Clerk’s Stamp COURT FILE NUMBER: 2001-06194 JUDICIAL CENTRE: CALGARY APPLICANTS: IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, RSC 1985, c C- 36, as amended 109424 AND IN THE MATTER OF THE COMPROMISE OR ARRANGEMENT COM Feb 02 2021 OF REDROCK CAMPS INC., J. Jones SOCKEYE ENTERPRISES INC., SWEETWATER HOSPITALITY INC. and BALDR CONSTRUCTION MANAGEMENT INC. DOCUMENT: BRIEF ADDRESS FOR SERVICE AND MLT AIKINS LLP CONTACT INFORMATION OF Barristers & Solicitors PARTY FILING THIS DOCUMENT: 2100 Livingston Place – 222 3rd Avenue SW Calgary, AB T2P 0B4 Attention: Ryan Zahara/Catrina Webster Phone: 403.693.5420/403.693.4347 Facsimile: 403.508.4349 File: 0128056.00002 23832757 - 2 - TABLE OF CONTENTS PART I – INTRODUCTION ........................................................................................................ 3 PART II – STATEMENT OF FACTS .......................................................................................... 4 PART III - ISSUE ......................................................................................................................13 PART IV – LAW AND ARGUMENT ...........................................................................................13 A. Approval of Asset Sales ............................................................................................................... 13 B. Approval of the Reverse Vesting Order ...................................................................................... 14 C. The Purchase Agreement is Appropriate in the Circumstances .............................................. 14 D. The Reverse Vesting Order is Appropriate in the Circumstances ........................................... 16 i. Use and Effect of a Reverse Vesting Order ................................................................................ 16 ii. Authority to Grant a Reverse Vesting Order .............................................................................. 17 iii. The Reverse Vesting Order is Appropriate in the Current Circumstances ............................. 20 iv. The Reverse Vesting Order is in the Best Interests of the Companies’ Stakeholders .......... 21 PART V – RELIEF SOUGHT ...................................................................................................................... 22 LIST OF AUTHORITIES ............................................................................................................................. 23 23832757 000002 - 3 - PART I – INTRODUCTION 1. This brief is submitted on behalf of BDO Canada Limited, in its capacity as the court- appointed Monitor (“BDO” or the “Monitor”) of Redrock Camps Inc. (“Redrock”), Sockeye Enterprises Inc. (“Sockeye”), Sweetwater Hospitality Inc. (“Sweetwater”), and Baldr Construction Management Inc. (“Baldr”, and together with Redrock, Sockeye and Sweetwater, the “Companies”), in support of an Application filed on January 27, 2021 (the “Application”) seeking, among other things, the following relief: (i) an order (the “SAVO”) approving the Asset Purchase Agreement dated January 26, 2021 (the “Purchase Agreement”) between Redrock, as vendor, and Invico Holdings Canada Inc. (“IHC”) and Redrock Camps LP (“RC LP”), by its general partner Redrock Camps GP Ltd. (“RC GP”, and together with IHC and RC LP, the “Purchasers”), as purchasers, and authorizing Redrock and the Monitor to take any and all such steps as are necessary or advisable to implement and close the transaction contemplated by the Purchase Agreement (the “Transaction”); and (ii) transferring and vesting all of Redrock’s right, title and interest in and to the Excluded Assets (as defined in the Purchase Agreement) in the name of Baldr, subject to the Encumbrances (as defined in the Purchase Agreement) (the “Reverse Vesting Order”). 2. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Sixth Report of the Monitor, dated January 27, 2021 (the “Sixth Report”).1 3. The Purchase Agreement was the only viable transaction that resulted from the Court- approved sale and investment solicitation, and is in the best interest of the Companies’ stakeholders as it preserves the business of Redrock on a going concern. The Purchase Agreement, which is conditional on the Reverse Vesting Order, is appropriate in the 1 Sixth Report of the Monitor, dated January 27, 2021 (the “Sixth Report”). 23832757 000003 - 4 - circumstances and best fulfils the remedial purpose of the Companies’ Creditors Arrangement Act (the “CCAA”).2 PART II – STATEMENT OF FACTS 4. On May 13, 2020, this Honourable Court granted the Initial Order, among other things: (a) declaring that the CCAA applies to the Companies; (b) granting a stay of proceedings up to and including May 25, 2020 (the "Stay Period"); and (c) appointing BDO as the Monitor of the Companies in these proceedings.3 5. On May 25, 2020, this Honourable Court granted an Amended and Restated CCAA Initial Order (the “Amended and Restated Initial Order”), among other things, approving an Amended and Restated Interim Financing Agreement among the Companies, as borrowers, and Invico Diversified Income LP (“IDI”), as lender.4 6. Since then, and in addition to extending the stay period to February 12, 2021,5 the Court has granted the following orders: a. On July 14, 2020 – the SISP Approval Order, pursuant to which the Court approved the sale and investment solicitation process (as amended, the "SISP"), the engagement of KPMG Corporate Finance Inc. (the "Sale Advisor") as the sale advisor in respect of the SISP, and certain charges against the Companies' Property (as defined in the Amended and Restated Initial Order);6 and b. On July 14, 2020 – the Enhanced Powers Order, pursuant to which the Court enhanced the powers of the Monitor to enable it to execute any definitive asset 2 Companies’ Creditors Arrangement Act, 1985 RSC c C-36 (the “CCAA”), at TAB 1. 3 Sixth Report, at paras. 2-3. 4 Sixth Report, at para. 5; Fourth Hawkins Affidavit, at para. 11. 5 Affidavit of David Hawkins, affirmed on January 26, 2021 (the “Fourth Hawkins Affidavit”), at para. 13. 6 Sixth Report, at para. 7(b); Fourth Hawkins Affidavit, at para. 12. 23832757 000004 - 5 - sale agreements or investment agreements for and on behalf of the Companies in connection with the SISP.7 7. Pursuant to Orders granted by this Honourable Court on July 17, 2020, September 15, 2020, and October 9, 2020, the stay of proceedings has been extended and is currently set to expire on February 12, 2021.8 8. Pursuant to the SISP, the Monitor is, among other things, authorized to: (a) direct and manage any SISP and all bids made therein; (b) assess the bids in consultation with the Sale Advisor, the Companies, and the Companies’ creditors, as appropriate; and (c) seek approval from the Court for the consummation of any successful bid. 9. In accordance with the terms of the SISP, the Sale Advisor marketed the business and assets of the Companies under the supervision and control of the Monitor.9 Specifically, pursuant to the SISP, the Sales Advisor and the Monitor have taken numerous actions with respect to the Companies, which include, among others: a. marketing and selling the Companies’ property, in accordance with the Monitor’s duties and powers under the SISP and the Initial Order; b. researching and identifying potentially interested parties, including strategic and financial investors; c. preparing a process summary letter (the “Teaser Letter”) and conditional information memorandum (the “CIM”) with input from the Monitor’s legal counsel and the Companies; d. contacting interested parties by email and/or telephone to determine their interest in the SISP and other potential investors and providing them with a copy of the Teaser Letter; e. arranging for notice of the SISP to be published; 7 Sixth Report, at para. 7(a). 8 Sixth Report, at para. 13. 9 Fourth Hawkins Affidavit, at para. 14. 23832757 000005 - 6 - f. preparing and populating an electronic date site containing information on the Companies’ assets and operations (the “Data Room”) for prospective purchasers; g. obtaining signed non-disclosure agreements (each an “NDA”) from interested parties and provided those parties with a copy of the CIM and access to the Data Room; and h. responding to due diligence requests from potential investors and their advisors.10 10. A summary of the various bids received by the Monitor as part of the SISP are set out in the Confidential Supplement to the Sixth Report.11 11. Pursuant to the SISP, the Monitor and the Sale Advisor discussed the bids received, including the Purchasers’ bid, with relevant key stakeholders, apart from IDI and Invico Trade Capital LP (“ITC”, and with IDI, “Invico”).12 12. The Bid Deadline, as defined in the SISP, was August 21, 2020, which deadline was extended by the Monitor to August 28, 2020.13 On August 31, 2020, the Monitor informed Invico that it had been selected as the Successful Bidder (as defined in the SISP), with respect to the following property of the Companies: a. substantially all of the assets of Redrock, not including its shares in Sockeye, Sweetwater and Baldr (the “Transferred Assets”); and b. substantially all of the assets of Sockeye (the “Sockeye Assets”).14 13. Invico was the only bidder that submitted a bid to purchase all of the assets of Redrock and Sockeye on a going concern basis.15 10 Third Report of the Monitor, dated September 11, 2020 (the “Third Report”), at para. 14. 11 Confidential Supplement to the Monitor’s Sixth Report (“Confidential