fund the first distribution of $600,000 due on January 15,
2014, as required under the Plan;
(u) on February 4, 2014, the Monitor provided a material adverse change notice (the
"Material Adverse Change Notice ") to the Applicants' creditors indicating that
the distributions owing to creditors pursuant to the Plan would unlikely be made
due to insufficient funds;
(v) to date, neither the Applicants nor the Monitor have made any distributions under
the Plan;
Sale Process and APA
(w) since the date of the Material Adverse Change Notice, the Applicants, with the
assistance of the Monitor, have been seeking entities interested in: (a) refinancing
the Applicants' debt; (b) investing in the Applicants' business; or (c) purchasing
the Applicants' assets;
N
(x) on May 5, 2014, the Vendors and the Purchasers entered into the APA, which
remains subject to, among other things, approval by this Court and recognition by
the US Court;
(y) the Monitor has filed with the Court its Fifth Report outlining, among others
things: (i) the actions of the Monitor since its Fourth Report dated September 24,
2013 and its Supplementary Report to the Fourth Report dated September 25,
2013; (ii) the status of the Plan; (iii) the details of the APA and the basis for the
Monitor's recommendation that the Court approve the APA; and (iv) the
professional fees and disbursements of the Monitor and its counsel, including an
accrual for fees and disbursements to be incurred to the completion of these
proceedings;
(z) a sealing order is required because the Confidential Supplement contains certain
commercially sensitive information, the release of which could prejudice the
stakeholders of the Applicants, particularly if the Transaction does not close;
(aa) the Monitor and its counsel, Davis LLP, have accrued fees and expenses in their
capacity as Monitor and counsel thereto, respectively, which fees and expenses
require the approval of this Court pursuant to the Initial Order;
(bb) the Initial Order authorizes the Monitor to pass its accounts from time to time, and
to include any necessary solicitor fees and disbursements in the passing of the
accounts;
(cc) the other grounds set out in the Fifth Report, the Confidential Supplement and the
affidavit of Harris Hester sworn May 5, 2014;
(dd) the provisions of the CCAA and, in particular, section 36;
(ee) rules 1.04, 2.03, 3.02, 37 and 39 of the Rules of Civil Procedure, R.R.O. 1990,
Reg. 194, as amended; and
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(ff) such further and other grounds as counsel may advise and this Court may permit.
3.
THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the
motion:
(a) the affidavit of Harris Hester sworn May 5, 2014;
(b) the Fifth Report;
(c) the Confidential Supplement;
(d) the affidavit of Blair Davidson, to be sworn;
(e) the affidavit of Bruce Darlington, to be sworn; and
(f) such other evidence as counsel may advise and this Court may permit.
Date: May 6, 2014 AIRD & BERLIS LLP Barristers & Solicitors Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglishçllairdber1is,com
Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515
Email: iaversa@airdberlis.com
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
1 1
Court File No. CV-13-10009-OOCL
• I I
Proceedings commenced at Toronto
I _ IJiISII II)I0
AIRD & BERLIS LLP Barristers and Solicitors
Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: ren lish ,.a airdberlis.com
Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversaLwairdberlis.eom
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
17760982.3
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Court File No. CV-13-10009-OOCL
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THIS MOTION, made by The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc.
and Forsyth of Canada, Inc. (collectively, the "Applicants"), for an order, inter alia, approving
the sale transaction (the "Transaction") contemplated by the asset purchase agreement among
The John Forsyth Shirt Company Ltd. and Forsyth of Canada, Inc. (collectively, the "Vendors"),
as vendors, and 2414395 Ontario Inc. (the "Canadian Purchaser") and Forsyth U.S.
Acquisition Company Inc. (the "US Purchaser" and, together with the Canadian Purchaser, the
"Purchasers "), as purchasers, dated May 5, 2014 (the "APA"), a copy of which is appended, in
redacted form, to the Fifth Report of BDO Canada Limited, in its capacity as the Court-
appointed monitor of the Applicants (in such capacity, the "Monitor"), dated May <*>, 2014
(the "Fifth Report"), filed, and appended, in unredacted form, to the Confidential Supplement to
the Fifth Report of the Monitor dated May <*>, 2014 (the "Confidential Supplement "), filed,
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and vesting in the Purchasers the Vendors' right, title and interest in and to the Purchased Assets
(as defined in the APA), was heard this day at 330 University Avenue, Toronto, Ontario.
ON READING the affidavit of Harris Hester sworn May 5, 2014, the Fifth Report and
the Confidential Supplement, and on hearing the submissions of counsel for the Applicants,
counsel for the Monitor, counsel for the Purchasers, counsel for Salus Capital Partners, LLC and
counsel for Manunion Investments Limited, no one appearing for any other person on the service
list, although properly served as appears from the affidavit of Susy Moniz sworn May 6, 2014,
filed,
1. THIS COURT ORDERS that the time for service and filing of the notice of motion and
the motion record is hereby abridged and validated so that this motion is properly returnable
today and hereby dispenses with further service thereof.
2. THIS COURT ORDERS AND ECLA S that the Transaction is hereby approved,
and the execution of the APA by the Vendors is hereby authorized and approved, with such
minor amendments as the Vendors and the Purchasers, with the consent of the Monitor, may
deem necessary. The Vendors are hereby authorized and directed to take such additional steps
and execute such additional documents as may be necessary or desirable for the completion of
the Transaction and for the conveyance of the Purchased Assets to the Purchasers.
3. THIS COURT ORDERS AND DECLARES that upon the delivery of a certificate by
the Monitor to the Purchasers substantially in the form attached as Schedule "A" hereto (the
"Monitor's Certificate "), all of the Vendors' right, title and interest in and to: (i) the Canadian
Purchased Assets (as defined in the APA) shall vest absolutely in the Canadian Purchaser; and
(ii) the US Purchased Assets (as defined in the APA, including without limitation the US
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Purchased Assets described on Schedule "B" hereto (the "Real Property ")) shall vest
absolutely in the US Purchaser, in each case free and clear of and from any and all security
interests (whether contractual, statutory, or otherwise), hypothecs, mortgages, trusts or deemed
trusts (whether contractual, statutory, or otherwise), liens, executions, levies, charges, or other
financial or monetary claims, whether or not they have attached or been perfected, registered or
filed and whether secured, unsecured or otherwise (collectively, the "Claims"), including,
without limiting the generality of the foregoing: (i) any encumbrances or charges created by the
Initial Order of the Honourable Justice Wilton-Siegel dated February 22, 2013 (the "Initial
Order"); (ii) all charges, security interests or claims evidenced by registrations pursuant to the
Personal Property Security Act (Ontario), the Uniform Commercial Code, as adopted in any state
in the United States, or any other personal property registry system; and (iii) those Claims listed
on Schedule "C" hereto (all of which are collectively referred to as the "Encumbrances" which
term shall not include the permitted liens, encumbrances, easements and restrictive covenants
listed on Schedule "D") and, for greater certainty, this Court orders that all of the Encumbrances
affecting or relating to the Purchased Assets are hereby expunged and discharged as against the
Purchased Assets.
4. THIS COURT O ERS that, upon the delivery of the Monitor's Certificate to the
Purchasers, if any person or entity that has filed financing statements, mortgages, lis pendens or
other documents, instruments, notices or agreements evidencing any Encumbrances against or in
the Real Property has not delivered to the Vendors, in proper form for filing and executed by the
appropriate parties, termination statements, releases or instruments of satisfaction that the person
or entity has with respect to the Real Property, then with regard to the Real Property: (a) the
Vendors and/or the US Purchaser are authorized to execute and file such termination statements,
releases, instruments of satisfaction or other documents on behalf of the person or entity with
respect to the Real Property; and (b) the Vendors and/or the US Purchaser are authorized to file,
register or otherwise record a certified copy of this Order which, once filed, registered or
otherwise recorded, shall constitute conclusive evidence of the release of all Encumbrances
against the Real Property. This Order is deemed to be in recordable form sufficient to be placed
in the filing or recording system of each and every federal, state, local, tribal or foreign
government agency, department or office.
5. THIS COURT ORDERS that each and every filing agent, filing officer, title agent,
recording agency, governmental department, secretary of state, federal, state and local official,
and any other persons and entity who may be required by operation of law, the duties of their
office or contract, to accept, file, register or otherwise record or release any documents or
instruments or who may be required to report or insure any title in or to the Real Property, is
hereby authorized and directed to accept any and all documents and instruments necessary and
appropriate to consummate the Transaction and this Order. All such entities described above in
this paragraph are authorized and specifically directed to strike all recorded Encumbrances
against the Real Property from their records, official and otherwise.
6. THIS COURT ORDERS AND DIRECTS that upon delivery of the Monitor's
Certificate to the Purchasers, the Monitor shall be authorized and directed to establish, hold and
maintain the following reserves as cash collateral from the proceeds from the sale of the
Purchased Assets (the "Sale Proceeds "):
(a) the sum of $177,424.00 or such other amount as may be required pursuant to the
APA (the "Administration Charge Reserve ") to which the Administration
-5-
Charge (as defined in the Initial Order) shall attach with the priority provided by
the Initial Order; and
(b) the sum of $50,000.00 (the "D&O Charge Reserve" and, together with the
Administration Charge Reserve, the "Reserves ") to which the D&O Charge (as
defined in the Initial Order) shall attach with the priority provided by the Initial
Order.
7. THIS COURT ORDERS that the Monitor is hereby authorized and empowered, without
further order of the Court, to make distributions from the Administration Charge Reserve to the
beneficiaries of the Administration Charge upon delivery by such beneficiary to the Applicants,
the Monitor and the Purchasers of an invoice detailing the fees and disbursements it has incurred
in connection with these proceedings, free and clear of all Encumbrances other than those in
favour of such beneficiary, to be applied against the indebtedness, liabilities and obligations
owing by the Applicants to such beneficiary.
8. THIS COURT ORDERS that once the Monitor determines that all claims to the
Administration Charge Reserve have been fully and finally determined and all applicable
payments have been made, or a further Order of the Court so holds, (i) the Administration
Charge shall be fully and finally discharged, and (ii) the Monitor is hereby authorized and
directed, without further Order of the Court, to distribute all amounts remaining in the
Administration Charge Reserve to the Purchasers, free and clear of all Encumbrances.
9. THIS COURT ORDERS that the Monitor is hereby authorized and empowered, without
further order of the Court, to make distributions from the D&O Charge Reserve to the
beneficiaries of the D&O Charge on account of claims made to such D&O Charge Reserve that
-6-
the Monitor determines are valid claims for indebtedness, liabilities or obligations owing by the
Applicants to such beneficiary pursuant to the indemnity provided in paragraph 20 of the Initial
Order, free and clear of all Encumbrances other than those in favour of such beneficiary, to be
applied against the indebtedness, liabilities and obligations owing by the Applicants to such
beneficiary.
10. THIS COURT ORDERS that upon the earlier of: (A) the date on which the Monitor
determines that all claims to the D&O Charge Reserve have been fully and finally determined
and all applicable payments have been made, or a further Order of the Court so holds; and (B)
six months from the date of the Monitor's Certificate, (i) the D&O Charge shall be fully and
finally discharged, and (ii) the Monitor is hereby authorized and directed, without further Order
of the Court, to distribute all amounts remaining in the D&O Charge Reserve to the Purchasers,
free and clear of all Encumbrances.
11. THIS COURT ORDERS that for the purposes of determining the nature and priority of
Claims, the Sale Proceeds (less the Reserves) (the "Remaining Sale Proceeds ") shall stand in
the place and stead of the Purchased Assets, and that from and after the delivery of the Monitor's
Certificate all Claims and Encumbrances shall attach to the Remaining Sale Proceeds with the
same priority as they had with respect to the Purchased Assets immediately prior to the sale, as if
the Purchased Assets had not been sold and remained in the possession or control of the person
having that possession or control immediately prior to the sale, except that the Administration
Charge and D&O Charge shall not attach to the Remaining Sale Proceeds.
12. THIS COURT ORDERS that the Monitor is hereby authorized and empowered, without
further order of the Court, to distribute the Remaining Sale Proceeds on account of certain
-7-
indebtedness, liabilities and obligations owing by the Applicants for the Priority Claims (as
defined in the APA).
13. THIS COURT ORDERS AND DIRECTS that the DIP Charge (as defined in the Initial
Order) is hereby fully and finally discharged.
14. THIS COURT ORDERS that the Monitor may rely on written notice from the Vendors
and the Purchasers regarding fulfillment of conditions to closing under the APA and shall incur
no liability with respect to the delivery of the Monitor's Certificate based on such reliance.
15. THIS COURT ORDERS AND I CTS the Monitor to file with the Court a copy of
the Monitor's Certificate, forthwith after delivery thereof.
16. THIS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal
Information Protection and Electronic Documents Act, the Applicants are authorized and
permitted to disclose and transfer to the Purchasers all human resources and payroll information
in the Applicants' records pertaining to the Applicants' past and current employees. The
Purchasers shall maintain and protect the privacy of such information and shall be entitled to use
the personal information provided to it in a manner which is in all material respects identical to
the prior use of such information by the Applicants.
17. THIS COURT ORDERS that, notwithstanding:
(a) the pendency of these proceedings;
(b) any applications for a bankruptcy order now or hereafter issued pursuant to the
Bankruptcy and Insolvency Act (Canada) in respect of any of the Applicants and
any bankruptcy order issued pursuant to any such applications; and
(c) any assignment in bankruptcy made in respect of any of the Applicants,
the APA, the Transaction and the vesting of the Purchased Assets in the Purchasers pursuant to
this Order shall be binding on any trustee in bankruptcy that may be appointed in respect of any
of the Applicants and shall not be void or voidable by creditors of the Applicants, nor shall it
constitute nor be deemed to be a fraudulent preference, assignment, fraudulent conveyance,
transfer at undervalue or other reviewable transaction under the Bankruptcy and Insolvency Act
(Canada) or any other applicable federal, state or provincial legislation, nor shall it constitute
oppressive or unfairly prejudicial conduct pursuant to any applicable federal, state or provincial
legislation.
18. THIS COURT ORDERS AND DECLARES that the Transaction is exempt from the
application of the Bulk Sales Act (Ontario) and any other equivalent federal, state or provincial
legislation.
19. THIS COURT ORDERS that the Applicants are authorized, following the completion
of the Transaction, to execute, deliver and file any document, including, without limitation, any
articles of reorganization, required in order to effect a change of the corporate name of each of
the Applicants, and this Court waives any third party requirement or required consent pursuant to
any Canadian federal or provincial legislation relating to same.
S
20. 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 Applicants, the Monitor and their respective 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
Applicants and to the Monitor, as an officer of this Court, as may be necessary or desirable to
give effect to this Order or to assist the Applicants, the Monitor and their respective agents in
carrying out the terms of this Order.
21. THIS COURT R E S that each of the Applicants and the Monitor 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 Monitor 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.
Schedule "A" Form of Monitor's Certificate
Court File No. CV-13-10009-OOCL
s _! _ ONTARIO
• ,.
1I!. I ,,
A. Pursuant to an Order of the Honourable Mr. Justice Wilton-Siegel of the Ontario Superior
Court of Justice (Commercial List) (the "Court") dated February 22, 2013 (the "Initial Order"),
The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
(collectively, the "Applicants") were declared companies to which the Companies' Creditors
Arrangement Act applied and BDO Canada Limited ("BDO") was appointed as the Court-
appointed Monitor of the Applicants (in such capacity, the "Monitor").
B. Pursuant to an Order of the Court dated May 13, 2014 (the "Approval and Vesting
Order"), the Court approved the asset purchase agreement among The John Forsyth Shirt
Company Ltd. and Forsyth of Canada, Inc. (collectively, the "Vendors"), as vendors, and
2414395 Ontario Inc. (the "Canadian Purchaser") and Forsyth U.S. Acquisition Company Inc.
(the "US Purchaser" and, together with the Canadian Purchaser, the "Purchasers"), as
purchasers, dated May 5, 2014 (the "APA"), and provided for the vesting in the Purchasers of
the Vendors' right, title and interest in and to the Purchased Assets, which vesting is to be
effective with respect to the Purchased Assets upon the delivery by the Monitor to the Purchasers
of a certificate confirming: (i) the Purchasers have satisfied the Purchase Price for the Purchased
Assets pursuant to the APA; (ii) the conditions to Closing as set out in the APA have been
satisfied or waived by the Vendors and the Purchasers; and (iii) the Transaction has been
completed to the satisfaction of the Monitor.
C. Unless otherwise indicated herein, capitalized terms shall have the meanings ascribed to
them in the APA.
THE MONITOR CERTIFIES the following:
1. the Purchasers have satisfied the Purchase Price for the Purchased Assets pursuant to the
AA
2. the conditions to Closing as set out in the APA have been satisfied or waived by the
Vendors and the Purchasers;
3. the Transaction has been completed to the satisfaction of the Monitor; and
4. this Certificate was delivered by the Monitor at on , 2014.
BDO CANADA LIMITED, in its capacity as the Court-appointed Monitor of The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc., and not in its personal capacity
Per: Name: Blair Davidson Title: President
Schedule "B" Purchased Assets
All that tract or parcel of land, situate lying and being in Land Lot 41 of the Eleventh (11th) Land District of Crisp County, Georgia, containing 7.5 acres, more or less, as shown on plat of survey made by Earl D. Raines, Surveyor, dated July 16, 1968 and further described as follows: Beginning at the point of intersection of the south right-of-way line of 13th Avenue with the east right-of-way line of Harris Street, proceed thence South 85 degrees 25 minutes East for a distance of 651.37 feet to a point which is on the west right-of-way line of any easement for a street; thence proceed South 00 degrees 46 minutes West for a distance of 445.6 feet; thence proceed North 88 degrees 55 minutes West for a distance of 650 feet; thence proceed North 00 degrees 46 minutes East for a distance of 488 feet to the point of beginning of the tract herein described together with all and singular the rights, members and appurtenances thereof.
Schedule "C" Claims to be deleted and expunged from title to Real Property
(1) Deed To Secure Debt, Security Agreement and Assignment OF Leases and Rents from Forsyth of Canada, Inc. to Hilco Capital LP, dated May 12, 2003, filed and recorded at Deed Book 563, Page 153, Crisp County, Georgia records; as affected by Lien Subordination Agreement from Forsyth of Canada, Inc. to Hilco Capital, LP, filed April 6, 2007, filed and recorded at Deed Book 750, Page 40, aforesaid records; and re-recorded at Deed Book 787, Page 43, aforesaid records.
(2) UCC Financing Statement between Forsyth of Canada, Inc. (Debtor) and Hilco Capital LP (Secured Party), filed May 12, 2003, and recorded at Deed Book 563, Page 188, Crisp County, Georgia records.
(3) 1988 City of Cordele Taxes in the name of Clinton Marine Products, Inc., FiFa No. 0047760, entered on GED Tax Document 1-1 Addendum, Clerk's Office, Crisp Superior Court.
1
(1) Deed To Secure Debt, Security Agreement and Assignment OF Leases and Rents from Forsyth of Canada, Inc. to Congress Financing Corporation (Canada), dated May 12, 2003, filed and recorded at Deed Book 563, Page 119, Crisp County, Georgia records; as affected by Lien Subordination Agreement by and among Wells Fargo Capital Finance Corporation Canada, successor in interest by merger to Wachovia Capital Finance Corporation (Canada), successor in interest by merger to Congress Financial Corporation (Canada) (Subordinating Creditor), by Forsyth of Canada, Inc. (Debtor) and Wells Fargo Bank, National Association, successor in interest by merger to Wachovia Bank, National Association, filed April 24, 2013 at Deed Book 936, Page 106, aforesaid records.
(2) Deed to Secure Debt and Assignment of Rents between from Forsyth of Canada, Inc. and Wachovia Bank, National Association dated March 23, 2007, filed April 6, 2007 and recorded at Deed Book 750, Page 42, aforesaid records; as affected by Lien Subordination Agreement by and among Wells Fargo Capital Finance Corporation Canada, successor in interest by merger to Wachovia Capital Finance Corporation (Canada), successor in interest by merger to Congress Financial Corporation (Canada) (Subordinating Creditor), by Forsyth of Canada, Inc. (Debtor) and Wells Fargo Bank, National Association, successor in interest by merger to Wachovia Bank, National Association, filed April 24, 2013 at Deed Book 936, Page 106, aforesaid records.
(3) UCC Financing Statement between Forsyth of Canada, Inc. (Debtor) and Wachovia Bank, National Association (Secured Party), filed April 6, 2007, and recorded at Deed Book 750, Page 51, Crisp County, Georgia records; as affected by UCC Financing Statement Amendment by Wachovia Bank, National Association (Secured Party), filed and recorded October 1, 2010, filed and recorded at Deed Book 863, Page 89, aforesaid records; as affected by UCC Financing Statement Amendment (Continuation), filed and recorded February 10, 2012 at Deed Book 898, Page 92, aforesaid records.
(4) Eighty (80) foot right of way for Harris Street given to Crisp County by document of record recorded in Deed Book 63, Page 522, Crisp County, Georgia records.
I ••.
Court File No. CV-13-10009-OOCL
," I• I •
Proceedings commenced at Toronto
AIRD & BERLIS LLP Barristers and Solicitors
Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862FIB) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglish(a airdberlis.com
Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversaa)airdberlis.com
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
17904961.4
mIt t
Court File No. C- 13-1 0009-OOCL
IH J i f1U[SJ
re THE — ----' ) THE _ ) |)/\Y-
) '
JUSTICE
Ii! 1IP
Pebte~ IhJohn Forsyth Shirt Company Ltd.. Forsyth Holdings. Inc. and Forsyth of Canada,
-2-
Inc. (collectively. the "Ai niieants"1 for an order . inter ilia, approving the sale transaction (the
~ ralYSaetl® nrr n n
Pur, haserthe-Pets") contemplated by the asset purchase agreement among The John Forsyth
Shirt ompanv Ltd. and Forsyth f Canada Inc (collectively, "Vendors"). as vendors. and
2414395 Ontario Inc (the "Canadian Purchaser") and Forsyth U.S. Acquisition Company Inc
(the "US Purchaser" and together with the Canadian Purchaser. the "Purchasers"1 as
purchasers dated May 5 2014 (the "APA" . a copy of which is appended, in redacted form, to
the Fifth Report of BDO Canada Limited .Jn i: . j c monitor of the
Applicants (in such capacity, the "Monitor"). dated May <* >. 2014 (the "Fifthepor filed.
and appended in unredacted form to the Confidential Supplement to the Fifth Report of the
Monitor dated May <*> 2014 (the "Confidential Supplement"1 filed and vesting in the
Purchasers the Vendors' right, title and interest in and to the assets deseribe the
Agree+ -nI44 "''Purchased Assets'-' (as defined in the APA ), was heard this day at 330 University
Avenue, Toronto, Ontario.
ON READING the affidavit of Harris Hester sworn May 5 2014 the Fifth Report and
the ConfidentialSupplemenl and on hearing the submissions of counsel for the Re—c =ter -
fYYV1T~C.7'E "C7T1T~L~ 1 T1-L\~T~b~%-Y- LTTTCLI V'\~"~' counsel for the Monitor counsel for
the Purchasers counsel for Salus Capital Partners LLC and counsel for Manunion Investments
DXSTOR I......120192.7:~.a4
-3-
Limited , no one appearing for any other person on the service list, although properly served as
appears from the affidavit of f 4li Susv Moniz sworn fDATTi ay 6. 2014.. filed_,
the motion record is hereby abridged and validated so that this motion is properly returnable
today and hereby dispenses with further service thereof .
2_ 4-7--THIS COURT ORDERS AND DECLARES that the Transaction is hereby
approved,2 and the execution of the -,W e--~ ^greemen APA by the Reeei-ve Vendors is hereby
authorized and approved, with such minor amendments as the Ree4ver Vendors and the
Purchasers. with the consent of the Monitor may deem necessary. The 14eee4ve4sVendors are
hereby authorized and directed to take such additional steps and execute such additional
documents as may be necessary or desirable for the completion of the Transaction and for the
conveyance of the Purchased Assets to the rrsee Purchasrs .
I 2-T IS COURT ORDERS AND DECLARES that upon the delivery of a
certificate by the Monitor to the 1'uie•hPurchasers substantially in the form attached as
Schedule "A" hereto (the 4 e ' 'Monitor' s Certificate), all of the De Vendors ,
right, title and interest in and to the (i) the Canadian Purchased Assets (as defined in the APAI
shall vest absolutely in the Canadian Purchaser: and (ii l the US Purchased Assets (as defined in
the APA including without limitation the US Purchased Assets described in-thelh- -Agreement--
FHcl~r-sl~c>tttct-tai-;~~r-~ #f~n-~ttl
warr-a31t-a...4i#'#Z,t ~c~aat apt a~UTa lr.-_£ <3aia>-,e-4-s}~ k --ec}n €i --att; c;}-)iaag-r}ae—a-tYicttir ~ EAf se4wioe-tia...fl+i-s'-Or-dt 7.~~u;;~c°-cn-n-"s~?~~ netel~31~-w'r'c°re t'~;r_ -a~rE~r—n3,."~° "~ Ip6H-f• jy~.7•, , +a~~
i -~~-iti:-rrcw--~i'roui- ~ °~-.-elzcr-S ° "~ °'~' "c~~~TCCTrniar~--vvmt -rcn-4n'ricirir~z'n-c • il, ~ .. i.° ... ':l e: . l v t-4..~ !".,.,v-tic
crrcro r~+-rrcvrr~
3 4 set e ees ,the -0c E ~~rwiN ~e t} urt fur ter T z~}c t e k cat tti a i e a ti ~cl} itw€ c # a ~ t]ae. ~=1~c~n ~•;ti~art:--}~-tl~ar~-ease-~~at=~la~~ tatC-1 1~€;-#ak-eat--tm ~-~ra~ larc*-N~t~-t}~-L~r€l~a~trt~~ t-t zcs-e~#~r-ta>*l~«t k~-~-N~<~--l~~tsa~
aril-t4~e-I~~c-~i~ c-r-#~--~~eaat€~-aatc~-cl~livkar el~sc ,-at~c#-tai~~r-std:
Ix)E STo1R:......1204 zT44
L 'zc4i ,te-d on Schedule "B" heretof 4 (the "Real Prolrtv~11 shall vest absolutely in the US
Purchaser, iin each case free and clear of and from any and all security interests (whether
contractual, statutory, or otherwise), hypothecs, mortgages, trusts or deemed trusts (whether
contractual, statutory, or otherwise), liens, executions, levies, charges, or other financial or
monetary claims, whether or not they have attached or been perfected, registered or filed and
whether secured, unsecured or otherwise (collectively, the ""Claims'"_'). including, without
limiting the generality of the foregoing: (i) any encumbrances or charges created by the InitiaL
Order of the Honourable Justice fNAME jflon- S1egg dated fl Tf February 22. 2013. (the
"Initial Order") ; (ii) all charges, security interests or claims evidenced by registrations pursuant
to the Personal Property Security Act (Ontario) the Uniform Commercial Code as adopted in
any state in the United States. or any other personal property registry system; and (iii) those
Claims listed on Schedule "C" hereto (all of which are collectively referred to as the
"Encumbrances2 which term shall not include the permitted liens encumbrances, easements
and restrictive covenants listed on Schedule "D) and, for greater certainty, this Court orders
that all of the Encumbrances affecting or relating to the Purchased Assets are hereby expunged
and discharged as against the Purchased Assets.
2 -THIS COURT ORDERS € that ~ ~ etl--legist~y- , ---f&r-l€-
~31-~4:'"'zrrnc°--crTm~-na-i-ur"'i; c-c'ria;sc"~. ~s<°-c~c,~.ip"'l'-`u-r"nr",-cczrrv-cR°.-Sc-irw`crm-cr-vc,.cccnc~
~1~E
.~'s+l~~€a+sa-rrra ~ict's-~~-tlataE ttca~Er~i~rla~ :
I DU(STO R: 2O•r s.27\1.4
-5-
upon the delivery of the Monitor's
Certificate to the Purchasers, if any person or entity that has filed financing statements,
mortgages, i s vendens or other documents, instruments, notices or agreements evidencing any
Encumbrances against or in the Real Property has not delivered to the Vendors. in proper form
for filing and executed by the appropriate parties. termination statements, releases or instruments
MUM
the Real Property: (a) the Vendors and/or the US Purchaser are authorized to execute and file
such termination statements, releases, instruments of satisfaction or other documents on behalf of
UFATM
Purchaser are authorized to file. register or otherwise record a certified copy of this Order which.
once filed, registered or otherwise recorded, shall constitute conclusive evidence of the release of
sufficient to be placed in the filing or recording system of each and every federal, state, local.
tribal or foreign government agency, department or office
office or contract, to accept, file, register or otherwise record or release any documents or
P€)€ST•QR. 42-04P2711-14
instruments or who may be required to report or insure any title in or to the Real Propev, is
appropriate to consummate the Transaction and this Order. All such entities described above in
this paragraph are authorized and specifically directed to strike all recorded Encumbrances
i:. i1Iiu s1tiu wuJ fi Wo- Ell
maintain the following reserves as cash collateral from the proceeds from the sale of the
the sum of177424.00 or such other amount as may be reouired pursuant to the
Charge as defined in the Initial Order) shall attach with the priority provided by
the sum of $50,000-00 (the "D&O Charge Reserve" and together with the
Administration Charge Reserve. the "Reserves" to which the D&O charge As
defined in theInitial Order) shall attach with the priority provided by the Initial
Order.
FL tii1IiiUItIiiP]
further order of the Court. to make distributions from the Administration Charge Reserve to the
I ATfl U sth sit a itfli
~~Im~wmmvlww- Lino
in connection with these proceedings, free and clear of all Encumbrances other than those in
DOCS1OR: 1204927A4
- 7-
favour of such beneficiary, to be applied against the indebtedness, liabilities and obligations
owing by the Applicants to such beneficiary.
8. THIS—CO -URT ORDERS that once the Monitor determines that all claims to the
payments have been made, or a further Order of the Court so holds. the Administration Charge
In - WINEW 40
without further Order of the Court, to distribute all amounts remaining in the Administration
Charge Reserve to the Purchasers, free and clear of all Encumbrances.
9. THIS COURT ORDERS that the Monitor is hereby authorized and empowered. without
further order of the Court, to make distributions from the D&O Charge Reserve to the
ft In
the Monitor determines are valid claims for indebtedness, liabilities or obligations owing by the
Applicants to such beneficiary pursuant to the indemnity provided in paragraph 20 of the Initial
Order, free and clear of all Encumbrances other than those in favour of such beneficiary, to be
beneficiary.
:10 THIS COURT ORDERS that upon the earlier of: (A) the date on which the Monitor
determines that all claims to the D&O Charge Reserve have been fully and finally determined
and all applicable payments have been made, or a further Order of the Court so holds: and (B) six
months from the date of the Monitor's Certificate, (i) the D&O Charge shall be fully and finally
discharged. and (ii' the Monitor is hereby authorized and directed, without further Order of the
P)(STOR:• 1201927\14
:
Court, to distribute all amounts remaining in the D&O Charge Reserve to the Purchasers, free
nd clear of all Encumbrances,
11.. 4-;-THIS COURT ORDERS that for the purposes of determining the nature and priority
of Claims, the n -pro-ed from4he—ale--o4T-41e-Threhase4-AssetsSale Proceeds (less the
Reserves) (the "Remainiiw Sale Proceeds" shall stand in the place and stead of the Purchased
Assets, and that from and after the delivery of the 1eee-i-vedMonitor's Certificate all Claims and
Encumbrances shall attach to thene4m-the-s',-the--Pu+&ase4-AsetsRern jail in
Sale Proceeds with the same priority as they had with respect to the Purchased Assets
immediately prior to the sales, as if the Purchased Assets had not been sold and remained in the
possession or control of the person having that possession or control immediately prior to the
sale, except that the Administration Charge and D&O Charge shall not attach to the Remaining
I2. THIS COURT ORDERS that the Monitor is hereby authorized and empowered, without
indebtedness, liabilities and obligations owing by the Applicants for the Priority Claims (as
IL I 1I11L.Iii!I I 1 [iJ!.T1'JID.
Order is hereby fully and finally discharged.
3'sa4i ~1ept
1)X;.J OF 92....14
-9-
14. T IS COURT ORDERS that the Monitor may rely on written notice from the Vendome
and the Purchasers re ar ing fulfillment of conditions to closing under the APA and shall incur
naiiabilitv with respect to t delivery of the Monitor's Certificate based on such reliance
15 THIS COURT ORDERS AND DIRECTS the Ree erMcrnjtor to file with the Court
a copy of the -ever i is Certificate, forthwith after delivery thereof.
1_6.. 6-T IS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal
Information Protection and Electronic Documents Act, the R ci Aplicants are authorized
and permitted to disclose and transfer to the P easerBiirchasers all human resources and payroll
information in the t:ny A licants' records pertaining to the Dex'sApplicants' past and
current employees-idin st;1-i _ €
the-Sa4Te- g --he--Prehaser. The Purchasers shall maintain and protect the privacy of
such information and shall be entitled to use the personal information provided to it in a manner
which is in all material respects identical to the prior use of such information by the
DrApplicants .
L7- 7-THIS COURT ORDERS that, notwithstanding:
(a) the pendency of these proceedings;
(b) any applications for a bankruptcy order now or hereafter issued pursuant to the
Bankruptcy and Insolvency Act (Canada) in respect of any of the
De Applicants and any bankruptcy order issued pursuant to any such
applications; and
(c) any assignment in bankruptcy made in respect of ~f the . i a
DOL STOR..:.....•1•21)19.277\,1.4
the APA. the Transaction and the vesting of the Purchased Assets in the PafehaserPurchasers
pursuant to this Order shall be binding on any trustee in bankruptcy that may be appointed in
respect of the _ lA _ icants and shall not be void or voidable by creditors of the
l e btcar c_anis , nor shall it constitute nor be deemed to be a fraudulent preference,
assignment, fraudulent conveyance, transfer at undervalue, or other reviewable transaction under
the Bankruptcy and Insolvency Act (Canada) or any other applicable federalt or provincial
legislation, nor shall it constitute oppressive or unfairly prejudicial conduct pursuant to any
applicable federal or provincial legislation.
18. - -.-THIS COURT ORDERS AND ECL,ARES that the Transaction is exempt from the
application of the Bulk Sales Act (Ontario) nd any other equivalent federal, state or provincial
legislation.
19.; THIS COURT ORDERS that the Applicants are authorized, following the completion
of the Transaction, to execute. deliver and file any document. including, without limitation, any
articles of reorganization required in order to effect a change of the corporate name of each of
th Applcnts, and this Court waives any third party re uirement or required consent pursuant to
any Canadian federal or provincial legislation relating to same .
2Q~ 9--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 -1 e -i -an4-itsApplicants. the Monitor and their respective
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 Re-eeberApp1icants and to the Monitor , as an officer of this Court, as may be necessary or
DO(',&:T.OR {_2O. ~...92.7:.,.{.4
-ll __
desirable to give effect to this Order or to assist the
their resnective agents in carrying out the terms of this Order.
2L THIS COURT ORDERS that each of the Applicants and the Monitor be at liberty and is
body. wherever located, for the recognition of this Order and for assistance in carrying out the
terms of this Order. and that the Monitor is authorized and empowered to act as a representative
in respect of the within proceedings for the puose of having these proceedings recognized in a
jurisdiction outside Canada.
Schedule A—
.F'.. T1 . 4-4 - roful of iteeiwiviOIiuOz s Certificate
Court File No. CV13-100O9-00CL
ONTARIO in au I[S1
• u : uMATTER OF TH 4NIES ' CREDITORS ARRA m v II1J
iIh1 Ji u :1 au ri I ID! tIJ J WILIJ EIA I (iWAITJIS) ri i DkU Dihi • al I .ii 1 U.i&h74irI .1111W! I] I1.1I..k7I k.iJIII pI I[J.
U • [W i[•]Uh1 II D1I II IAMENDED
Rt!flMIX IIi]4k'iSi DI II [WiIU
Pursuant to an Order of the Honourable f A4Vt&O-l-U4XiE4Mr. Justice
Wilton-Siegel of the Ontario Superior Court of Justice (Commercial ListUthe Court-date4-
&fe--4ertal-•pe-€m4-a&st-øf-B4-OR-: H-" dated February 22. 2013 the "Initial
Order". The John Forsyth Shirt Company Ltd., Forsyth Holdings. Inc. and Forsyth of Canada.
p(.çI.R ,,1,2.0IO2..7.\14
Inc.(collectively, the "Applicants") were declared companies to which_ the Companies
court-appointed Monitor of the Applicants (in such capacity. the " _ ").
B. B: Pursuant to an Order of the Court dated {T€4Mav 13.2014 ( the "Approval
and Vesting Order" , the Court approved the asset purchase agreement of l n =
s--of [ g ^ri a Tr r A~ry M~ ~ ~cen csze n1elt0~~n—te ce ,~9, b- fTl ~~
The John Forsyth Shirt Com any Ltd.
and Forsyth of Canada. Inc (collectively, the "Vendors") as vendors and 2414395 Ontario Inc
(the "Canadian Purchaser") and Forsyth U.S. Acquisition Company Inc the "US Purchaser"
and, together with the Canadian Purchaser. the "Purchasers"), as purchasers dated May 5 2014
(the "APA"). and provided for the vesting in the P+w aserPurchasrs of the -1 -s i r '
right, title and interest in and to the Purchased Assets, which vesting is to be effective with
respect to the Purchased Assets upon the delivery by the Reeei=o r-Monitor to the
P+reh-ase-rPurchasers of a certificate confirming . (i) the he Prr e Purchasers
have satisfied the Purchase Price for the Purchased Assets pursuant to the APA ; (ii) that-the
conditions to Closing as set out in s ti the &Me Ag er e-ntAPA have been satisfied or
waived by the Reeai-ver Vendor and theP we h—asurPurchasers ; and (iii) the Transaction has been
completed to the satisfaction of the Iir Monitor .
C. C. Unless otherwise indicated herein, capitali c. terms wi• i ia1-apital-sshall have
the meanings a cribed to them in the Sa''e `gee„,e-nAA .
>O{_;,`TOR..;_.12f)1.9 .7t.}.4
THE M €-14 14MONIIQR CERTIFIES the following:
__Purchasers e-r ` _Purchasers have satisfied
the Purchase Price for the Purchased Assets t a3 -e z -he C?.es r te* pursuant to the me
g€i 1A
2 2 Theih conditions to Closing as set out in s4n-- the 1k tAPA
have been satisfied or waived by the Reeei and the ., aud Purchasers:
Theth Transaction has been completed to the satisfaction of the
R e-e-ir.Mn i r° and
_ ;,. ~r 4. 4: Thi-stl Certificate was delivered ~~e c- by the ~- mt r at
on fA 1 2014.
M
I D)GST()R:1-201 99 744
M'
Court File No. CV-13-10009-0OCL
11T I
r t1 ' ,
THE HONOURABLE ) TUESDAY, THE 13TH DAY
JUSTICE ) OF MAY, 2014
•
flT! I 1 ~ . 1 . 1 •,,
THIS MOTION, made by The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc.
and Forsyth of Canada, Inc. (collectively, the "Applicants") for an order, among other things:
(a) approving the Fifth Report of BDO Canada Limited ("BDO") , in its capacity as
the Court-appointed monitor (in such capacity, the "Monitor") of the Applicants,
dated May <*>, 2014 (the "Fifth Report") and the Confidential Supplement to
the Fifth Report of the Monitor dated May <*>, 2014 (the "Confidential
Supplement"), and the actions of the Monitor described therein;
(b) sealing the Confidential Supplement until further order of this Court;
(c) approving the fees and disbursements of the Monitor and its counsel, including an
accrual for fees and disbursements to be incurred to the completion of these
proceedings (the "CCAA Proceedings");
-2-
(d) discharging BDO as Monitor and releasing BDO from any and all liability that
BDO has or may hereafter have by reason of, or in any way arising out of, the acts
or omissions of BDO while acting in its capacity as Monitor, upon the filing of
the Monitor's Discharge Certificate (as defined herein) with this Court; and
(e) terminating the CCAA Proceedings, upon the filing of the Monitor's Discharge
Certificate with this Court,
was heard this day at 330 University Avenue, Toronto, Ontario.
ON READING the Fifth Report, the Confidential Supplement, the affidavit of Harris
Hester sworn May 5, 2014, the affidavit of Blair Davidson sworn May <*>, 2014, and the
affidavit of Bruce Darlington sworn May <*>, 2014, and on hearing the submissions of counsel
for the Applicants, counsel for the Monitor, counsel for Salus Capital Partners, LLC and counsel
for Manunion Investments Limited, 2414395 Ontario Inc. and Forsyth U.S. Acquisition
Company Inc., no one appearing for any other person on the service list, although properly
served as appears from the affidavit of Susy Moniz sworn May 6, 2014, filed,
1. THIS COURT ORDERS that the time for service and filing of the notice of motion and
the motion record is hereby abridged and validated so that this motion is properly returnable
today and hereby dispenses with further service thereof.
2. THIS COURT ORDERS that the Fifth Report and the Confidential Supplement be and
are hereby approved and the actions of the Monitor described therein be and are hereby
approved.
-3-
3. THIS COURT ORDERS that, subject to further order of this Court, the Confidential
Supplement shall be sealed, kept confidential and not form part of the public record, but, rather,
shall be placed, separate and apart from all other contents of the Court file, in a sealed envelope
attached to a notice that sets out the title of these proceedings and a statement that the contents
are subject to a sealing order and shall only be opened upon further order of this Court.
4. THIS COURT O ERS that, upon the filing by the Monitor of a certificate with this
Court substantially in the form attached as Schedule "A" hereto (the "Monitor's Discharge
Certificate ") certifying that all matters to be attended to in connection with the CCAA
Proceedings have been completed to the satisfaction of the Monitor:
(a) BDO be and is hereby discharged and relieved from any further obligations,
liabilities, responsibilities or duties in its capacity as Monitor pursuant to the
Order of the Honourable Mr. Justice Wilton-Siegel granted on February 22, 2013
in the CCAA Proceedings (the "Initial Order"), any other Order of this Court in
the CCAA Proceedings, the Companies' Creditors Arrangement Act, R.S.C.
1985, c. C-36, as amended (the "CCAA") or otherwise, provided, however, that
notwithstanding its discharge herein, the Monitor shall remain Monitor for the
performance of such incidental duties as may be required to complete the
administration of the CCAA Proceedings; and
(b) the CCAA Proceedings be and are hereby terminated.
5. THIS COURT ORDERS that, in addition to the protections in favour of the Monitor as
set out in the Initial Order, any other Order of this Court or reasons provided by this Court in the
CCAA Proceedings or the CCAA, the Monitor shall not be liable for any act or omission on the
-4-
part of the Monitor, including with respect to any reliance thereof, including, without limitation,
with respect to any information disclosed, any act or omission pertaining to the discharge of the
Monitor's duties in the CCAA Proceedings or with respect to any other duties or obligations of
the Monitor under the CCAA or otherwise, save and except for any claim or liability arising out
of any gross negligence or wilful misconduct on the part of the Monitor. Subject to the
foregoing and in addition to the protections of the Monitor as set out in the Orders of this Court
or any reasons provided by this Court in the CCAA Proceedings, any claims against the Monitor
in connection with the performance of its duties as Monitor are hereby released, stayed,
extinguished and forever barred and the Monitor shall have no liability in respect thereof.
6. THIS COURT ORDERS that no action or other proceeding shall be commenced against
the Monitor in any way arising from or related to its capacity or conduct as Monitor except with
prior leave of this Court and on prior written notice to the Monitor and such further order
securing, as security for costs, the full indemnity costs of the Monitor in connection with any
proposed action or proceeding as the Court hearing the motion for leave to proceed may deem
just and appropriate.
7. THIS COURT ORDERS that, notwithstanding any provision of this Order, nothing
contained in this Order shall affect, vary, derogate from or amend any of the rights, approvals
and protections in favour of the Monitor pursuant to the Initial Order, any other Order of this
Court or reasons provided by this Court in the CCAA Proceedings, the CCAA or otherwise, all
of which are expressly continued and confirmed.
8. THIS COURT ORDERS that the fees and disbursements of the Monitor for the period
of <*> to and including <*>, in the amount of $<*>, inclusive of applicable HST, be and are
hereby approved.
-5-
9. THIS COURT ORDERS that the fees and disbursements of the Monitor's legal counsel,
Davis LLP, for the period of <*> to and including <*>, in the amount of $<*>, inclusive of
applicable HST, be and are hereby approved.
10. THIS COURT ORDERS that the Fee Accrual (as defined in the Fifth Report) be and is
hereby approved.
11. 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 Applicants, the Monitor and their respective 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
Applicants and to the Monitor, as an officer of this Court, as may be necessary or desirable to
give effect to this Order or to assist the Applicants, the Monitor and their respective agents in
carrying out the terms of this Order.
12. THIS COURT ORDERS that each of the Applicants and the Monitor 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 Monitor 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.
SCHEDULE "A" FORM OF MONITOR'S DISCHARGE CERTIFICATE
Court File No. CV-13-10009-OOCL
I' 4 ' JS
1
• 1 , ,
IJ!.1 I
1 1 .V31
I. D• Iw
A. Pursuant to an Order of the Honourable Mr. Justice Wilton-Siegel of the Ontario Superior
Court of Justice (Commercial List) (the "Court") dated February 22, 2013, The John
Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
(collectively, the "Applicants") were declared companies to which the Companies'
Creditors Arrangement Act applied and BDO Canada Limited ("BDO") was appointed as
the Court-appointed Monitor of the Applicants (in such capacity, the "Monitor")
B. Pursuant to an Order of this Court dated May 13, 2014 (the "Discharge Order"), BDO
was discharged as Monitor of the Applicants to be effective upon the filing by the
Monitor of a certificate with this Court certifying that all matters to be attended to in
connection with the CCAA Proceedings have been completed to the satisfaction of the
Monitor, provided, however, that (i) notwithstanding its discharge, the Monitor shall
remain Monitor for the performance of such incidental duties as may be required to
complete the administration of the CCAA Proceedings; and (ii) the Monitor will continue
to have the benefit of the provisions of all Orders made in these proceedings, including
all approvals, protections and stays of proceeding in favour of BDO, in its capacity as
Monitor.
C. Unless otherwise indicated herein, capitalized terms have the meanings set out in the
Discharge Order.
THE MONITOR CERTIFIES that all matters to be attended to in connection with the
CCAA Proceedings have been completed to the satisfaction of the Monitor.
DATED at Toronto, Ontario, this day of , 2014
BDO CANADA LIMITED, in its capacity as the Court-appointed Monitor of The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc., and not in its personal capacity
C Name: Blair Davidson Title: President
1 1,
1,,, . Ii 1 1 ~ •1 • 1•.
Court File No. CV-13-10009-000L
/
1 '
Proceedings commenced at Toronto
I1 1:1
AIRD & BERLIS LLP Barristers and Solicitors
Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglish;a)airdberlis.com
Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversa!dairdberlis.com
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
17761257.3
1
Court File No. CV-13-10009-OOCL
ONTARIO j SUPERIOR 4
1N [f
I I• N H DU ri I U ai Ui
ANDfl!.i MATTER
and FORSYTH OF CANADA, INC.
APPLICATION UNDER
AFFIDAVIT OF HARRIS R. HESTER (sworn May 5, 2014)
I, Harris R. Hester, of the Town of Darien, in the State of Connecticut, MAKE OATH
FRO1IL'WDIb'IX11JR111M
1. I am the President and a director of each of The John Forsyth Shirt Company Ltd.
("Forsyth Canada"), Forsyth Holdings, Inc. ("Forsyth Holdings") and Forsyth of Canada, Inc.
("Forsyth USA" and, together with Forsyth Canada and Forsyth Holdings, the "Applicants").
As such, I have personal knowledge of the matters to which I hereinafter depose in this Affidavit.
Where I do not have personal knowledge of the matters set out herein, I have stated the source of
my information and, in all such cases, believe it to be true.
I I.0 1 I] [SI N (I]WI 1 1 aIUTM i'iiiii,i : NI
2. This Affidavit is sworn in support of a motion by the Applicants under the Companies'
Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"), for an order,
among other things:
(a) if necessary, abridging the time for service and filing of this notice of motion and
the motion record or, in the alternative, dispensing with same;
Affidavit of Harris R. Hester Page 2
(b) approving the asset purchase agreement among The John Forsyth Shirt Company
Ltd. and Forsyth of Canada, Inc. (collectively, the "Vendors "), as vendors, and
2414395 Ontario Inc. (the "Canadian Purchaser ") and Forsyth U.S. Acquisition
Company Inc. (the "US Purchaser" and, together with the Canadian Purchaser,
the "Purchasers"), as purchasers, dated May 5, 2014 (the "APA"), and vesting
the Vendors' right, title and interest in and to the Purchased Assets (as defined in
the APA) in the Purchasers, upon the filing by BDO Canada Limited ("BDO"), in
its capacity as the Court-appointed monitor of the Applicants (in such capacity,
the "Monitor"), of a certificate with this Court (the "Monitor's Certificate ")
certifying, among other things, that the transaction contemplated by the APA (the
"Transaction") has been completed to the satisfaction of the Monitor (as defined
below);
(c) authorizing and directing the Monitor to establish, hold and maintain certain
reserves (the "Reserves") as cash collateral from the proceeds from the sale of the
Purchased Assets to satisfy claims secured by the Administration Charge and the
D&O Charge (as such terms are defined in the Initial Order granted by the
Honourable Justice Wilton-Siegel on February 22, 2013 in these proceedings (the
"Initial Order")) ;
(d) authorizing and empowering the Monitor to make distributions from the Reserves
to the beneficiaries of the Administration Charge and the D&O Charge;
(e) discharging the Administration Charge once the Monitor determines that all
claims secured by such charge have been fully and finally determined and all
applicable payments have been made;
(f) discharging the D&O Charge upon the earlier of: (A) the date on which the
Monitor determines that all claims secured by such charge have been fully and
finally determined and all applicable payments have been made; and (B) six
months from the date of the Monitor's Certificate;
(g) discharging the DIP Charge (as defined in the Initial Order);
Affidavit of Harris R. Hester Page 3
(h) following the completion of the Transaction, authorizing the Applicants to
execute, deliver and file any document, including, without limitation, any articles
of reorganization, required in order to effect a change of the corporate name of
each of the Applicants;
(i) approving the Fifth Report of the Monitor (the "Fifth Report"), and the
Confidential Supplement to the Fifth Report of the Monitor (the "Confidential
Supplement"), and approving the actions of the Monitor described therein;
(j) sealing the Confidential Supplement to the Fifth Report until further order of this
Court;
(k) approving the fees and disbursements of the Monitor and its counsel, including an
accrual for fees and disbursements to be incurred to the completion of these
proceedings (the "CCAA Proceedings ");
(1) discharging BDO as Monitor and releasing BDO from any and all liability that
BDO has or may hereafter have by reason of, or in any way arising out of, the acts
or omissions of BDO while acting in its capacity as Monitor, upon the filing by
the Monitor of a certificate (the "Monitor's Discharge Certificate ") with this
Court certifying that all matters to be attended to in connection with the CCAA
Proceedings have been completed to the satisfaction of the Monitor; and
(m) terminating the CCAA Proceedings, upon the filing of the Monitor's Discharge
Certificate with this Court.
I I.. : t IttI111U11
3. The Applicants are collectively in the business of manufacturing, distributing and selling
apparel in both Canada and the United States of America. Through their collective distribution
channels, the Applicants sell apparel in various retail stores, through catalogues and through the
Internet. Additionally, the Applicants sell uniform apparel to certain large organizations in
North America.
Affidavit of Harris R. Hester Page 4
4. On February 22, 2013, this Court issued the Initial Order granting the Applicants
protection from their creditors under the CCAA in the CCAA Proceedings. A copy of the Initial
Order is attached as Exhibit "A" to this Affidavit.
5. Pursuant to the Initial Order, the Applicants obtained debtor-in-possession financing
under the terms of the DIP Commitment Letter dated February 20, 2013 among Wells Fargo
Capital Finance Corporation Canada and Wells Fargo Capital Finance, LLC (together, "Wells
Fargo") and the Applicants (the "DIP Commitment Letter").
6. I swore an affidavit on February 20, 2013 (the "February 20 Affidavit ") in support of
the Initial Order. The February 20 Affidavit sets out the background of the CCAA Proceedings,
including the collective business of the Applicants and their financial difficulties and an
overview of the Applicants' major stakeholders. A copy of the February 20 Affidavit (without
exhibits) is attached as Exhibit "B" to this Affidavit.
7. On March 18, 2013, orders (the "US Recognition Orders ") were entered by the United
States Bankruptcy Court for the Southern District of New York (the "US Court") in Case No.
13-10526 (the "US Recognition Proceedings "), among other things, recognizing the Initial
Order and these CCAA Proceedings as foreign main proceedings. Copies of the US Recognition
Orders are collectively attached as Exhibit "C" to this Affidavit.
8. On March 21, 2013, upon a motion by the Applicants, this Court granted an order (the
"March 21 Order"), among other things: (i) extending the Stay Period (as defined in the Initial
Order) to and including May 29, 2013; and (ii) approving the First Report of the Monitor dated
March 18, 2013, and approving the actions of the Monitor described therein. A copy of the
March 21 Order is attached as Exhibit "D" to this Affidavit.
9. On May 27, 2013, upon a motion by the Applicants, this Court granted an order (the
"May 27 Order") extending the Stay Period to and including May 31, 2013. The balance of the
Applicants' relief was adjourned to May 31, 2013. A copy of the May 27 Order is attached as
Exhibit "E" to this Affidavit.
10. On May 31, 2013, this Court granted orders (the "May 31 Orders"), among other things:
(i) extending the Stay Period to and including July 12, 2013; (ii) approving the Second Report of
Affidavit of Harris R. Hester Page 5
the Monitor dated May 17, 2013 and the Supplementary Report of the Second Report dated May
30, 2013, and the actions of the Monitor described therein; (iii) approving a claims process and
bar date for claims of creditors of the Applicants; and (iv) authorizing and establishing the
procedure for the Applicants to call, hold and conduct a meeting of their creditors to consider
and vote on the Consolidated Plan of Compromise and Arrangement of the Applicants dated
May 16, 2013 (as restated, supplemented or amended from time to time, the "Plan"). Copies of
the May 31 Orders are collectively attached as Exhibit "F" to this Affidavit.
11. At the meeting of creditors on June 26, 2013, 95% of the Applicants' creditors holding
98% of the value of votes cast voted in favour of the Plan
12. On July 11, 2013, upon a motion by the Applicants, this Court granted an order (the
"Sanction Order"), among other things: (i) extending the Stay Period to and including
September 30, 2013; (ii) sanctioning and approving the Plan; (iii) approving the Second
Amending Agreement to the DIP Commitment Letter dated July 9, 2013; and (iv) approving the
Third Report of the Monitor dated July 4, 2013 and the Supplement to the Third Report dated
July 9, 2013, and the actions of the Monitor described therein. A copy of the Sanction Order is
attached as Exhibit "G" to this Affidavit.
13. On August 21, 2013, the US Court entered an order, among other things, recognizing and
enforcing the Sanction Order, a copy of which is attached as Exhibit "H" to this Affidavit.
14. On September 26, 2013, upon a motion by the Applicants, this Court granted an order
(the "September 26 Order"), among other things: (i) extending the Stay Period to and including
October 18, 2013; (ii) approving the Fourth Report of the Monitor dated September 24, 2013 and
the Supplementary Report to the Fourth Report dated September 25, 2013, and the actions of the
Monitor described therein; and (iii) approving the Third DIP Extension Agreement to the DIP
Commitment Letter dated September 24, 2013. A copy of the September 26 Order is attached as
Exhibit "I" to this Affidavit.
III. THE REPLACEMENT LENDER
15. Paragraph 7.2(j) of the Plan required the Applicants to establish funding arrangements to
repay the amounts owing to Wells Fargo under the DIP Commitment Letter.
Affidavit of Harris R. Hester Page 6
16. On October 10, 2013, the Vendors entered into a credit agreement (the " Salus Credit
Agreement") with Salus Capital Partners, LLC ( "Salus") which, among other things, provided
the financing required to repay the Applicants' indebtedness to Wells Fargo under the DIP
Commitment Letter.
17. The Applicants' indebtedness to Wells Fargo under the DIP Commitment Letter was
repaid from a portion of the credit facilities provided under the Salus Credit Agreement on
October 10, 2013. Accordingly, there are no longer any amounts secured by the DIP Charge and
the Applicants request that the DIP Charge be discharged.
18. On October 10, 2013, the Monitor filed a certificate with this Court certifying: (i) that the
conditions precedent set out in section 7.2 of the Plan have been satisfied or waived in
accordance with the Plan; and (ii) that the Plan Implementation Date (as defined in the Plan) is
October 11, 2013. A copy of this Monitor's certificate is attached as Exhibit "J" to this
Affidavit.
f► UNall l
19. The Plan was structured such that the Applicants':
(a) unsecured creditors (other than Employee Claimants (as defined in the Plan)) with
Proven Distribution Claims (as defined in the Plan) of $5,000 or less, or those
who elected to reduce their claims to $5,000 or less, would receive a fixed
distribution based on a formula in the Plan in a specific time frame;
(b) unsecured creditors (other than Employee Claimants) with Proven Distribution
Claims exceeding $5,000 but less than $3,000,000 would receive two separate
distributions on or before the Interim Distribution Date and the Second
Distribution Date (each as defined in the Plan), respectively, each equal to 10% of
such creditor's Proven Distribution Claim;
(c) unsecured creditors (other than Employee Claimants) with Proven Distribution
Claims exceeding $3,000,000 would receive a distribution equal to 10% of their
Proven Distribution Claim on the Interim Distribution Date and a promissory note
Affidavit of Harris R. Hester Page 7
issued by the Applicants on the Plan Implementation Date, which provides
payment tranches based on formulae set out in section 4.2(c)(ii) of the Plan;
(d) Employee Claimants with Proven Distribution Claims of $1,000 or less would
receive the amount of their Proven Distribution Claims on the Interim
Distribution Date;
(e) Employee Claimants with Proven Distribution Claims greater than $1,000 but less
than $3,250 would receive $1,000 on the Interim Distribution Date, an additional
payment equal to the lesser of $1,000 or the balance of such Proven Distribution
Claim on or before the Second Distribution Date, and the balance, if any, of such
Proven Distribution Claim on or before January 15, 2016, to a maximum of
$3,250;
(f) Employee Claimants with Proven Distribution Claims greater than $3,250 but less
than or equal to $16,250 would receive payments on each of the Initial
Distribution Date, the Second Distribution Date and January 15, 2016, as
applicable, pursuant to formula set out in section 4.3(c) of the Plan; and
(g) Employee Claimants with Proven Distribution Claims exceeding $16,250 would
receive two payments equal to 10% of such Proven Distribution Claim paid on the
Interim Distribution Date and the Second Distribution Date, respectively.
, I S )JAI N
20. The Stay Period expired on October 18, 2013.
21. In the Fall of 2013, the Applicants' managed their operations with the lending
arrangements provided by Salus. Unfortunately, sales did not meet expectations in the fourth
quarter, which resulted in operating losses and decreased availability. For the year ended
December 31, 2013, sales of approximately $24.5 million and losses of approximately $1.9
million were incurred by the Applicants.
22. In addition, late in 2013, Salus commissioned an inventory appraisal by Gordon Brothers
Group, a copy of which is appended to the Confidential Supplement. This new appraisal
Affidavit of Harris R. Hester Page 8
presented orderly liquidation values for the Applicants' inventory that were significantly lower
than past appraisals, which resulted in a reduction of the Vendors' availability under the Salus
Credit Agreement in January, 2014.
23. The combination of the two factors described above created a situation wherein the
Applicants could not fund the first distribution of $600,000 due on January 15, 2014, as required
under the Plan.
24. The Monitor advised the creditors of this disappointing development in a letter dated
January 14, 2014. A copy of this letter is attached as Exhibit "K" to this Affidavit.
25. During January and early February, 2014, the Applicants made efforts to source
additional or new financing to fund the planned distributions. However, these efforts were
ultimately unsuccessful.
26. On February 4, 2014, the Monitor provided a material adverse change notice (the
"Material Adverse Change Notice ") to the Applicants' creditors indicating that the
distributions owing to creditors pursuant to the Plan would unlikely be made due to insufficient
funds. A copy of the Material Adverse Change Notice is attached as Exhibit "L" to this
Affidavit.
27. To date, neither the Applicants nor the Monitor have made any distributions under the
Plan.
28. Since the date of the Material Adverse Change Notice, the Applicants, with the assistance
of the Monitor, have been seeking entities interested in: (a) refinancing the Applicants' debt; (b)
investing in the Applicants' business; or (c) purchasing the Applicants' assets.
29. Given my knowledge of market competitors and other potential strategic buyers, I led this
informal sale and investment process with the assistance of the Monitor.
30. I approached several parties which I believed would be interested in a potential
investment in or purchase of the Applicants. These efforts led to formal meetings with three
Affidavit of Harris R. Hester Page 9
parties, namely: (i) Tharanco Lifestyles, LLC ( "Tharanco"); (ii) Robert Talbott ( "Talbott"); and
(iii) Weatherproof Garment Co., a division of David Peyser Sportswear, Inc. ("Weatherproof'),
all of whom are in the clothing distribution business.
31. Tharanco, a Massachusetts company that distributes golf-inspired sportswear and
accessories, and Weatherproof, a leading apparel manufacturer located in New York, were
primarily interested in the Applicants' U.S. customers and were not interested in purchasing the
substantial assets located in Canada.
32. Talbott, a high end men's shirt manufacturer and distributor located in California,
expressed a serious interest in the Applicants' business, but its interest was conditional upon:
(a) Salus providing 100% financing for the transaction;
(b) Talbott not assuming any of the Applicants' liabilities; and
(c) Manunion Investments ("Manunion"), Forsyth's largest supplier located in
China, providing extended creditor terms for future inventory purchases.
33. Manunion was Forsyth's largest unsecured trade creditor affected by the CCAA
Proceedings. Manunion is owed approximately US$7 million and represented approximately
70% of the Applicants' unsecured claims at the date of the CCAA filing. During the CCAA
process, Manunion continued its role as the Applicants' largest supplier but on effectively "cash
on delivery" terms.
34. Manunion considered the possibility of acquiring the Applicants' business as it was
effectively being asked to finance another purchaser and risk future non-payment. If Manunion
purchased the Applicants' business, it would ensure an on-going customer for its products and
provide an opportunity to possibly recoup a portion of its past losses out of future profits.
35. Manunion and Oliver Morante, Forsyth's Executive Vice-President, formed an
acquisition vehicle for the purpose of acquiring substantially all of the Applicants' assets.
36. On May 5, 2014, the Vendors and the Purchasers entered into the APA, which remains
subject to, among other things, approval by this Court and recognition by the US Court. A
Affidavit of Harris R. Hester Page 10
redacted copy of the APA is appended to the Fifth Report and an unredacted copy of the APA is
appended to the Confidential Supplement.
37. The primary terms of the APA are summarized in detail in the Fifth Report. The APA
provides that the Applicants are to change their corporate names following closing and the
Applicants request specific authorization from this Court to do so.
38. The consideration provided pursuant to the APA is mainly the assumption of the
Applicants' secured debt, including the secured debt owed to Salus. In addition, as a component
of the purchase price, the Purchasers have agreed to post with the Monitor certain amounts to
fund claims that have priority over such secured debt on the terms reflected in the orders being
sought. Accordingly, it is proposed that the Monitor will hold and maintain an Administration
Charge Reserve and a D&O Charge Reserve on the terms of the orders being sought. I am
advised by counsel that all beneficiaries of the Administration Charge have agreed to the amount
and terms of the proposed Administration Charge Reserve. All beneficiaries of the D&O Charge
(being myself and Oliver Morante) have agreed to the amount and terms of the proposed D&O
Charge Reserve. In the event that there are surplus monies in the proposed Administration
Charge Reserve or D&O Charge Reserve, all parties have agreed that such surplus monies are to
be returned to the Purchasers.
39. The Monitor has reviewed the sales process and recommends that this Court approve the
APA having regard to: (i) the Applicants' current financial position; (ii) the benefits of the
proposed going concern sale, including the continued employment for many of the Applicants'
employees; and (iii) the limited prospects for recovery for the Applicants' unsecured creditors if
the APA is not approved and the Transaction is not completed.
40. I believe that the APA is the only going concern solution available to the Applicants
which would be acceptable to the Applicants' largest stakeholders (Salus and Manunion) and,
accordingly, I believe that the Transaction is in the best interests of the Applicants' and their
stakeholders.
Affidavit of Harris R. Hester Page 11
41. A sealing order is required because the Confidential Suppleme.t contains certain
commercially sensitive information, the release of which could prejudice the stakeholders of the
Applicants, particularly if the Transaction does not close.
42. Assuming the Transaction closes, I believe that the CCAA Proceedings will no longer be
needed and the Monitor can be discharged.
43,. This Affidavit is sworn in support of the relief requested by the Applicants and for no
other or improper purposes.
. ; .
Attached is Exhibit "A"
Referred to in the
Affidavit of Harris R. Hester
Sworn before me
this 5 th day of May, 2414
'ommissioner for taking Affidavits, etc
Court File No, CV-13-10009-00CL
,., ,,
THE HONOURABLE MR. ) FRIDAY, THE 22ND DAY
JUSTICE WILTON-SIEGEL ) OF FEBRUARY, 2013
~!.
.
THIS APPLICATION, made by The John Forsyth Shirt Company Ltd., Forsyth
Holdings, Inc. and Forsyth of Canada, Inc. (collectively, the "Applicants"), pursuant to the
Companies Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"), was
heard this day at 330 University Avenue, Toronto, Ontario.
ON READING the affidavit of Harris R. Hester sworn February 20, 2013 and the
exhibits thereto (the "Hester Affidavit"), the affidavit of Ian Aversa sworn February 21, 2013
and the exhibits thereto, the pre-filing report of BDO Canada Limited ("BDO"), in its capacity as
the intended Monitor in these proceedings, dated February 20, 2013, and the consent of BDO to
act as the Monitor, and on being advised that the secured creditors who are likely to be affected
by the charges created herein were given notice, and on hearing the submissions of counsel for
the Applicants, counsel for BDO, and counsel for Wells Fargo Capital Finance Corporation
Canada and Wells Fargo Capital Finance, LLC (collectively, "Wells Fargo"), no one appearing
for any other person on the service list, although duly served as appears from the affidavit of
Eunice Baltkois sworn February 20, 2013, filed,
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1. THIS COURT ORDERS that the time for service of the Notice of Application and the
Application Record is hereby abridged and validated so that this Application is properly
returnable today and hereby dispenses with further service thereof.
APPLICATION
2. THIS COURT ORDERS AND DECLARES that each of the Applicants is a company
to which the CCAA applies.
3. THIS COURT ORDERS that the Applicants shall have the authority to file and may,
subject to further Order of this Court, file with this Court a plan of compromise or arrangement
(hereinafter referred to as the "Plan") between the Applicants and one or more of their secured
and/or unsecured creditors as the Applicants deem appropriate.
4. THIS COURT ORDERS that each of the Applicants shall remain in possession and
control of its current and future assets, undertakings and properties of every nature and kind
whatsoever, and wherever situate including all proceeds thereof (collectively, the "Property").
Subject to further Order of this Court, each of the Applicants shall continue to carry on business
in a manner consistent with the preservation of its business (collectively, the "Business ") and
Property. Each of the Applicants shall be authorized and empowered to continue to retain and
employ the employees, consultants, agents, experts, accountants, counsel and such other persons
(collectively, "Assistants ") currently retained or employed by it, with liberty to retain such
further Assistants as it deems reasonably necessary or desirable in the ordinary course of
business or for the carrying out of the terms of this Order.
5. THIS COURT ORDERS that each of the Applicants shall be entitled to continue to
utilize the cash management system currently in place as described in the Hester Affidavit or
replace it with another substantially similar cash management system (the "Cash Management
System") and that any present or future bank or service provider providing the Cash
Management System shall not be under any obligation whatsoever to inquire into the propriety,
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validity or legality of any transfer, payment, collection or other action taken under the Cash
Management System, or as to the use or application by the Applicants of funds transferred, paid,
collected or otherwise dealt with in the Cash Management System, shall be entitled to provide
the Cash Management System without any liability in respect thereof to any Person (as
hereinafter defined) other than the Applicants, pursuant to the terms of the documentation
applicable to the Cash Management System, and shall be, in its capacity as provider of the Cash
Management System, an unaffected creditor under the Plan with regard to any claims or
expenses it may suffer or incur in connection with the provision of the Cash Management
System.
6. THIS COURT ORDERS that each of the Applicants, either on its own behalf or on
behalf of another one of the Applicants, shall be entitled but not required to pay the following
expenses or honour the following obligations whether incurred prior to or after the date of this
Order:
(a) all outstanding and future wages, salaries, employee and pension benefits,
vacation pay and expenses payable on or after the date of this Order, in each case
incurred in the ordinary course of business and consistent with existing
compensation policies and arrangements;
(b) the fees and disbursements of any Assistants retained or employed by the
Applicants, or any one of them, in respect of these proceedings, at their standard
rates and charges; and
(c) with the prior consent of the Monitor and subject to compliance with the DIP
Credit Agreement (as hereinafter defined), all or part of outstanding amounts
owing for goods and services actually supplied to the Applicants (or, where
acceptable to the supplier, return of supplied goods in lieu of such payments), or
amounts necessary to obtain the release of goods contracted for prior to the date
of this Order, by suppliers, if, in the opinion of the Applicants and the Monitor,
such payments are necessary in order to ensure an uninterrupted supply of goods
and services to the Applicants which are material to the continued operation of the
Business.
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7. THIS COURT ORDERS that, except as otherwise provided to the contrary herein, each
of the Applicants shall be entitled but not required to pay all reasonable expenses incurred by it
in carrying on the Business in the ordinary course on and after the date of this Order, and in
carrying out the provisions of this Order, which expenses shall include, without limitation:
(a) all expenses and capital expenditures reasonably necessary for the preservation of
the Property or the Business, including, without limitation, payments on account
of insurance (including directors and officers insurance), maintenance and
security services; and
(b) payment for goods received by or services actually supplied to the Applicants, or
any one of them, on or after the date of this Order.
8. THIS COURT ORDERS that each of the Applicants shall remit, in accordance with
legal requirements, or pay:
(a) any statutory deemed trust amounts in favour of the Crown in right of Canada or
of any Province thereof or any other taxation authority, including, United States
of America federal or state taxes, which are required to be deducted from
employees' wages, including, without limitation, amounts in respect of: (i)
employment insurance; (ii) Canada Pension Plan; (iii) Quebec Pension Plan; and
(iv) income taxes;
(b) all goods and services or other applicable sales taxes (collectively, "Sales Taxes ")
required to be remitted by the Applicants in connection with the sale of goods and
services by the Applicants, but only where such Sales Taxes are accrued or
collected after the date of this Order, or where such Sales Taxes were accrued or
collected prior to the date of this Order but not required to be remitted until on or
after the date of this Order; and
(c) any amount payable to the Crown in right of Canada or of any Province thereof or
any political subdivision thereof or any other taxation authority, including, United
States of America federal or state taxes, in respect of municipal realty, municipal
business or other taxes, assessments or levies of any nature or kind which are
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entitled at law to be paid in priority to claims of secured creditors and which are
attributable to or in respect of the carrying on of the Business by the Applicants.
9. THIS COURT ORDERS that until a real property lease is disclaimed in accordance
with the CCAA, each of the Applicants shall pay all amounts constituting rent or payable as rent
under real property leases (including, for greater certainty,, common area maintenance charges,
utilities and realty taxes and any other amounts payable to the landlord under the lease) or such
amount as otherwise may be negotiated between the Applicants, or any one of them, and the
landlord from time to time ( "Rent"), for the period commencing from and including the date of
this Order, twice-monthly in equal payments on the first and fifteenth day of each month, in
advance (but not in arrears). On the date of the first of such payments, any Rent relating to the
period commencing from and including the date of this Order shall also be paid.
10. THIS COURT ORDERS that, except as specifically permitted herein, each of the
Applicants is hereby directed, until further Order of this Court: (a) to make no payments of
principal, interest thereon or otherwise on account of amounts owing by the Applicants to any of
their creditors as of this date except in respect of scheduled payments of principal, interest and
costs to be remitted to Wells Fargo under the Wells Fargo Loan Agreement (as such term is
defined in the Hester Affidavit); (b) to grant no security interests, trust, liens, charges or
encumbrances upon or in respect of any of its Property; and (c) to not grant credit or incur
liabilities except in the ordinary course of the Business.
L1 iNt4IIN 11111 PXI
11. THIS COURT ORDERS that each of the Applicants shall, subject to such requirements
as are imposed by the CCAA and such covenants as may be contained in the DIP Credit
Agreement, have the right to:
(a) permanently or temporarily cease, downsize or shut down any of its business or
operations, and to dispose of non-profitable, redundant or non-material assets and
operations not exceeding $250,000 in any one transaction or $500,000 in the
aggregate;
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(b) terminate the employment of such of its employees or temporarily or indefinitely
lay off such of its employees as it deems appropriate on such terms as may be
agreed upon between the Applicants and such employee, or failing such
agreement, to deal with the consequences thereof in the Plan; and
(c) pursue all avenues of restructuring, including, without limitation, the sale of all or
any parts of its Business or the Property, subject to prior approval of this Court
being obtained (except as permitted in this Order),
all of the foregoing to permit the Applicants to proceed with an orderly restructuring, sale or
winding down of the Business (the "Restructuring")
12. THIS COURT ORDERS that the Applicants shall provide each of the relevant landlords
and the Monitor with notice of the Applicants' 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 Applicants' entitlement to remove any such fixture under the
provisions of the lease, such fixture shall remain on the leased premises and shall be dealt with as
agreed between any applicable secured creditors, such landlord and the Applicants, or by further
Order of this Court upon application by the Applicants on at least two (2) days notice to such
landlord and any such secured creditors. If the Applicants disclaim the lease governing such
leased premises in accordance with section 32 of the CCAA, they shall not be required to pay
Rent under such lease pending resolution of any such dispute (other than Rent payable for the
notice period provided for in subsection 32(5) of the CCAA), and the disclaimer of the lease
shall be without prejudice to the Applicants' claim to the fixtures in dispute.
13. THIS COURT ORDERS that if a notice of disclaimer is delivered pursuant to section
32 of the CCAA, then: (a) during the notice period prior to the effective time of the disclaimer,
the landlord may show the affected leased premises to prospective tenants during normal
business hours, on giving the Applicants and the Monitor 24 hours' prior written notice; and (b)
at the effective time of the disclaimer, the relevant landlord shall be entitled to take possession of
any such leased premises without waiver of or prejudice to any claims or rights such landlord
may have against the Applicants in respect of such lease or leased premises and such landlord
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shall be entitled to notify the Applicants of the basis on which it is taking possession and to gain
possession of and re-lease such leased premises to any third party or parties on such terms as
such landlord considers advisable, provided that nothing herein shall relieve such landlord of its
obligation to mitigate any damages claimed in connection therewith.
14. THIS COURT ORDERS that until and including March 22, 2013, or such later date as
this Court may order (the "Stay Period"), no proceeding or enforcement process in any court or
tribunal (each, a "Proceeding") shall be commenced or continued against or in respect of the
Applicants, or any one of them, or the Monitor, or affecting the Business or the Property, except
with the written consent of the Applicants and the Monitor, or with leave of this Court, and any
and all Proceedings currently under way against or in respect of the Applicants, or any one of
them, or affecting the Business or the Property are hereby stayed and suspended pending further
Order of this Court.
15. THIS COURT ORDERS that during the Stay Period, all rights and remedies of any
individual, firm, corporation, governmental body or agency, or any other entities (all of the
foregoing, collectively being "Persons" and each being a "Person") against or in respect of the
Applicants, or any one of them, or the Monitor, or affecting the Business or the Property, are
hereby stayed and suspended except with the written consent of the Applicants and the Monitor,
or leave of this Court, provided that nothing in this Order shall: (i) empower the Applicants to
carry on any business which the Applicants are not lawfully entitled to carry on; (ii) affect such
investigations, actions, suits or proceedings by a regulatory body as are permitted by section 11.1
of the CCAA; (iii) prevent the filing of any registration to preserve or re-perfect an existing
security interest; or (iv) prevent the registration of a claim for lien.
16. THIS COURT ORDERS that during the Stay Period, no Person shall discontinue, fail to
honour, alter, interfere with, repudiate, terminate or cease to perform any right, renewal right,
contract, agreement, lease, sub-lease, licence or permit in favour of or held by any of the
Applicants except with the written consent of the Applicants and the Monitor, or leave of this
Court.
CONTINUATION OF SERVICES
17. THIS COURT ORDERS that during the Stay Period, all Persons having oral or written
agreements with any of the Applicants 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, leasing or other services to the Business or the Applicants, 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 Applicants, and that the Applicants
shall be entitled to the continued use of their current premises, 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
Applicants in accordance with normal payment practices of the Applicants or such other
practices as may be agreed upon by the supplier or service provider, the Applicants and the
Monitor, or as may be ordered by this Court.
NON-DEROGATION OF RIGHTS
18. THIS COURT ORDERS that, notwithstanding anything else in this Order, no Person
shall be prohibited from requiring immediate payment for goods, services, use of leased or
licensed property or other valuable consideration provided on or after the date of this Order, nor
shall any Person be under any obligation on or after the date of this Order to advance or re-
advance any monies or otherwise extend any credit to the Applicants. Nothing in this Order
shall derogate from the rights conferred and obligations imposed by the CCAA.
PROCEEDINGS AGAINST DIRECTORS AND OFFICERS
19. THIS COURT ORDERS that during the Stay Period, and except as permitted by
subsection 11.03(2) of the CCAA, no Proceeding may be commenced or continued against any
of the former, current or future directors or officers of the Applicants with respect to any claim
against the directors or officers that arose before the date hereof and that relates to any
obligations of the Applicants whereby the directors or officers are alleged under any law to be
S
liable in their capacity as directors or officers for the payment or performance of such
obligations, until a compromise or arrangement in respect of the Applicants, if one is filed, is
sanctioned by this Court or is refused by the creditors of the Applicants or this Court.
20, THIS COURT ORDERS that each of the Applicants shall indemnify its directors and
officers against obligations and liabilities that they may incur as directors or officers of the
Applicants after the commencement of the within proceedings, except to the extent that., with
respect to any officer or director, the obligation or liability was incurred as a result of the
director's or officer's gross negligence or wilful misconduct.
21. THIS COURT ORDERS that the directors and officers of the Applicants shall be
entitled to the benefit of and are hereby granted a charge (the "DO Charge") on the Property,
which charge shall not exceed an aggregate amount of $300,000, as security for the indemnity
provided in paragraph 20 of this Order. The D&O Charge shall have the priority set out in
paragraphs 38 and 40 of this Order.
22. THIS COURT ORDERS that, notwithstanding any language in any applicable
insurance policy to the contrary, (a) no insurer shall be entitled to be subrogated to or claim the
benefit of the D&O Charge, and (b) each of the Applicants' directors and officers shall only be
entitled to the benefit of the D&O Charge to the extent that they do not have coverage under any
directors' and officers' insurance policy, or to the extent that such coverage is denied or
insufficient to pay amounts indemnified in accordance with paragraph 20 of this Order.
21S]k'l S; S
23. THIS COURT ORDERS. that BDO is hereby appointed pursuant to the CCAA as the
Monitor, an officer of this Court, to monitor the business and financial affairs of the Applicants
with the powers and obligations set out in the CCAA or set forth herein and that the Applicants
and their shareholders, officers, directors, and Assistants shall advise the Monitor of all material
steps taken by the Applicants pursuant to this Order, and shall co-operate fully with the Monitor
in the exercise of its powers and discharge of its obligations and provide the Monitor with the
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assistance that is necessary to enable the Monitor to adequately carry out the Monitor's
functions.
24. THIS COURT ORDERS that the Monitor, in addition to its prescribed rights and
obligations under the CCAA, is hereby directed and empowered to:
(a) monitor the Applicants' receipts and disbursements;
(b) report to this Court at such times and intervals as the Monitor may deem
appropriate with respect to matters relating to the Property, the Business, and such
other matters as may be relevant to the proceedings herein;
(c) assist the Applicants, to the extent required by the Applicants, in its dissemination
to the DIP Lender (as defined in paragraph 32 below) and its counsel on a
periodic basis of financial and other information as agreed to between the
Applicants and the DIP Lender which may be used in these proceedings,
including reporting on a basis to be agreed with the DIP Lender;
(d) advise the Applicants in their preparation of the Applicants' cash flow statements
and reporting required by the DIP Lender, which information shall be reviewed
with the Monitor and delivered to the DIP Lender and its counsel on a periodic
basis, but not less than weekly, or as otherwise agreed to by the DIP Lender;
(e) provide information to the DIP Lender with respect to the Applicants'
Restructuring and these proceedings as the Monitor deems appropriate in its
discretion;
(f) advise the Applicants in their development of the Plan and any amendments to the
Plan;
(g) assist the Applicants with the Restructuring;
(h) assist the Applicants, to the extent required by the Applicants, with the holding
and administering of creditors' or shareholders' meetings for voting on the Plan;
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(1) have full and complete access to the Property, including, the premises, books,
records, data, including data in electronic form, and other financial documents of
the Applicants, to the extent that is necessary to adequately assess the Applicants'
business and financial affairs or to perform its duties arising under this Order;
(j) be at liberty to engage independent legal counsel or such other persons as the
Monitor deems necessary or advisable respecting the exercise of its powers and
performance of its obligations under this Order, including being at liberty to retain
and utilize the services of entities related to BDO as may be necessary to perform
the Monitor's duties hereunder;
(k) consider and prepare a report and assessment of the Plan;
(1) assist the Applicants with their continuing restructuring activities and in the
conduct of any sale process or processes to sell the Property and Business or any
part thereof;
(m) advise and assist the Applicants in their negotiation with suppliers, customers and
other stakeholders; and
(n) perform such other duties as are required by this Order or by this Court from time
to time.
25. THIS COURT ORDERS that the Monitor shall not take possession of the Property and
shall take no part whatsoever in the management or supervision of the management of the
Business and shall not, by fulfilling its obligations hereunder, be deemed to have taken or
maintained possession or control of the Business or Property, or any part thereof.
26. THIS COURT ORDERS that nothing herein contained shall require the Monitor 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
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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 Monitor from any duty to report or make disclosure imposed by applicable
Environmental Legislation. The Monitor shall not, as a result of this Order or anything done in
pursuance of the Monitor'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.
27. THIS COURT O ERS that the Monitor shall provide any creditor of the Applicants
and the DIP Lender with information provided by the Applicants in response to reasonable
requests for information made in writing by such creditor addressed to the Monitor. The Monitor
shall not have any responsibility or liability with respect to the information disseminated by it
pursuant to this paragraph. In the case of information that the Monitor has been advised by the
Applicants is confidential, the Monitor shall not provide such information to creditors unless
otherwise directed by this Court or on such terms as the Monitor and the Applicants may agree.
28. THIS COURT ORDERS that, in addition to the rights and protections afforded the
Monitor under the CCAA or as an officer of this Court, the Monitor shall incur no liability or
obligation as a result of its appointment or the carrying out of the provisions of this Order, save
and except for any gross negligence or wilful misconduct on its part. Nothing in this Order shall
derogate from the protections afforded the Monitor by the CCAA or any applicable legislation.
29. THIS COURT ORDERS that the Monitor, counsel to the Monitor and counsel to the
Applicants shall be paid their reasonable fees and disbursements incurred both before and after
the making of this Order, in each case at their standard rates and charges, by the Applicants as
part of the costs of these proceedings. The Applicants are hereby authorized and directed to pay
the accounts of the Monitor, counsel for the Monitor and counsel for the Applicants on a weekly
basis and, in addition, the retainer previously paid by the Applicants to the Applicants' counsel
in the amount of $20,000, which is to be held as security for payment of its fees and
disbursements outstanding from time to time, is authorized and approved.
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30, THIS COURT ORDERS that, if requested by the DIP Lender, the Applicants, any
interested party or this Court, the Monitor and its legal counsel shall pass their accounts from
time to time, and for this purpose the accounts of the Monitor and its legal counsel are hereby
referred to a judge of the Commercial List of the Ontario Superior Court of Justice.
31. THIS COURT ORDERS that the Monitor, counsel to the Monitor and counsel to the
Applicants shall be entitled to the benefit of and are hereby granted a charge (the
"Administration Charge") on the Property, which charge shall not exceed an aggregate amount
of $400,000 as security for their professional fees and disbursements incurred at the standard
rates and charges of the Monitor and such counsel, both before and after the making of this Order
in respect of these proceedings, The Administration Charge shall have the priority set out in
paragraphs 38 and 40 of this Order.
32. T S COURT ORDERS that the Applicants are hereby authorized and empowered to
obtain and borrow under a credit facility from Wells Fargo (in such capacity, the "DIP Lender")
in order to finance the Applicants' working capital requirements and other general corporate
purposes and capital expenditures, provided that borrowings under such credit facility shall not
exceed the principal amount of CDN$10,000,000 unless permitted by further Order of this Court.
33. THIS COURT ORDERS that such credit facility shall be on the terms and subject to the
conditions set forth in the DIP Commitment Letter between the Applicants and the DIP Lender
dated February 20, 2013 (the "DIP Credit Agreement"), filed, and that the Applicants are
hereby authorized and directed to comply with the terms and conditions of the DIP Credit
Agreement and to perform their obligations thereunder, including the application of funds
received after the date of this Order in reduction of the Pre-Filing Credit Facility (as defined in
the DIP Credit Agreement).
34. THIS COURT ORDERS that the Applicants are hereby authorized and empowered to
execute and deliver such credit agreements, mortgages, charges, hypothecs and security
documents, guarantees and other definitive documents (collectively, the "Definitive
Documents"), as are contemplated by the DIP Credit Agreement or as may be reasonably
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required by the DIP Lender pursuant to the terms thereof, and the Applicants are hereby
authorized and directed to pay and perform all of its indebtedness, interest, fees, liabilities and
obligations to the DIP Lender under and pursuant to the DIP Credit Agreement and the
Definitive Documents as and when the same become due and are to be performed,
notwithstanding any other provision of this Order.
35. THIS COURT ORDERS that the DIP Lender shall be entitled to the benefit of and is
hereby granted a charge (the "DIP Charge") on the Property, which DIP Charge shall not secure
an obligation that exists before this Order is made, The DIP Charge shall have the priority set
out in paragraphs 38 and 40 hereof.
36. THIS COURT ORDERS that, notwithstanding any other provision of this Order:
(a) the DIP Lender may take such steps from time to time as it may deem necessary
or appropriate to file, register, record or perfect the DIP Charge or any of the
Definitive Documents;
(b) upon the occurrence of an event of default under the DIP Credit Agreement, the
Definitive Documents or the DIP Charge, the DIP Lender may cease making
advances to the Applicants and set off and/or consolidate any amounts owing by
the DIP Lender to the Applicants against the obligations of the Applicants to the
DIP Lender under the DIP Credit Agreement, the Definitive Documents or the
DIP Charge, and make demand, accelerate payment or give other notices and,
upon 5 days' notice to the Applicants and the Monitor may exercise any and all of
its other rights and remedies against the Applicants or the Property under or
pursuant to the DIP Credit Agreement, the Definitive Documents and the DIP
Charge, including, without limitation, by applying to this Court for the
appointment of a receiver, receiver and manager or interim receiver, or for a
bankruptcy order against the Applicants and for the appointment of a trustee in
bankruptcy of the Applicants;
_15_
(c) upon receipt of any notice referenced in paragraph 36(b) of this Order, the
Monitor shall forthwith advise the Court in a Monitor's Report that such notice
was received; and
(d) the foregoing rights and remedies of the DIP Lender shall be enforceable against
any trustee in bankruptcy, interim receiver, receiver or receiver and manager of
the Applicants or the Property.
37, THIS COURT ORDERS AND DECLARES that the DIP Lender shall be treated as
unaffected in any plan of arrangement or compromise filed by the Applicants under the CCAA,
or any proposal filed by the Applicants under the Bankruptcy and Insolvency Act (Canada), as
amended (the "BIA"), with respect to any advances made under the DIP Credit Agreement or the
Definitive Documents.
38. THIS COURT ORDERS that the priorities of the Administration Charge, the DIP
Charge and the D&O Charge (collectively, the "Charges"), as among them, shall be as follows:
First — Administration Charge (to the maximum amount of $100,000);
Second -- DIP Charge;
Third — Administration Charge (to the maximum amount of $300,000); and
Fourth — D&O Charge (to the maximum amount of $300,000),
39. THIS COURT ORDERS that the filing, registration or perfection of the Charges shall
not be required, and that the Charges shall be valid and enforceable for all purposes, including as
against any right, title or interest filed, registered, recorded or perfected subsequent to the
Charges coming into existence, notwithstanding any such failure to file, register, record or
perfect.
40. THIS COURT ORDERS that each of the Charges shall constitute a charge on the
Property and such Charges shall rank in priority to all other security interests, trusts, liens,
charges and encumbrances, claims of secured creditors, statutory or otherwise (collectively,
- 16 -
"Encumbrances ") in favour of any Person with the exception that both the Administration
Charge (to the extent that it secures amounts over $100,000) and the D&O Charge shall be
subordinate to any valid, enforceable and perfected Encumbrances in favour of Wells Fargo
existing as of the date of this Order.
41. THIS COURT ORDERS that except as otherwise expressly provided for herein, or as
may be approved by this Court, the Applicants shall not grant any Encumbrances over any
Property that rank in priority to, or pari passu with, any of the Charges.
42. THIS COURT ORDERS that the Charges, the DIP Credit Agreement and the Definitive
Documents shall not be rendered invalid or unenforceable and the rights and remedies of the
chargees entitled to the benefit of the Charges (collectively, the "Chargees") thereunder shall not
otherwise be limited or impaired in any way by: (a) the pendency of these proceedings and the
declarations of insolvency made herein; (b) any application(s) for bankruptcy order(s) issued
pursuant to the BIA, or any bankruptcy order made pursuant to such applications; (c) the filing of
any assignments for the general benefit of creditors made pursuant to the BIA; (d) the provisions
of any federal or provincial statutes; or (e) any negative covenants, prohibitions or other similar
provisions with respect to borrowings, incurring debt or the creation of Encumbrances, contained
in any existing loan documents, lease, sublease, offer to lease or other agreement (collectively,
an "Agreement") which binds the Applicants, or any one of them, and notwithstanding any
provision to the contrary in any Agreement:
(a) neither the creation of the Charges nor the execution, delivery, perfection,
registration or performance of the DIP Credit Agreement or the Definitive
Documents shall create or be deemed to constitute a breach by the Applicants of
any Agreement to which they are a party;
(b) none of the Chargees shall have any liability to any Person whatsoever as a result
of any breach of any Agreement caused by or resulting from the Applicants
entering into the DIP Credit Agreement, the creation of the Charges or the
execution, delivery or performance of the Definitive Documents; and
- 17-
(c) the payments made by the Applicants pursuant to this Order, the DIP Credit
Agreement or the Definitive Documents, and the granting of the Charges do not
and will not constitute preferences, fraudulent conveyances, transfers at
undervalue, oppressive conduct, or other challengeable, reviewable, void or
voidable transactions under any applicable law,
43. THIS COURT ORDERS that any Charge created by this Order over leases of real
property in Canada shall only be a Charge in the Applicants' interest in such real property leases.
44. THIS COURT O ERS that the Monitor shall (i) without delay, publish a notice
containing the information prescribed under the CCAA, (ii) within five days after the date of this
Order, (A) make this Order publicly available in the manner prescribed under the CCAA, (B)
send, in the prescribed manner, a notice to every known creditor who has a claim against the
Applicants of more than $1000, and (C) prepare a list showing the names and addresses of those
creditors and the estimated amounts of those claims, and make it publicly available in the
prescribed manner, all in accordance with subsection 23(1)(a) of the CCAA and the regulations
made thereunder.
45. TIllS COURT ORDERS that the Applicants and the Monitor be at liberty to serve 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
electronic transmission to the Applicants' creditors or other interested parties at their respective
addresses as last shown on the records of the Applicants and that any such service or notice by
courier, personal delivery or electronic 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.
46. THIS COURT ORDERS that the Applicants, the Monitor, and any party who has filed a
Notice of Appearance may serve any court materials in these proceedings by e-mailing a PDF or
other electronic copy of such materials to counsels' email addresses as recorded on the Service
List from time to time, and the Monitor may post a copy of any or all such materials on its
web site at www.bdo.ca/forsyth.
GENERAL
47. TillS COURT ORDERS that the Applicants or the Monitor may from time to time
apply to this Court for advice and directions in the discharge of its powers and duties hereunder.
48. THIS COURT ORDERS that nothing in this Order shall prevent the Monitor from
acting as an interim receiver, a receiver, a receiver and manager, or a trustee in bankruptcy of the
Applicants, or any one or more of them, the Business or the Property.
49. 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 Applicants, the Monitor and their respective 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
Applicants and to the Monitor, as an officer of this Court, as may be necessary or desirable to
give effect to this Order, to grant representative status to the Monitor in any foreign proceeding,
or to assist the Applicants and the Monitor and their respective agents in carrying out the terms
of this Order.
50. THIS COURT ORDERS that each of the Applicants and the Monitor 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 Monitor 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.
51. THIS COURT ORDERS that any interested party (including the Applicants and the
Monitor) may apply to this Court to vary or amend this Order on not less than seven (7) days'
notice to any other party or parties likely to be affected by the order sought or upon such other
notice, if any, as this Court may order, provided, however, that the DIP Lender shall be entitled
to rely on this Order as issued for all advances made under the DIP Credit Agreement and the
Definitive Documents.
19-
52. THIS COURT ORDERS that, notwithstanding the immediately preceding paragraph,
no order shall be made varying, rescinding or otherwise affecting the provisions of this Order
with respect to the DIP Credit Agreement or the Definitive Documents unless notice of a motion
is served on the Monitor, the Applicants and the DIP Lender returnable on or before March 15,
2013.
53. TIllS COURT ORDERS that this Order and all of its provisions are effective as of
12:01 a.m. Eastern Standard Time on the date of this Order.
ENTERED PT f INSCRiT A TORONTO ON I BOOK NO: LE DAMS LE i lEGISTPi . NC).;
FEB722013
& BERLIS LLP Barristers and Solicitors
Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862F1B) TeL 416.865.4748 Fax: 416.863.1515 Email: renglish(2iairdberlis.com
Ian Aversa (LSUC # 55449N) Tel: 416.865.3 082 Fax: 416.863.1515 Email: iaversa@airdberlis.com
James A. Desjardins (LSUC # 62493E) Tel: 416.865.4641 Fax: 416.863.1515 Email: jdesiardins( airdberlis.com
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
13933630.3
C C
Attached is Exhibit "B"
Referred to in the
Affidavit of Harris R., Hester
ONTARIO t,J S (Ii I
I i U:. LU U 1S1
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF THE JOHN FORSYTH SHIRT COMPANY LTD., FORSYTH HOLDINGS, INC.
and FORSYTH OF CANADA, INC.
APPLICATIONtUNDER
AFFIDAVIT OF HARRIS R. HESTER (sworn February 20, 2013)
I, Harris R. Hester, of the Town of Darien, in the State of Connecticut, MAKE OATH
ni is'i ru] muw&s
1. I am the President and a director of each of The John Forsyth Shirt Company Ltd.
("Forsyth Canada"), Forsyth Holdings, Inc. ("Forsyth Holdings") and Forsyth of Canada, Inc.
("Forsyth USA" and, together with Forsyth Canada and Forsyth Holdings, the "Applicants" or
the "Companies"). As such, I have personal knowledge of the matters to which I hereinafter
depose in this Affidavit, Where I do not have personal knowledge of the matters set out herein, I
have stated the source of my information and, in all such cases, believe it to be true,
2, This Affidavit is sworn in support of an application by the Applicants under the
Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"), for
an order, among other things:
(a) declaring that each of the Applicants is a company to which the CCAA applies;
Affidavit of Harris R. Hester Page 2
(b) staying all proceedings and remedies taken or which might be taken in respect of
the Applicants or any of their property, except upon the leave of the Court being
granted, or as otherwise provided;
(c) authorizing the Applicants to prepare and file with the Court a plan of
compromise or arrangement with their creditors (the "Plan");
(d) appointing BDO Canada Limited ("BDO") as monitor of the Applicants (in such
capacity, the "Monitor");
(e) approving a debtor-in-possession financing facility (the "DIP Facility") with
Wells Fargo Capital Finance Corporation Canada and Wells Fargo Capital
Finance, LLC (collectively, "Wells Fargo'') in the principal amount of
CDN$10,000,000 and granting a priority charge over the assets, properties and
undertakings of the Applicants (collectively, the "Property") to secure repayment
of the amounts borrowed by the Applicants under the DIP Facility;
(f) granting a priority charge over all of the Property in the principal amount of
$400,000 to secure the fees and disbursements of the Applicants' counsel, the
Monitor and the Monitor's counsel; and
(g) granting a priority charge over the Property in the principal amount of $300,000
in order to protect the Applicants' directors and officers from certain potential
liabilities.
3. The most likely outcome of this proceeding is a restructuring of the Applicants' business.
However, there is also the possibility that there will be a going concern sale with respect to
certain or all of the Applicants' assets. Protection under the CCAA will allow for the
restructuring to happen under the supervision of the Court for the benefit of all of the Applicants'
stakeholders and also allow for the prospect of a going concern sale of the Applicants' business.
Iu
4. The Applicants are collectively in the business of manufacturing, distributing and selling
apparel in both Canada and the United States of America. Through its collective distribution
Affidavit of Harris R. Hester Page 3
channels, the Applicants sell apparel in various retail stores, through catalogues and though the
Internet in both Canada and the United States of America. Additionally, the Applicants sell
uniform apparel to certain large organizations in North America.
5. Forsyth Canada is a corporation incorporated pursuant to the laws of the Province of
Ontario. Its registered office is located at 6789 Airport Road, Mississauga, Ontario. Forsyth
Canada is the operational company for the manufacture, distribution and sale of apparel in
Canada. Forsyth Canada is a wholly-owned subsidiary of Forsyth Holdings. Forsyth Canada's
directors are myself and Oliver Morante (together, the "Forsyth Canada Directors "), Forsyth
Canada's officers are myself as President and Secretary, and Oliver Morante as Vice President
(together, the "Forsyth Canada Officers "). A copy of the corporation profile report for Forsyth
Canada is attached as Exhibit "A" to this Affidavit.
6. Forsyth USA is a corporation incorporated pursuant to the laws of the State of Delaware
and is registered to conduct business in the State of New York. Its principal executive office is
located at 1071 Avenue of the Americas, 8th Floor, New York, New York. Forsyth USA is the
operational company for the distribution and sale of apparel in the United States of America. Its
books and records are kept at the Administration Location (as defined herein). Forsyth USA is a
wholly-owned subsidiary of Forsyth Holdings. I am the sole director (the "Forsyth USA
Director") and officer of Forsyth USA, holding the offices of President, Secretary and Treasurer
(in such capacities, the "Forsyth USA Officer"). Forsyth USA's corporate profile report is
attached hereto as Exhibit "B".
7. Forsyth Holdings is a corporation incorporated pursuant to the laws of the State of
Delaware. Its principal office is located at 1071 Avenue of the Americas, 8 th Floor, New York,
New York, Forsyth Holdings is not engaged in any form of manufacturing, distributing or
selling of any goods or services. Its books and records are kept at the Administration Location. I
am the sole director (the "Forsyth Holdings Director", and, together with the Forsyth Canada
Directors and the Forsyth USA Director, the "Directors") and officer of Forsyth Holdings,
holding the offices of President, Secretary and Treasurer (in such capacities, the "Forsyth USA
Officer", and, together with the Forsyth Canada Officers and the Forsyth USA Officer, the
"Officers"). Forsyth Holdings' corporate profile report is attached hereto as Exhibit "C".
Affidavit of Harris R. Hester Page4
8, PremiumWear, Inc. ("PremiumWear"), a corporation incorporated pursuant to the 'Laws
of the state of Delaware, is a wholly-owned subsidiary of Forsyth Holdings. Its registered office
is 1071 Avenue of the Americas, 8 th Floor, New York, New York. A manufacturer and seller of
apparel, PremiumWear was acquired by Forsyth Holdings in 2007 and ceased operations on or
around January, 2010. It does not have any material assets and is a dormant company.
Accordingly, it is not currently contemplated that PremiumWear will be an applicant in these
proceedings.
9. The Applicants' ownership structure is set out in the organizational chart which is
attached as Exhibit "I)" to this Affidavit.
10. The vast majority of the Applicants' business operations, including, without limitation,
their manufacturing, warehousing, distribution and administrative operations, are conducted in
Canada by and through Forsyth Canada. The Applicants' collective books and records are kept
and maintained in Ontario at the Administration Location and their cash management system is
primarily conducted by and through various bank accounts in Canada, as discussed below.
Additionally, the Applicants' executive management operates from the Administration Location
in Ontario. I further understand that the Applicants' largest secured creditor, Wells Fargo,
recognizes the Applicants' Canadian operations as being the centre of their collective operations.
The Applicants' business in the United States is presently limited to a sales office in the State of
New York and a distribution centre in the State of Georgia, which, as discussed below, are
anticipated to be downsized and closed, respectively.
Iii
11. As of the date of this Affidavit, the Applicants' collective business is operating at a loss.
12. The failure of the anticipated financial benefits of the acquisition of PremiumWear to
materialize initiated the Applicants' financial hardship. As a result of various circumstances, the
acquisition caused significant financial harm to the Applicants that was never fully recovered.
13. The Applicants' collective financial position, cash flow and profit margins further eroded
in 2012 due to, among other things, increased competition in the apparel industry, increased raw
input and distribution costs, and increased wage and salary expenses.
Affidavit of Harris R. Hester Page 5
14. Prior to 2013, Forsyth Canada was a beneficiary of the Tailored Collar Shirts Remission
Order, 1997, SOR/97-291 (the "Duty Remission Program"), which granted certain remission
discounts regarding duties payable under the Customs Tariff to prescribed manufacturers of
tailored collar shirts, including Forsyth Canada, Forsyth Canada's duty remission entitlement for
2011 was $1,884,508.60.
15. Suddenly, in late 2012, the Government of Canada decided not to renew the Duty
Remission Program and, accordingly, Forsyth Canada became ineligible for the Duty Remission
Program. Such ineligibility imposed an immediate, unforeseen and significant cash requirement
on Forsyth Canada, which, as discussed above, is the chief operating company of the Applicants.
Given the Applicants' already diminished financial state, the loss of revenue from the Duty
Remission Program was a major factor in the Applicants' becoming insolvent in that they are
currently, collectively and individually, unable to pay their obligations as they become due,
16. Attached as Exhibit "E" to this Affidavit is a copy of the Applicants' consolidated
audited financial statements for the fiscal year ended 2011 and copy of the Applicants'
consolidated unaudited financial statements for the period ended December 31, 2012
(collectively, the "Financials"). The Financials reflect a cash deficit of approximately
$3,932,000 in 2011, a negative EBIT of approximately $2,111,000 in 2012 and a net loss of
approximately $1,863,000 in 2012. The Applicants' gross sales have decreased by
approximately 1.1% from 2011 to 2012 while its cost of goods sold has increased by
approximately 7.9% for the same period.
17. The Applicants' collective liabilities total approximately $17.1 million, approximately $9
million of which are secured (including capital lease and mortgage obligations).
(a) Wells Fargo
18. The Applicants and Congress Financial Corporation (Canada), as agent ( "Congress"),
entered into a loan agreement dated June 23, 1997 (the "Initial Loan Agreement") pursuant to
which Congress agreed to make certain loans to Forsyth Canada and Forsyth USA. Congress
was subsequently acquired by Wells Fargo. The Initial Loan Agreement has since been amended
Affidavit of Harris R. Hester Page 6
several times, the most recent of which being the fifth amended and restated loan agreement
dated October 20, 2012 (the "Wells Fargo Loan Agreement ") among the Applicants and Wells
Fargo. Pursuant to the Wells Fargo Loan Agreement, Wells Fargo agreed to provide a revolving
credit facility to Forsyth Canada and a revolving credit facility to Forsyth USA in the combined
maximum principal amount of CDN$12,000,000 (collectively, the "Wells Fargo Facilities "). A
copy of the Wells Fargo Loan Agreement is attached as Exhibit "F" to this Affidavit.
19. Forsyth Canada executed and delivered a general security agreement dated July 23, 1997
(the "Forsyth Canada GSA") in favour of Congress, registration in respect of which was made
against Forsyth Canada pursuant to the Personal Property Security Act (Ontario) (the "PPSA")
over "Inventory", "Equipment", "Accounts", "Other" and "Motor Vehicle Included" on June 30,
1997 pursuant to financing statement number 19970630 1147 3037 1596 and reference file
number 832198851, as amended. PPSA financing change statement number 20100929 0923
1590 9196, as amended, was registered against Forsyth Canada to reflect Wells Fargo as the
secured creditor and remove reference to Congress. This PPSA registration currently expires on
June 30, 2016. A copy of the Forsyth Canada GSA is attached as Exhibit "G" to this Affidavit,
20. The Forsyth Canada GSA was also registered in the District of Columbia pursuant to the
Uniform Commercial Code on September 19, 2005, pursuant to registration number
20051345375, as amended, and expires April 15, 2015.
21. Forsyth USA executed and delivered a general security agreement dated July 23, 1997
(the "Forsyth USA GSA") in favour of Congress, registration in respect of which was made
against Forsyth USA pursuant to the PPSA over "Inventory", "Equipment", "Accounts", "Other"
and "Motor Vehicle Included" on April 25, 2000 pursuant to financing statement number
20000425 1443 9065 7813 and reference file number 861168105, as amended. PPSA financing
change statement number 20100929 0923 1590 9197, as amended, was registered against
Forsyth USA to reflect Wells Fargo as the secured creditor and remove reference to Congress.
This PPSA registration currently expires on April 25, 2019. A copy of the Forsyth USA GSA is
attached as Exhibit "H" to this Affidavit.
22. The Forsyth USA GSA was also registered in the State of Delaware pursuant to the
Uniform Commercial Code on March 13, 2002, pursuant to registration number 20650394, as
Affidavit of Harris R. Hester Page 7
amended, and expires March 13, 2017. Similar registrations were made with the New York
Secretary of State (registration number 154554 on July 25, 1997), the Erie (New York) County
Clerk's Office (registration number Q36-7272 on July 25, 1997), the New York City Register,
NY County (registration number 97PN36425 on July 25, 1997) and the Crisp County Clerk of
the Superior Court in Georgia (registration number 040-1999-1234 on August 23, 1999). In
connection with the Cordele Mortgage transaction noted below, Wells Fargo made a further
Uniform Commercial Code registration against Forsyth USA in the State of Georgia on April 6,
2007, pursuant to the registration at Book 750 Page 051, as amended, regarding the fixtures,
equipment and accessions related to the real property known municipally as 301 S. Harris Street,
Cordele, GA, which registration expires February 10, 2017.
23. Forsyth Holdings executed and delivered a general security . agreement dated May 12,
2003 (the "Forsyth Holdings GSA") in favour of Congress, registration in respect of which was
made against Forsyth Holdings pursuant to the PPSA over "Inventory", "Equipment",
"Accounts", "Other" and "Motor Vehicle Included" on November 29, 2000 pursuant to financing
statement number 20001129 1032 9065 4398 and reference file number 867929751, as amended.
PPSA financing change statement number 20100929 0925 1590 9200, as amended, was
registered against Forsyth Holdings to reflect Wells Fargo as the secured creditor and remove
reference to Congress. A second and identical registration was made in favour of Congress on
September 16, 2005 pursuant to financing statement number 20050916 1106 1862 6056 and
reference file number 618926337, as amended. Again, PPSA financing change statement
number 20100929 0925 1590 9199, as amended, was registered against Forsyth Holdings to
reflect Wells Fargo as the secured creditor and remove reference to Congress. This PPSA
registration currently expires on November 29, 2016. A copy of the Forsyth Holdings GSA is
attached as Exhibit "I" to this Affidavit.
24. The Forsyth Holdings GSA was also registered in the State of Delaware pursuant to the
Uniform Commercial Code on April 17, 2003, pursuant to registration number 31017816, as
amended, and expires April 17, 2018.
25. The Applicants are currently in default of certain of their obligations under the Wells
Fargo Loan Agreement.
Affidavit of Harris R. Hester Page 8
26. The total cumulative indebtedness of the Applicants owing to Wells Fargo as at the date
hereof is approximately CDN$8,300,000.
(b) Oliver Morante
27. Forsyth Canada executed and delivered a demand promissory note in the principal
amount of CDN$200,000 and dated September 20, 2011 (the " Morante Note") in favour of
Oliver Morante in connection with a $200,000 loan provided by Oliver Morante to Forsyth
Canada, A copy of the Morante Note is attached as Exhibit "J" to this Affidavit.
28. In connection with the Morante Note, Forsyth Canada executed and delivered a general
security agreement dated September, 2011 in favour of Oliver Morante (the " Morante GSA").
Registration in respect to the Morante GSA was made against Forsyth Canada on September 22,
2011 pursuant to the PPSA over "Consumer Goods", "Inventory", "Equipment", "Accounts" and
"Other" pursuant to financing statement number 20110922 1012 1862 9387 and reference file
number 673111539. A copy of the Morante GSA is attached as Exhibit "K" to this Affidavit.
29. Oliver Morante executed and delivered a subordination and postponement agreement in
favour of Wells Fargo, as agent, dated September 15, 2011 (the "Subordination Agreement "),
pursuant to which the debts owing by Forsyth Canada to Oliver Morante are subordinated in
favour of Wells Fargo, as agent.
30. The total cumulative indebtedness of the Applicants owing to Oliver Morante as of the
date hereof is approximately CDN$217,300, including interest and costs.
(c) Harris Hester
31. Forsyth Canada executed and delivered a demand promissory note in the principal
amount of USD$200,000 and dated September 20, 2011 (the "Hester Note") in favour of myself
in connection with a USD$200,000 loan provided by me to Forsyth Canada. A copy of the
Hester Note is attached as Exhibit "L" to this Affidavit,
32. In connection with the Hester Note, Forsyth Canada executed and delivered a general
security agreement dated September 20, 2011 in favour of myself (the "Hester GSA").
Registration in respect to the Hester GSA was made against Forsyth Canada on September 22,
.... --....... ..-.
Affidavit of Harris R. Hester Page 9
20 1 the PPSA Goods" , "inventory", 77 "T' " " " zo i ~ pursuant to the PPSA over "Consumer Goods , ,~rveixtory , ~quipznent , Accounts and
"Other" pursuant to financing statement number 20110922 1012 1862 9387 and reference file
number 673111539. A copy of the Hester GSA is attached as Exhibit "M" to this Affidavit.
33. I am also a party to the Subordination Agreement, pursuant to which the debts owing by
Forsyth Canada to myself are subordinated in favour of Wells Fargo, as agent.
34. The total cumulative indebtedness of the Applicants owing to myself as of the date hereof
is approximately USD$217,300, including interest and costs.
(d) Other Secured Creditors
35. Orlando Corporation ("Orlando"), the landlord of the Distribution Location (as defined
below), has made a PPSA registration against Forsyth Canada with respect to "Inventory",
"Equipment" and "Other" pursuant to PPSA financing statement number 20090522 1003 1862
7403 and reference file number 653606721, which registration does not appear to be related to
specific equipment.
36. Each of GE VFS Canada Limited Partnership and IBM Canada Limited has made PPSA
registrations against Forsyth Canada with respect to specific equipment.
37. A summary of the PPSA registrations made against the Applicants is attached as Exhibit
"N" to this Affidavit.
38. Other than the creditors described above, I am not aware of any other creditors with
general security over the Applicants' assets.
(e) Cash Management System
39. As of the date hereof, Forsyth Canada maintains the following bank accounts with Royal
Bank of Canada (66 C") in Ontario:
(a) a Canadian currency account used for disbursements;
(b) a Canadian currency blocked account under the dominion of Wells Fargo;
Affidavit of Harris R. Hester Page 10
(c) a USA currency account used for disbursements; and
(d) a USA currency blocked account under the dominion of Wells Fargo.
40. As of the date hereof, Forsyth USA maintains the following bank accounts:
(a) a Canadian currency account with RBC in Ontario used for disbursements;
(b) a USA currency account with RBC in Ontario used for disbursements;
(c) a USA currency blocked account with RBC in Ontario under the dominion of
Wells Fargo; and
(d) an account with Bank of America in the United States of America used for
disbursements related to payroll.
41. As of the date hereof, Forsyth Holdings maintains a Canadian currency bank account
with RBC in Ontario which is used for disbursements.
42. In connection with the Wells Fargo Loan Agreement, Forsyth Canada, Wells Fargo and
RBC are parties to a blocked account agreement dated March 23, 2011 (the "Blocked Account
Agreement"), pursuant to which Wells Fargo has dominion over Forsyth Canada's bank
accounts maintained by the Applicants at RBC. The Blocked Account Agreement does not
apply to any of bank accounts of either Forsyth USA or Forsyth Holdings.
(f) Landlords
43. The Applicants have existing lease agreements with the following landlords:
(a) PFS GTA Industrial Inc., in respect to the premises known municipally as 6789
Airport Road, Mississauga, Ontario (the "Administration Location");
(b) Savage Holdings Inc., in respect to the premises known municipally as 111
Savage Drive, Cambridge, Ontario (the "Cambridge Location");
(c) Orlando, in respect to the premises known municipally as 6471 Northwest Drive,
Mississauga, Ontario (the "Distribution Location "); and
Affidavit of Harris R. Hester Page Ii
(d) Adams & Company Real Estate, LLC, in respect to the premises known
municipally as 1071-1079 Avenue of the Americas, #801, New York, New York
(the "New York Location").
(g) Mortgage with Wachovia Bank, N,A., which was assumed by Wells Fargo
44. Forsyth USA owns the real property located at the addresses known municipally as 301
Harris Street, Cordele, Georgia, USA and 2810 East 13 th Avenue, Cordele, Georgia, USA
(together, the "Cordele Location").
45. Wachovia Bank, N.A. ("Wachovia") provided a $1,300,000 construction mortgage loan
to Forsyth USA (the "Wachovia Loan") in respect to the Cordele Location pursuant to a term
sheet dated December 7, 2006, and a real estate loan commitment letter dated February 14, 2007,
unexecuted copies of which are attached as Exhibit "O" to this Affidavit.
46. In connection with the Wachovia Loan, Forsyth USA executed and delivered a
promissory note in the principal amount of $1,300,000 in favour of Wachovia dated March,
2007, as amended (the "Wachovia Note"). An unexecuted copy of the Wachovia Note is
attached as Exhibit ``P" to this Affidavit.
47. In connection with the Wachovia Note, Forsyth USA executed and delivered a deed to
secure debt and assignment of rents with respect to the Cordele Location in favour of Wachovia
dated March, 2007 (the "Wachovia Deed"), a copy of which is attached as Exhibit "Q" to this
Affidavit.
48. Wachovia was subsequently acquired by Wells Fargo.
49. As of the date hereof, the total amount outstanding under the Wachovia Loan is
approximately $700,000.
(h) Employees and the Unions
50. Forsyth Canada presently employs 160 full-time employees in Ontario (the "Ontario
Employees"). Forsyth USA currently employs 9 full-time employees in the United States of
Affidavit of Harris R. Hester Page 12
America the"USA Employees", and, together with the Ontario Employees, the "Employees"
Wages and benefits total approximately $450,000 per month.
51. As of the date hereof, all source deductions related to Employees were current, including,
without limitation, income tax withholdings, employee health tax, worker's compensation,
Canada Pension Plan and employment insurance.
52. The Applicants have no pension plans.
53. 89 of the Ontario Employees worked at the Cambridge Location (collectively, the
"Cambridge Union Members ") and are members of the union known as Workers United
Ontario Council, Local 2643 (the "Cambridge Union"). The relationship between the
Cambridge Union Members, Forsyth Canada and the Cambridge Union are set out in a collective
agreement dated January 1, 2010 (the "Cambridge Union Agreement"), a copy of which is
attached as Exhibit "R" to this Affidavit. An additional ii of the Ontario Employees worked at
the Cambridge Location who were not unionized (the "Non-Union Cambridge Employees ",
and, together with the Cambridge Union Members, the "Cambridge Employees").
54. As of the date hereof, all 100 Cambridge Employees have been terminated pursuant to
and in compliance with the Employment Standards Act, 2000 (Ontar.io) and the Labour Relations
Act, 1995 (Ontario), as applicable.
55. 14 of the Ontario Employees work at the Distribution Location (collectively, the "Distribution Union Members") and are members of the union known as Workers United
Canada Council, Local 1058C (the "Distribution Union"). The relationship between the
Distribution Union Members, Forsyth Canada and the Distribution Union are set out in a
collective agreement dated April 4, 2011 (the "Distribution Union Agreement"), a copy of
which is attached as Exhibit "S" to this Affidavit. An additional 7 of the Ontario Employees
work at the Distribution Location who are not unionized (the "Non-Union Distribution
Employees ", and, together with the Distribution Union Members, the "Distribution
Employees").
Affidavit of Harris R. Hester Page 13
56. As of the date hereof, 1 Distribution Employee has been terminated pursuant to and in
compliance with the Employment Standards Act, 2000 (Ontario) and the Labour Relations Act,
1995 (Ontario), as applicable.
57. 39 of the Ontario Employees work at the Administration Location (the "Administration
Employees ") and are not unionized. As of the date hereof, 15 of the Administration Employees
have been terminated pursuant to and in compliance with the Employment Standards Act, 2000
(Ontario).
58. 3 of the USA Employees work at the New York Location and are paid via commission.
The balance of the USA Employees work at the Cordele Location.
59. There are insufficient funds to satisfy the future anticipated amounts owing to the
Employees based on the Applicants' current consolidated cash position and their pro-forma cash
flows. Accordingly, and in conjunction with the other anticipated restructuring steps, further
terminations or temporary or indefinite layoffs of the remaining Employees may be required
throughout these CCAA proceedings.
o-eiiiu. um
60. As at the date of this Affidavit, the Applicants' federal and outstanding provincial sales
tax obligations and goods and services tax obligations are all current, as well as their source
deduction remittances.
61. I am not aware of any actual or threatened environmental claims or investigations by any
government or similar authority in respect to the Cordele Property.
(l) Trade Creditors
62. As at February 15, 2013, the Applicants' other unsecured liabilities, including trade debt,
totalled approximately $8,100,000.
63. Of the Applicant's total unsecured liabilities, $7,100,000 is attributable to Manunion
Investments Limited ("Manunion"), a Hong Kong company. Manunion is the chief
manufacturer of the Applicants' imported apparel product line, which line accounts for the
Affidavit of Harris R. Hester Page 14
majority of the Applicants' total annual sales. As such, Manunion's supply of goods to the
Applicants is critical to their continued operation.
64. The relationship between the Applicants and Manunion began 20 years ago and has
continued amicably since that time without any written agreements. Orders are made by Forsyth
Canada via telephone where the price, quantity and delivery time are negotiated and reduced to a
purchase order. Payment is made to Manunion by Forsyth USA 30 days after receipt of goods.
65. The Applicants have had discussions with Manunion in respect to the Applicants'
financial position and contemplation of these CCAA proceedings. These discussions culminated
in Manunion expressing its support to the Applicants' proposed steps to restructure.
V. RESTRUCTURING STRUCT'U NG UNDIH R CCAA PROTECTION
66. The Applicants are insolvent. The aggregate value of their assets at a fair valuation or if
disposed of in a fairly conducted sale under legal process would not be sufficient to enable them
to pay all of their obligations. As well, the Applicants are not able to pay their liabilities as they
become due. The Applicants' current lenders are no longer willing to continue to fund the
Applicants' ongoing losses in the existing business structure without substantial change to the
Applicants' structure, operations and, perhaps, business model, given the Applicants' place in the
market and the changing dynamics of the apparel industry. I believe the same would be true of
any other lenders, so a simple refinancing would not solve the Applicants' issues.
67. In order for the Applicants to ensure the best possible recovery for their stakeholders,
including, without limitation, suppliers, vendors, employees and landlords, management of the
Applicants has determined that a restructuring or a sale of its business is required.
68. The anticipated steps in the Applicants' restructuring plan are, in order of anticipated
completion and without limitation:
(a) to relocate the administrative function carried out at the Administration Location
to the Distribution Location, followed closely by the closure of the Administration
Location;
(b) to cease operations at the Cambridge Location and vacate the premises;
Affidavit of Harris R. Hester Page 15
(c) to terminate the employment of such of the Employees or temporarily or
indefinitely lay off such of the Employees as the Applicants deem appropriate on
such terms as may be agreed upon between the Applicants and such Employee(s)
or, failing such agreement, to deal with the consequences thereof in the Plan;
(d) to list the Cordele Property for sale and cease operations thereat;
(e) to relocate the operations from the New York Location to an alternative and less
costly location in the same geographical region; and
(f) to seek out alternative, long-term suppliers of goods in order to diminish the
Applicants' dependence on Manunion.
69. The Applicants have every intention of preparing and presenting the Plan to their
creditors, including, without limitation, current and former employees, landlords in respect of
repudiated leases, trade creditors and, perhaps, their remaining secured creditors.
70. A CCAA stay is needed to ensure that the Applicants' business can be restructured and/or
sold in an efficient and orderly way under the protection of the Court without the threat of
proceedings.
71. A CCAA stay of proceeding is needed to ensure that the Applicants, with the support of
the Monitor, can restructure their collective business or sell certain or all of their assets as a
going concern in an efficient and orderly way under the protection of the Court without the threat
of proceedings or discontinuation of essential services. A stay of proceedings will restrain
temporarily the exercise of rights and remedies under the various agreements to which the
Applicants are a party, preserve the status quo, and restrain existing creditors from taking unfair
advantage in the circumstances. In so doing, the Applicants, with the aid of the Monitor, will be
in a position to, among other things, determine the validity of creditors' claims and understand
the priority of such claims, all of which is an important step in the Applicant's formulation of the
Plan.
Affidavit of Harris R. Hester Page 16
72. The Applicants believe that a stay of proceedings will not materially prejudice any of the
existing creditors when compared to the consequences if a stay of proceedings is not granted.
On certain terms, Wells Fargo has agreed to provide the Applicants with the DIP Facility and to
fund necessary post-filing expenses during the CCAA proceedings, the details of which are set
out below. I believe that the alternative to a stay of proceedings is the forced sale and/or
liquidation of the Applicants and their assets, respectively.
73. BDO has assisted the Applicants in preparing for this CCAA application, including,
without limitation, reviewing the cash flow projections of the Applicants for the next 13 weeks,
assuming the relief sought is granted (the "Cash Flow Projection"). The amounts set out in the
Cash Flow Projection reflect, among other things, the minimum payments required to maintain
the Applicants' business during an initial thirty day stay period, as well as professional fees. A
copy of the 13 week Cash Flow Projection together with a report containing the prescribed
representations of the Applicants regarding the preparation of the Cash Flow Projection is
attached as Exhibit "T" to this Affidavit.
74. Management believes that it is in the best interests of all stakeholders if this Court
appoints BDO as the Court-appointed monitor of the Applicants. As a result of BDO's
involvement with the Applicants in advance of and in preparation for this filing, BDO has gained
insight into the Applicants' business and will be in a position to perform the monitoring duties
effectively and without delay.
75. BDO has consented to act as monitor of the Applicants in accordance with the
requirements of the CCAA, subject to the Court's approval. A copy of BDO's consent is
included in the Application Record in these proceedings.
1 1I VJ'(IISJ
76. Wells Fargo is prepared to provide the Applicants with the financing they will need to
have available to them during these proceedings through the DIP Facility, a new credit facility in
the maximum principal amount of CDN$10,000,000 pursuant to a DIP Commitment Letter (the
"DIP Term Sheet"), a draft copy of which is attached as Exhibit "U". Under the DIP Term
Affidavit of Harris R. Hester Page 17
Sheet, each of Forsyth Canada and Forsyth USA are borrowers, and each of the Applicants
guarantees payment of the obligations of the others under the DIP Facility. As provided in the
DIP Term Sheet, such funding is conditional on Wells Fargo, as the DIP Lender, being granted
security over the Property, ranking in priority to any existing security except for the First
Administration Charge (as such term is defined below), pursuant to the terms an order
substantially in the form filed in these proceedings (the "DIP Charge"). Recognizing the nature
of the asset based lending arrangements in place at this time, while the DIP Term Sheet
contemplates the establishment and funding of a new credit facility to fund the Applicants'
expenses post-filing, the DIP Facility is also conditional on the Applicants' receipts after the
CCAA filing being deposited into the existing Wells Fargo controlled bank accounts and being
applied in reduction of the amounts outstanding under the Wells Fargo Facilities.
77. Under the DIP Term Sheet, the interest rate is 1% per annum higher than under the Wells
Fargo Facilities, and the only new fee for the establishment of the DIP Facility is a fee of
$50,000. In our view, the terms of the DIP Facility are better than we would likely receive from
a lender unfamiliar with the business and assets, who would likely charge a substantially higher
interest rate and/or fee for the provision of the credit facilities. Also, it is unlikely that another
lender could react and be in a position to provide credit in these circumstances.
78. The Applicants believe that the terms of the DIP Facility are reasonable and favourable to
them having regard to the circumstances. Among other things, Wells Fargo has an existing
relationship with the Applicants and is familiar with their business and assets. Also, Wells Fargo
has an economic interest in preserving and developing the Applicants' business.
79. The Applicants believe that the amount of the DIP financing being sought is necessary
and reasonable in the circumstances to ensure that the Applicants have a prudent and responsible
level of liquidity so that they can meet post-filing obligations as they become due for the period
of the initial stay. The Applicants will not be able to continue their operations and initiate any
restructuring efforts without access to the DIP Facility.
80. Each of the Applicants' legal counsel, the Monitor and the Monitor's legal counsel, as a
condition of their continued involvement with the Applicants, has indicated that its ongoing
involvement is conditional upon the granting of an order under the CCAA which grants the
administration charge in the aggregate maximum amount of $400,000 on the Property, which
charge shall be allotted, subject to the approval of this Court, according to the following tranches
and priorities pursuant to the terms of an order substantially in the form filed in these
proceedings:
(a) $100,000 ranking first in priority (the "First Administration Charge"); and
(b) $300,000 ranking fourth in priority behind the First Administration Charge, the
DIP Charge and the pre-filing secured claims of Wells Fargo, respectively (the
"Second Administration Charge" and, together with the First Administration
Charge, the "Administration Charge")
81. I believe that that the following factors support the granting of the Administration
Charge:
(a) the beneficiaries of the Administration Charge will provide essential legal and
financial advice and support to the Applicants throughout the CCAA proceedings;
(b) the roles of the Applicants' legal counsel, the Monitor and the Monitor's legal
counsel are distinct and there is no anticipated unwarranted duplication; and
(c) the Administration Charge does not purport to prime any secured party who has
not received notice of this motion.
82. Accordingly, I believe that this is an appropriate case in which to grant the
Administration Charge. Each of the proposed beneficiaries of the Administration Charge will
play a critical role in the Applicants' restructuring, and it is unlikely that the above-noted
advisors will participate in these CCAA proceedings unless the Administration Charge is granted
to secure their fees and disbursements.
Affidavit of Harris R. Hester Page 19
X. DIRECTORS' r ND OFFICERS' CHARGE
83. The Directors and Officers, as a condition of their continued involvement with the
respective Applicants, have indicated that their respective ongoing involvement is conditional
upon the granting of an order under the CCAA which grants a charge on the Property in the
maximum amount of $300,000 (the "D&O Charge") as security for the Applicants'
indemnification for possible liabilities which may be incurred by such Directors and Officers,
which would be subordinate to the Administration Charge, the DIP Charge, and the pre-filing
secured claims of Wells Fargo.
84. The Applicants maintained an Executive Insurance policy with Liberty Mutual Insurance
Company (the "Liberty Policy"). The Liberty Policy provides coverage to the Applicant, any
subsidiary or joint-venture of the Applicant and the Directors and Officers. The aggregate limit
of liability coverage provided for under the Liberty Policy is $5,000,000. The Liberty Policy
expired on February 17, 2013.
85. The Applicants also maintained an Executive Liability & Indemnification insurance
policy with Chartis Insurance Company of Canada (the "Chartis Policy", and, together with the
Liberty Policy, the "Policies"). The aggregate limit of liability coverage provided for under the
Chartis Policy was $5,000,000. The Chartis Policy expired on December 31, 2012.
86. Management of the Applicant has made inquiries with the Applicant's current insurance
broker and I am advised that a comparable level of insurance coverage will not likely be
available to the Applicants after the Policies expire or, if such policies are available, they will be
cost-prohibitive for the Applicants, due to the Applicants' poor financial health.
87. The Policies contains several exclusions and limitations to the coverage they provide and
there is a potential for there to be insufficient coverage in respect of the potential liabilities for
which the Directors and Officers may be found responsible.
88. The D&O Charge is required in order to provide a level of protection to the Directors and
Officers with respect to the possible liabilities imposed on individuals in their capacity as
directors and officers of a corporation. I believe that the request of the Directors and Officers to
receive adequate protection in the form of the D&O Charge is fair and reasonable and advances
Affidavit of Harris K Hester Page 20
the integral need of the Applicants to have fully functional, experienced and qualified advisors,
boards of directors and officers.
1_EthYSi Itik1
89. It is in the best interests of all stakeholders of the Applicants for this Court to grant the
relief sought by the Applicants. It will allow the Applicants, with the support of the Monitor, to
restructure or realize the collective business in a way to maximize value for all stakeholders. I
believe this is preferable to the Applicants' assets becoming subject to bankruptcy or
receivership proceedings.
90. This Affidavit is sworn in support of the relief requested by the Applicants and for no
other or improper purposes.
Court File No. CV-13-10009-OOCL
. r 4iJ ~
Proceeding commenced at Toronto
& BERLIS LLP Barristers and Solicitors
Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: ren lish(cr~,airdberlis.com
Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversa(a~airdberlis.com
James A. Desjardins (LSUC # 62493E) Tel: 416.865.4641 Fax: 416.863.1515 Email: jdesiardins@airdbenis.com
Lawyers for The John Fosyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
13933635.5
.;
Attached is Exhibit "C"
Referred to in the
Affidavit of Harris R, Hester
Sworn before me 45 I day of May, 2014
y®
Commissioner for taking Affidavits, etc
13-10526-scc Doc 24 Filed 03/18/13 Entered 03/18/13 14:21:23 Main Document Pg 1 of 6
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK
----------------------------------------------- x
In re: Chapter 15
THE JOHN FORSYTH SHIRT COMPANY LTD., et al. 1 Case No. 13-10526 (SCC)
Debtors in Foreign Proceeding. Jointly Administered
---------------------------------------------------------------x
ORDER GRANTING RECOGNITION AND RELATED RELIEF
Upon the request of BDO Canada Limited, the court-appointed monitor (the
"Monitor") and authorized foreign representative of the proceedings (the " Canadian
Proceedings ") of The John Forsyth Shirt Company Ltd. (" Forsyth Canada"), Forsyth Holdings,
Inc, ("Forsyth Holdings") and Forsyth of Canada, Inc. (" Forsyth USA" and together with Forsyth
Canada and Forsyth Holdings, the " Forsyth Entities ") under Canada's Companies Creditors
Arrangement Act, R.S.C. 1985, c. C-36 (as amended, the " CCAA") pending before the Ontario
Superior Court of Justice (Commercial List) (the " Ontario Court"), seeking an order recognizing
the Canadian Proceedings as foreign main proceedings and enforcing pursuant to section 1507,
1520, 1521, 363, 364 and 105 of the Bankruptcy Code the Initial Order of the Ontario Court,
dated February 22, 2013 (the " Initial Order"); due and timely notice of the filing of the Chapter
15 Petitions having been given in accordance with this Court's order dated February 22, 2013,
approving the form and manner of service thereof (the " Service Order"), which notice is deemed
adequate for all purposes such that no other or further notice thereof need be given; and the
Court having considered and reviewed the other pleadings and exhibits submitted by the Monitor
The debtors in these cases and the last four digits of each debtor's tax identification number are as follows: The John Forsyth Shirt Company Ltd. (RC0001), Forsyth Holdings, Inc. (7524), and Forsyth of Canada, Inc. (7526).
RLF1 8321798v.1
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pp of t Chapter " and the Court having determined that the relief requested in support f he Cha per 15 Petitions; a. .e „u.
by the Monitor is in the best interests of the Forsyth Entities, their creditors and other parties in
interest; and any objections to the Chapter 15 Petitions that have not been withdrawn or resolved
having been or are hereby overruled.
Therefore, after due deliberation and sufficient cause appearing therefor, the Court
finds and concludes as follows:
(A) This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and
1334 and section 1501 of the Bankruptcy Code.
(B) This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(P).
(C) Venue is proper in this District pursuant to 28 U.S.C. §§ 1410 (1) and (3).
(D) The Monitor is a person within the meaning of section 101(41) of the Bankruptcy
Code and is the duly appointed foreign representative of each of the Forsyth Entities within the
meaning of section 101(24) of the Bankruptcy Code.
(E) The Chapter 15 Cases were properly commenced pursuant to sections 1504 and
1515 of the Bankruptcy Code.
(F) The Chapter 15 Petitions meet, and the Monitor has satisfied, the requirements of
section 1515 of the Bankruptcy Code.
(G) The Canadian Proceedings are foreign proceedings within the meaning of section
101(23) of the Bankruptcy Code.
(H) The Canadian Proceedings are entitled to recognition by this Court pursuant to
section 1517 of the Bankruptcy Code.
(I) The Canadian Proceedings are pending in Ontario, Canada, and Canada is the
center of main interests of each of the Forsyth Entities. As such, the Canadian Proceedings
2 RLFI 8321798v.1
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constitute foreign main proceedings pursuant to section 1502(4) of the Bankruptcy Code and are
entitled to recognition as foreign main proceedings pursuant to section 1517(b)(1) of the
Bankruptcy Code.
(J) The Monitor is entitled to all the relief provided by sections 1520, 1521(a) and
1521(b) of the Bankruptcy Code, without limitation.
(K) The relief granted hereby is necessary and appropriate, in the interests of the
public and international comity, consistent with the public policy of the United States, warranted
pursuant to section 1521 of the Bankruptcy Code, and will not cause any hardship to any party in
interest that is not outweighed by the benefits of granting that relief.
(L) The interest of the public will be served by this Court granting the relief requested
by the Monitor.
(M) Time is of the essence in the Canadian Proceedings and cause has been shown as
to why this Order should not be subject to the stay provided by Rule 6004 of the Federal Rules of
Bankruptcy Procedure (the " Bankruptcy Rules ") or any other stay of effectiveness
NOW, THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:
1. The Chapter 15 Petitions are granted.
2. The Canadian Proceedings are hereby recognized and granted recognition as
foreign main proceedings pursuant to section 1517 of the Bankruptcy Code.
3. All provisions of section 1520 of the Bankruptcy Code apply in these Chapter 15
Cases, including, without limitation, the stay under section 362 of the Bankruptcy Code and the
ability to obtain financing under Section 364 of the Bankruptcy Code, throughout the duration of
these Chapter 15 Cases or until otherwise ordered by this Court.
3 RLF 1 8321798v,1
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4. The Initial Order, including any extensions, amendments or modifications thereto,
is hereby given full force and effect within the territorial jurisdiction of the United States. The
transactions already consummated or authorized by the Initial Order but not yet consummated,
including without limitation, the entry into the DIP Facility (as defined in the Initial Order), also
are and shall be recognized and granted comity and given full force and effect in the United
States to the same extent that they are given effect in Canada, and each is binding on all creditors
of the Forsyth Entities and any of their successors or assigns.
5. The Forsyth Entities and the Monitor are authorized and empowered to cause to
be filed with the secretary of state of any state or other applicable officials of any applicable
governmental units any and all certificates, agreements, or amendments necessary or
appropriate to effectuate the provisions of this Order, as any officer of the Forsyth Entities or
the Monitor may determine are necessary or appropriate. Consistent with 8 Del. C. § 303, the
execution of any such document or the taking of any such action is deemed conclusive evidence
of the authority of such person to so act on behalf of Forsyth USA and Forsyth Holdings.
Without limiting the generality of the foregoing, this Order shall constitute all approvals and
consents, if any, required by the corporation law of the state of Delaware for Forsyth USA and
Forsyth Holdings with respect to the implementation of this Order, and the transactions
contemplated thereby and hereby.
6. Notwithstanding Bankruptcy Rules 6004, 7062, and 9021,. this Order shall be
effective and enforceable immediately upon entry and its provisions shall be self-executing.
7. This Court shall retain jurisdiction with respect to the enforcement, amendment or
modification of this Order, any request for additional relief or any adversary proceeding brought
in and through these Chapter 15 Cases, and any request by an entity for relief from the provisions
4 RLF 1 8321798v.1
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of this Order, for cause shown, that is properly commenced and within the jurisdiction of this
Court.
8. This Order shall be served on or before March 21, 2013,. in accordance with the
Service Order and shall constitute adequate and sufficient service and notice of this Order.
9. The Chapter 15 Petitions and related filings shall be made available by the
Monitor through its website at http://www.bdo.ca/forsyth or upon request at the offices of its
counsel: Richards, Layton & Finger, One Rodney Square, 920 North King Street, Wilmington,
Delaware 19801, Attention: Russell C. Silberglied.
5 RLF 1 8321798v.1
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10. Notwithstanding Bankruptcy Rule 7062, made applicable to these Chapter 15
Cases by Bankruptcy Rule 1018, the terms and conditions of this Order shall be immediately
effective and enforceable upon its entry, and upon its entry, this Order shall become final and
appealable.
Dated: March 18, 2013 New York, New York
/s/ Shelley C. Chapman HONORABLE SHELLEY C. CHAPMAN UNITED STATES BANKRUPTCY JUDGE
6 RLF 1 8321798v.1
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---------------------------------------------------------------x In re:
Chapter 15 THE JOHN FORSYTH SHIRT COMPANY LTD., et al. 1 : Case No. 13-10526 (SCC)
Debtors in Foreign Proceeding. Jointly Administered
x
Iii, I I
This matter was brought upon by the motion (the " Motion")2 of BDO Canada Limited
(the "Monitor"), as the court-appointed monitor and authorized foreign representative for The
John Forsyth Shirt Company Ltd. (" Forsyth Canada"), Forsyth Holdings, Inc. ("Forsyth
Holdings") and Forsyth of Canada, Inc. (" Forsyth USA" and together with Forsyth Canada and
Forsyth Holdings, the "Forsyth Entities "), pursuant to sections 1519 and 1521 of title 11 of the
United States Code (the " Bankruptcy Code "), for (i) entry of an emergency order (the
"Provisional Order") which imposes a stay of all proceedings in the United States against the
Monitor or the Forsyth Entities, and the Forsyth Entities' business, property or assets located in
the United States and any attempt to collect thereon or any attempt to terminate executory
contracts and recognizes the Initial Order on an interim basis, and grants certain relief under
section 364 of the Bankruptcy Code on an interim basis and (ii) concurrently with or after entry
of a recognition order under section 1517 of the Bankruptcy Code, the entry of a final order (the
' The debtors in these cases and the last four digits of each debtor's tax identification number are as follows: The John Forsyth Shirt Company Ltd. (RC0001), Forsyth Holdings, Inc. (7524), and Forsyth of Canada, Inc. (7526).
2 Capitalized terms not otherwise defined herein shall have the meanings given to them in the Motion.
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Filial Order") recognizing the 'initial Order, and extending the stay granted in the Provisional
Order on a permanent basis.
This Court entered the Provisional Order on February 27, 2013 and scheduled a hearing
for March 18, 2013 at 2:00 p.m. to consider the Monitor's request for the relief set forth in the
Final Order. The Court has considered and reviewed the Motion, the Verified Petition for
Recognition of Foreign Proceedings and Related Relief filed by the Monitor under chapter 15 of
the Bankruptcy Code (the "Petition"), and the Memorandum of Law filed in support of the
Petition and the Motion. The Court also has considered any objections thereto and held a
hearing in connection with the request for a Final Order. Based on the foregoing, this Court
finds and concludes as follows:
(A) This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and
1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(P), Venue is proper in this
District pursuant to 28 U.S.C. § 1410(1) and (3).
(B) Notice of the hearing on the Motion was sufficient under the circumstances and
no further notice of, or hearing on, the Motion is necessary or required.
(C) The relief sought by the Monitor is authorized under sections 1520(a) and
1521(a)(7) of the Bankruptcy Code.
(D) The Monitor has demonstrated that the extension of the Provisional Order on a
permanent basis is justified because:
(i) pursuant to the Order Granting Recognition [Docket No. 24], the
Canadian Proceedings are foreign main proceedings within the meaning of section 1502(4) of the
Bankruptcy Code; and
2 RLF 1 8321801v.1
13-10526-scc Doc 25 Filed 03/18/13 Entered 03/18/13 14:27:38 Main Document Pg 3 of 4
(ii) the Monitor has demonstrated that the Forsyth Entities will be irreparably
harmed in the absence of the relief requested in that the Monitor has demonstrated that unless the
Provisional Order is extended on a permanent basis, there is a material risk that one or more
parties in interest will take action against the Monitor or the Forsyth Entities, or the Forsyth
Entities' business, assets or property, thereby interfering with the jurisdictional mandate of this
Court under chapter 15 of the Bankruptcy Code, interfering with and causing harm to the
Monitor's efforts to administer the Forsyth Entities' estates pursuant to the Canadian
Proceedings, and undermining the Monitors' effort to reorganize the Forsyth Entities' business.
As a result, the Monitor and the Forsyth Entities will suffer immediate and irreparable harm for
which they will have no adequate remedy at law.
(E) In addition, the Monitor has demonstrated that this Court's recognition of the
Initial Order of the Ontario Court (i) is in the best interests of the Forsyth Entities, their estates,
their creditors and other parties in interest, and (ii) is in the public interest because it will further
the public policy of the United States as articulated in, inter alia, section 1501 of the Bankruptcy
Code.
NOW, THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:
1. The Motion is granted.
2. The Initial Order is hereby recognized and given full force and effect within the
territorial jurisdiction of the United States. The Forsyth Entities shall be permitted to utilize the
DIP Facility in accordance with paragraphs 32-37 of the Initial Order, including, without
limitation, to incur secured indebtedness, to grant the DIP Charge and to execute, deliver and
perform under the DIP Credit Agreement and Definitive DIP Documents
3 RLF 1 8321801v.1
13-10526-scc Doc 25 Filed 03/18/13 Entered 03/18/13 14:27:38 Main Document Pg 4 of 4
3. Without limitation of the foregoing, the relief granted in paragraphs 2-5 of the
Provisional Order are hereby authorized on a final basis.
4. The stay imposed by the Provisional Order is hereby made permanent subject to
any further order of the court on any motion by a non-debtor party.
5. No litigation, proceeding, enforcement process or collection action in any court or
tribunal shall be commenced or continued against or in respect of the officers and directors of
any of the Forsyth Entities, except with the written consent of the Monitor, or with leave of this
Court or the Ontario Court.
6. Nothing herein shall enjoin a police or regulatory act of a governmental unit,
including a criminal action or proceeding.
7. Notice of the entry of this Order shall be served in accordance with Rule 2002 of
the Federal Rules of Bankruptcy Procedure.
8. This Court shall retain jurisdiction with respect to the enforcement of this Order.
Dated: March 18, 2013 New York, New York
/s/ Shelley C. Chapman HONORABLE SHELLEY C. CHAPMAN UNITED STATES BANKRUPTCY JUDGE
4 RLF 18321801 v.1
1.
Attached is Exhibit "D"
Referred to in the
Affidavit of Harris R. Hester
Sworn before me
this 5' day of May, 20 a
Commissioner for taking Affidavits, etc
Court 111e No. V- 13 - 10007° LL
S'
THURSDAY, THE 21 ST DAY
1
u , • .. ~ .
1
ORDER (Stay Extension)
THIS MOTION, made by The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc.
and Forsyth of Canada, Inc. (collectively, the "Applicants"), for an order, inter alia: (a)
extending the Stay Period (as defined in the Initial Order of the Honourable Mr. Justice Wilton-
Siegel granted on February 22, 2013 in these proceedings (the "Initial Order")) to and including
May 24, 2013; and (b) approving the First Report of BDO Canada Limited, in its capacity as the
Court-appointed monitor of the Applicants (in such capacity, the "Monitor") dated March 18,
2013 (the "First Report") and approving the actions of the Monitor described therein, was heard
this day at 330 University Avenue, Toronto, Ontario.
ON READING the affidavit of Harris R. Hester sworn. March 14, 2013 and the exhibits
thereto and the First Report, and on hearing the submissions of counsel for the Applicants,
1)
' cv 4 counsel for the Monitor, counsel for Workers United Qn±ario Council Local 2643 and counsel
for Wells Fargo Capital Finance Corporation, no one appearing for any other person on the
service list, although duly served as appears from the affidavit of Christine Doyle sworn March
14, 2013, filed,
1. THIS COURT ORDERS that the time for service and filing of the notice of motion and
the motion record is hereby abridged and validated so that this motion is properly returnable
today and hereby dispenses with further service thereof.
2. THIS COURT ORDERS that the Stay Period, as defined in paragraph 14 of the Initial
Order, be and is hereby extended to and including May , 2013.
3. THIS COURT ORDERS that the First Report and the actions of the Monitor described
therein be and are hereby approved.
TGROINTG
ON 1 BOOK NO: LE ! DNS LE ;EGS IRE
MAR 21 2Q13
r + 1 1>
•; •• •• I • • liii'• F. Court File No. CV-13-10009-OOCL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
•i
AIRD & BERLIS LLP Barristers and Solicitors
Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862FIB) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglish(iairdberlis.com
Ian Aversa (LS€JC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversa(ci,airdberlis_com
James A. Desjardins (LSUC # 62493E) Tel: 416.865.4641 Fax: 416.863.1515 Email: jdesjardins@airdberlis.com
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
wu
Attached is Exhibit "E"
Referred to in the
Affidavit of Harris R, Hester a~a4oelraereers~~r~
®~~'® ~us~t~• °"®~® Sworn before me
is 5'f' day of May, 14
'4
~®e0dog Commissioner for taking Affidavits, etc
Court File No. CV-13-10009-OOCI,
/ •' I
THE HONOURABLE MR. ) MONDAY, THE 27TH DAY
JUSTICE NEWBOULD ) OF MAY, 2013
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
u, •
1 r
ORDER (Re: Stay Extension)
THIS MOTION, made by The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc.
and Forsyth of Canada, Inc. (collectively, the "Applicants "), for an order, inter alia, extending
the Stay Period (as defined in the Initial Order of the Honourable Mr. Justice Wilton-Siegel
granted on February 22, 2013 in these proceedings (the "Initial Order")) to and including May
31, 2013, was heard this day at 330 University Avenue, Toronto, Ontario,
ON READING the affidavit of Harris R, Hester sworn May 20, 2013 and the exhibits
thereto and the Second Report of BDO Canada Limited, in its capacity as the Court-appointed
monitor of the Applicants (in such capacity, the "Monitor") dated May 17, 2013 (the "Second
Report"), and on hearing the submissions of counsel for the Applicants, counsel for the Monitor,
counsel for Workers United Canada Council Local 2643, counsel for Manunion Investments
Limited and counsel for Wells Fargo Capital Finance Corporation Canada and Wells Fargo
Capital Finance, LLC ("Wells Fargo"), no one appearing for any other person on the service list,
although duly served as appears from the affidavit of Eunice Baltkois sworn May 17, 2013, filed,
1. THIS COURT ORDERS that the Stay Period, as defined in paragraph 14 of the Initial
Order, be and is hereby extended to and including May 31, 2013.
N THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF THE JOHN FORSYTH SHIRT COMPANY LTD., et al.
Court File No. CV-13-10009-0OCL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
ORDER (Re: Stay Extension)
AIRD & BERLIS LLP Barristers and Solicitors
Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9
D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglisb@airdberlis.com
Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863 -1515 Email: iaversa@airdberlis.com
Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.
14729714.1
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