2039882 Ontario Limited o/a Shelter Cove

CCAA

^{Page last updated: April 22, 2024}

This page is for information purposes only and you should consult your professional adviser if you have any questions or are uncertain as to your rights or obligations.

Status of File as of April 11, 2024

On April 10, 2024, the Monitor filed its Third Report with the Court (the “Third Report”) to inform the Court of the following:

1. The activities of the Company and the Monitor since the Second Report;
2. The results of the SISP;
3. The variance analysis of the Company’s actual cashflow for the period from January 13, 2024 to April 5, 2024 as compared to the forecasted cashflow the same period;
4. The Company’s extended cashflow forecast  for the period from  April 6, 2024 to May 31, 2024, prepared in connection with the Company’s motion for the Stay Extension Order, to extend the Stay Period to and including  May 31, 2024 and to seal the Letters of Intent received during the SISP (the “Motion”); and
5. The Monitor’s views on the Company’s Motion.

Status of File as of April 9, 2024

On April 8, 2024, the Company filed their motion with the Court for an order (the “Stay Extension Order”) to, among other things, extend the Stay Period to an including May 31, 2024.

The motion will be heard on April 12, 2024.

Status of File as of March 15, 2024

In accordance with Section 8 of the SISP, the Company has extended the Phase 1 deadline to submit a Letter of Intent from 2 pm (EST) on March 6, 2024 to 2 pm (EST) on March 20, 2024.

Status of File as of February 6, 2024

On February 6, 2024, the Court issued an order (the “SISP Approval Order”) which, among other things approved the Sale, Refinancing and Investment Solicitation Process (“SISP”), in the form attaches as Schedule “A” to the SISP Approval Order.

More information on the SISP may be found on the “Sale and Investment Solicitation Process (SISP)” subpage of this website.

Status of File as of February 2, 2024

On February 2, 2024, the Company filed its motion with the Court for an order (the “SISP Approval Order”) to, among other things:

1. Approve a sale, refinancing and investment solicitation process (the “SISP”);
2. Approve the Amended Engagement Letter (as defined in the motion) between the Company and Clariti Strategic Advisors Inc. (“Clariti”) to assist the Company with, among other things, identifying and soliciting strategic transactions for the as part of the SISP; and
3. Grant a charge in favour of Clariti (the “Transaction Fee Charge”), to a maximum amount of $1.5 million, as security for the fees owed to Clariti.

On the same date, February 2, 2024, the Monitor filed its Second Report with the Court (the “Second Report”) to inform the Court of the:

1. The activities of the Company and the Monitor since the date of the First Report;
2. The Company’s actual cash flows for the period ending January 26, 2024 as compared to the cash flow forecast included in the Pre-Filing Report; and
3. The Monitor’s views on the Company’s motion for the SISP Approval Order.

The motion will be heard on February 6, 2024.

Status of File as of January 26, 2024

On January 26, 2024, the Court issued the Amended and Restated Initial Order which, among other things:

1. Extended the Stay Period to and including April 12, 2024;
2. Approved the increase of the Administration Charge to $285,000;
3. Approved the “KHL DIP Facility in the amount of $2.5 million replacing  the DIP Facility approved by the Initial Order;
4. Approved the increase of the DIP Lender’s Charge, in favour of KHL, to 2.5 million (the “KHL DIP Lender’s Charge”);
5. Authorized the Company to pay the DIP Lender $850,000 from the funds available from the KHL DIP Facility with accrued interest and fees; and
6. Approved the increase of the Directors’ Charge to $425,000.

Status of File as of January 25, 2024

On January 25, 2024, the Monitor filed its First Report with the Court (the “First Report”) to inform the Court of the:

1. The activities of the Company and the Monitor since the Filing Date;
2. The terms of a new DIP financing facility (the “KHL DIP Financing Facility”) to be made available to the Applicant by KHL Investments USA Inc. (“KHL”) which replaces the DIP Financing Facility provided by CC 108; and
3. The Monitor’s views on the Applicant’s motion for the Amended and Restated Initial Order (the “Amended and Restated Initial Order”).

Status of File as of January 18, 2024

On January 18, 2024 (the “Filing Date”), 2039882 Ontario Limited, operating as Shelter Cove (the “Applicant” or the “Company”) applied for and received an order (the “Initial Order”) for protection pursuant to the Companies’ Creditors Arrangement Act R.S.C.1985, c.C-36, as amended (“CCAA Proceeding”) from the Ontario Superior Court of Justice Commercial List (the “Court”).

The Initial Order, among other things:

1. Appointed PricewaterhouseCoopers Inc., LIT (”PwC”) as monitor of the Company (the “Monitor”);
2. Approved a stay of proceedings up to and including January 29, 2024 (“Stay Period”), which applies against the Company or the Monitor, or any of their respective employees and representatives, any of the former, current or future directors or officers of the Company and the Company’s Property and Business (as defined in the Initial Order);
3. Authorized the Company to continue to use the central cash management system (“CMS”) currently in place as described in the affidavit of Mario Bevacqua, sworn January 16, 2024 (the “Bevacqua’s Affidavit”) or,  replace it with another substantially similar CMS;
4. Granted a first ranking charge, in the amount of $255,000 (the “Administration Charge”), on the Property of the Company, as security for the professional fees and disbursements of the Monitor, the Monitor’s counsel, the Company’s counsel and the Company’s investment banking advisor, Clariti Strategic Advisors Inc., which charge shall rank in priority to all other security interests, trusts, liens, charges and encumbrances, claims of secured creditors, statutory or otherwise;
5. Authorized the Company to borrow under a credit facility from CC 108 Lender Limited Partnership (the “DIP Lender”) in order to finance the Company’s working capital requirements and other general corporate purposes and capital expenditures, provided that borrowings under such credit facility shall not exceed $850,000 (the “DIP Facility”), unless permitted by further order of this Court; and
6. Granted a second ranking charge in favour of the DIP Lender over the Property of the Company to a maximum amount of $850,000, as security for the DIP Facility (the “DIP Lender’s Charge”); and
7. Granted a third ranking charge, in the amount of $75,000 (the “Directors’ Charge”), on the Property of the Company, as security for the indemnity granted to the Company’s directors and officers, which charge shall rank in priority to all other security interests, trusts, liens, charges and encumbrances, claims of secured creditors, statutory or otherwise.

In accordance with section 23 (1)(ii)(b) of the CCAA and the Initial Order, on January 23, 2024, a notice was sent to all known creditors of the Companies who are owed $1,000 or more.