Motion Record of the Receiver Dated Dec 23, 2020

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Motion Record of the Receiver Dated Dec 23, 2020 Court File No. CV-20-00650239-00CL ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST IN THE MATTER OF SECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C.1985, C.B-3 AS AMENDED; IN THE MATTER OF SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990 c. C- 43, AS AMENDED BETWEEN: THE BANK OF NOVA SCOTIA Applicant - and - 1854313 ONTARIO LIMITED Respondent MOTION RECORD December 23, 2020 HARRISON PENSA LLP Barristers & Solicitors 450 Talbot Street London, ON N6A 4K3 Timothy C. Hogan (LSO #36553S) Tel: 519-679-9660 Fax: 519-667-3362 [email protected] Solicitors for the Receiver, BDO Canada Limited TO: Service List SERVICE LIST TO: LIPMAN, ZENER & WAXMAN PC Lawyers for The Bank of Nova Scotia Barristers and Solicitors 100 Sheppard Avenue East, Suite 850 Toronto, Ontario M2N 6N5 Ian Klaiman (LSO #58955G) Jason Spetter (LSO #46105S) Direct: 416-789-0658 / 416-789-0655 Fax: 416-789-9015 Email: [email protected] [email protected] AND TO: BDO Canada Limited Receiver 20 Wellington Street East, Suite 500 Toronto, Ontario M5E 1C5 Clark Lonergan Tel: 416-844-0843 Fax: 416-488-3765 Email: [email protected] AND TO: 1854313 ONTARIO LIMITED Respondent 1051 Upper James Street, Suite 200 Hamilton, Ontario L9C 3A6 Attention: Syed Bukhari Email: [email protected] AND TO: SYED BUKHARI 1051 Upper James Street, Suite 200 Hamilton, Ontario L9C 3A6 Email: [email protected] AND TO: 2642614 ONTARIO INC. 3751 Hwy 6 Mount Hope, Ontario, L0R 1W0 Attention: Syed Bukhari Email: [email protected] AND TO: TOUCHSTONE GROUP LTD. 48 Finch Avenue West Toronto, Ontario M2N 2H2 Attention: Matthew Moyal Email: [email protected] AND TO: ENERCARE HOME AND COMMERCIAL SERVICES INC. ENERCARE HOME AND COMMERCIAL SERVICES LIMITED PARTNERSHIP 7400 Birchmount Road Markham, Ontario L3R 5V4 Andrew Ottaway Tel: 416-649-1943 Email: [email protected] AND TO: KONE INC. 4225 Naperville Road Lisle, IL 60532 Anne C. T. Barber Operations Counsel Tel: 309-743-5867 309-269-5123 (mobile) E-mail: [email protected] AND TO: MATTHEW MOYAL 48 Finch Avenue West Toronto, Ontario M2N 2H2 Email: [email protected] AND TO: Ministry of Finance Legal Services Branch 777 Bay Street, 11th Floor Toronto, Ontario M5G2C8 Kevin O’Hara Tel: 905-433-6934 Fax: 905-436-4510 E-mail: [email protected] AND TO: Department of Justice Ontario Regional Office The Exchange Tower 130 King Street West, Suite 3400 Toronto, Ontario M5X 1K6 Diane Winters Tel: 416-973-3172 Fax: 416-973-0810 E-mail: [email protected] INDEX INDEX Tab Document Page No. 1 Notice of Motion dated December 23, 2020 1 Schedule “A” – Zoom Conference Details 9 2 First Report of the Receiver, dated December 22, 2020 12 Appendix A – Receivership Order dated October 29, 2020 35 Appendix B – Sample Tenant Letter dated October 30, 2020 53 Appendix C – Notice to Service List of Receiver’s Possession dated 55 November 3, 2020 Appendix D – Receiver’s Counsel E-mails dated November 3 and 58 November 5, 2020 Appendix E – Receiver’s Counsel E-mails dated November 5 and 63 November 6, 2020 Appendix F – Receiver’s Counsel E-mail dated November 11, 2020 70 Appendix G – Receiver’s Counsel E-mail dated November 16, 2020 80 Appendix H – Matthew Moyal’s E-mails dated November 16, 2020 83 Appendix I – Receiver’s Counsel Letter dated November 19, 2020 88 Appendix J – Receiver’s Counsel E-mail dated December 8, 2020 93 Appendix K – Receiver’s Counsel Opinion dated November 26, 2020 97 Appendix L – Affidavit of BDO Canada Limited dated December 22, 113 2020 Appendix M – Affidavit of Harrison Pensa LLP dated December 22, 133 2020 Tab 1 Court File No. CV-20-00650239-00CL ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST IN THE MATTER OF SECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C.1985, C.B-3 AS AMENDED; IN THE MATTER OF SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990 c. C- 43, AS AMENDED BETWEEN: THE BANK OF NOVA SCOTIA Applicant - and - 1854313 ONTARIO LIMITED Respondent NOTICE OF MOTION (returnable January 11, 2021) BDO Canada Limited (“BDO”) in its capacity as Court-appointed receiver (the “Receiver”) appointed pursuant to the Order of the Honourable Justice Cavanagh dated October 29, 2020 (the “Appointment Order”) of the Property of 1854313 Ontario Limited (“DCC”), as defined in the Appointment Order, will make a motion to the Court on January 11, 2021 at 12 noon, or as soon after that time as the motion can be heard by judicial teleconference via Zoom at Toronto, Ontario. Please refer to the conference details attached as Schedule “A” hereto in order to attend the motion and advise if you intend to join the motion by emailing Lindsay Provost at [email protected]. PROPOSED METHOD OF HEARING: The Motion is to be heard: [ ] in writing under subrule 37.12.1(1) because it is on consent; [ ] in writing as an opposed motion under subrule 37.12.1(4); [X] orally. 1 THE MOTION IS FOR AN ORDER: 1. That the time for service, filing and confirmation of the Notice of Motion and the Motion Record be abridged so that this motion is properly returnable today and hereby dispenses with further service and confirmation hereof; 2. Approving the Receiver’s First Report to the Court dated December 22, 2020 (the “First Report”) and the activities and conduct of the Receiver as detailed therein; 3. That the Receiver’s Interim Statement of Receipts and Disbursements, as detailed in the First Report, be approved; 4. That the Receiver’s Fees and Counsel Fees (all as defined and detailed in the First Report), and payment of same, be approved; 5. Approving the Sale Process (as defined and detailed in the First Report); 6. Directing Touchstone Group Inc. (“Touchstone”), Matthew Moyal (“Moyal”), DCC and Syed Bukahri (“Bukahri”) to provide to the Receiver a full detailed accounting of receipts received and disbursements in relation to the Property (as defined in the Appointment Order) as well as any books and records of DCC in their possession; 7. Seeking directions from this Court with respect to the payment to the Receiver of all monies collected or earned from the Property (as defined in the Appointment Order) following October 29, 2020 by Touchstone and Moyal and directing Touchtone and Moyal pay to the Receiver the sum of all monies collected or earned from the Property following October 29, 2020; and, 8. Such further and other relief as counsel may request and this honourable court may permit. THE GROUNDS FOR THE MOTION ARE: The Debtors and the Appointment of the Receiver 1. Pursuant to the Appointment Order dated October 29, 2020 (the “Date of Appointment”), BDO was appointed as the Receiver of all of the assets, properties and undertakings (collectively, the “Property”) of DCC under section 243 (1) of the 2 Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (the “BIA”) and section 101 of the Courts of Justice Act, R.S.O 1990, c. C.43 as amended (the “CJA”). 2. DCC is a corporation incorporated pursuant to the laws of Ontario which operated a two- story, approximately 250,000 square foot, shopping centre comprised of both retail and office space located at 100 King St. West, Chatham, Ontario (the “Premises”). 3. The shares of DCC are owned by 2642614 Ontario Inc. (“264”), a holding company controlled by Bukahri. In 2018, 264 purchased the shares of DCC from Touchstone, a company owned and controlled by Moyal. Secured Claims 4. The Bank of Nova Scotia (“BNS”) provided certain financing to DCC who as consideration, provided to BNS a general security agreement, collateral mortgage and assignment of rents (collectively the “BNS Security”). As at the Date of Appointment, the amount owing to BNS by DCC was approximately $14.0 million. The Receiver has obtained an independent legal opinion which states that the BNS Security is valid and enforceable. 5. The Receiver has, obtained relevant search results under the personal property search results in Ontario. In addition to the prior registrations in favour of BNS, those searches revealed the following registration: a. Touchstone for assignment of rents of tenants at the Premises, registered July 29, 2020. 6. The Receiver has, obtained relevant real property registration search results in Ontario. In addition to the prior registrations in favour of BNS, those searches revealed the following registrations: a. Touchstone in the amount of approximately $4.0 million, registered November 27, 2019; b. Enercare Home and Commercial Service Inc. in the amount of approximately $35,000, registered on June 29, 2020. This registration relates to a rented rooftop heating unit installed at the Premises; and 3 c. Kone Inc. in the amount of approximately $24,000, registered on August 6, 2020. This registration is a perfected construction lien concerning the lifting devices (elevators and escalators) at the Premises. 7. As at the date of the First Report, the Receiver has not obtained an independent opinion with respect to the validity or the enforceability of the security granted by DCC in favour of Touchstone. Events Leading to Appointment of a Receiver & Causes of Insolvency 8. On or about August 1, 2020, Touchstone took over possession and control of DCC and BNS was advised by Moyal that he was personally appointed as receiver of DCC on behalf of Touchstone (in such capacity the “Touchstone Moyal Receiver”). 9. Moyal has advised the Receiver that Touchstone is a secured creditor of DCC. The Receiver has obtained a copy of certain of the security that Touchstone relies on, including a mortgage (“Touchstone Mortgage”).
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