ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c.

Transcription

1 ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) Court File No. CV CL IN 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 URBANCORP CUMBERLAND 2 GP INC., URBANCORP CUMBERLAND 2 L.P., BOSVEST INC., EDGE ON TRIANGLE PARK INC., AND EDGE RESIDENTIAL INC. RESPONDING WRITTEN SUBMISSIONS OF THE EDGE COMPANIES AND ALAN SASKIN (Motion Returnable January 22, 2018) Date: January 19, 2018 BENNETT JONES LLP One First Canadian Place Suite 3400, P.O. Box 130 Toronto, ON M5X 1A4 Fax: (416) S. Richard Orzy (LSUC # ) Tel: orzyr@bennettjones.com Raj Sahni (LSUC # 42942U) Tel: sahnir@bennettjones.com Emrys Davis Tel: (LSUC # 57391B) davise@bennettjones.com Lawyers for The Edge Companies and Alan Saskin TO: THE SERVICE LIST

2 Overview 1. The Edge Companies and Alan Saskin support the Monitor s position that the Bennett Jones dockets not be produced to the Functionary. Production of dockets to the Functionary for review is: (a) unnecessary given that the Monitor has reviewed them and Bennett Jones has responded to the Monitor s enquiries; (b) improper given that the Functionary appears to be attempting to use his position in this proceeding to advantage his litigation efforts in other proceedings; and (c) unjustifiable given that the cost of further review dwarfs the likely benefit to the estate. Background 2. This is a Canadian CCAA proceeding supervised by this Court and its court officer, The Fuller Landau Group Inc. (the Monitor ). Guy Gissin (the Functionary ) is an Israeli lawyer who initially acted for a group of Israeli creditors of Urbancorp Inc. ( UCI ), the ultimate parent company of the debtors in this CCAA proceeding. He was appointed as a functionary by a court in Israel pursuant to proceedings commenced with respect to UCI in Israel.

3 2 3. The Functionary and the Monitor entered into a protocol to cooperate with each other and to maximize recoveries for the creditors of the Edge Companies and other stakeholders in accordance with their legal priorities The Protocol does not, and the Court should not permit it to, make the Functionary a Canadian court officer, allow him to effectively supplant the Monitor or permit him to duplicate the Monitor s efforts. Rather, an important goal of the Protocol is to promote efficiency and coordination between cross-border proceedings and maximize creditor recovery, which weighs strongly against duplication, as duplication burdens the estate with additional fees and expenses. 5. The Functionary requested that the Monitor review and report on fees charged by Bennett Jones to the Edge Companies. Because Bennett Jones acts for Alan Saskin and the Edge Companies, some of its work relates to the Edge Companies and some to Saskin s proposal proceedings. This situation has been known from the outset of these proceedings and is designed to harness efficiencies. These efficiencies have manifested in modest professional fees for debtor s counsel that may be below those of the Monitor and the Functionary. 6. The wisdom of re-reviewing Bennett Jones fees appeared suspect given the review s high cost and the unlikely prospect that it would reveal savings sufficient to create a net benefit for the estate. Nevertheless, the Monitor obliged. 7. The process took time. Bennett Jones delivered its detailed accounts to the Monitor. The Monitor reviewed them and had questions. Bennett Jones responded to the Monitor s questions. There were further discussions. Ultimately, Bennett Jones agreed to adjust its accounts to 1 Protocol for Co-operation Among Canada Court Officer and Israeli Functionary, Appendix A to the Eighth Report of the Functionary dated January 8, 2018, Functionary Motion Record Tab 2A ( Protocol ).

4 3 reallocate 8.2 hours of time previously docketed to the Edge Companies, resulting in a total reduction of approximately $7,995 plus HST. This represents less than 3 percent of amounts docketed by Bennett Jones to the Edge Companies and is undoubtedly outweighed by the costs of the Monitor and counsel who have had to spend significant time addressing the Functionary s requests. 8. As Bennett Jones confirmed to the Monitor, it at all times tried to carefully and appropriately apportion its time between the Edge and Saskin matters based on its understanding of the facts and issues at the time. As can happen when counsel use best efforts to apportion time between closely related matters that involve calls or meetings related to both, sometimes time is inadvertently apportioned incorrectly or facts later come to light that indicate the time should have been docketed to the other matter. For example, included in the $7,995 figure were amounts docketed on account of the geothermal assets, which at the time they were docketed were thought to have relevance to the Edge Companies. Since it has been determined that they do not, a reallocation of those and other entries was agreed to. 9. The Monitor s review confirmed that the amount docketed to the Edge Companies was de minimis. Indeed, it was likely dwarfed by the cost to the estate of having conducted the review in the first place. In addition, there was nothing to suggest impropriety and no basis to find that Bennett Jones was being funded by the Cumberland 2 Group to conduct legal services on behalf of Alan Saskin personally. 2 2 Ninth Report to Court of the Fuller Landau Group Inc. as Monitor of the Applicants dated January 19, 2018 at para. 6.

5 4 There is no basis to require production of the dockets 10. The Protocol requires the Monitor to provide information pertaining to the Edge Companies to the Functionary only if the Monitor considers the information material or if the information is reasonably requested by the Functionary. For the reasons that follow, the Functionary s request is not reasonable. (i) No additional review is required given that the Monitor has reviewed and reported 11. The Monitor has reported and is satisfied that nothing more need reasonably be done, apart from providing the dockets to the Court under seal should the Court wish to review them. This should end the matter. The Monitor s conclusion in this regard should receive significant consideration. 12. There is no reason to call into question the Monitor s judgment, second-guess the Monitor s conclusions or duplicate the Monitor s work. Doing so simply depletes the estate through additional professional fees, is contrary to the goals of the Protocol and is at odds with the objectives of this CCAA proceeding to maximize creditor recovery. 13. What information can be reasonably requested must be considered in view of the Functionary s position. The Functionary is not the Monitor. He has neither the same responsibilities nor the same entitlements granted him to discharge those responsibilities. The Protocol is not a vehicle for him to supplant the Monitor or duplicate his efforts in overseeing the debtors during the CCAA process.

6 5 14. As described in the next section, the Protocol is also not a vehicle for the Functionary to obtain information for collateral litigation. (ii) The Functionary appears to be on a fishing expedition for an improper and collateral purpose 15. Given the Monitor s conclusions and the de minimis amounts at issue, the Functionary s continued pursuit of the dockets makes no financial sense. This suggests a motivation other than the financial interests of the estate, such as for use in the Functionary s litigation in Israel should he succeed in lifting the stay against Alan Saskin and others. This is the subject of another motion to be heard on January 22, The Functionary s lift stay motion highlights the distinction between him and the Monitor. The Functionary seeks to litigate to advance the interests of one group of creditors. The Monitor is the court-appointed officer charged with monitoring the debtors during the CCAA process for the benefit of all creditors. 17. Yet in these circumstances, the Functionary seeks to redo the Monitor s work without explanation (or justification). His continued insistence on obtaining the dockets is in the nature of a fishing expedition in the hopes of finding something for a collateral purpose. Notably, this expedition launched only in late 2017 after these proceedings had been ongoing for more than a year and only after the debtors and others questioned his own fees in Israel. This calls into further question the reasonableness of the Functionary s request given its potentially retaliatory motivation.

7 6 (iii) The cost of review by the Functionary far exceeds any potential benefit and prejudices the creditors by reducing the value of the estate 18. Even if the Functionary was acting for a proper purpose, requesting production of the dockets to redo the Monitor s work is unreasonable given that it is disproportionate to the likely benefit to the estate. The more time spent on this issue, the higher the professional fees paid out of the estate and the less money that will remain available for creditors. 19. Bennett Jones identified approximately $7,995 worth of entries that have now been reallocated based on the current understanding of the facts and issues. These savings came at a much higher cost to the estate in terms of professional time spent on the review. 20. Now, costs have been incurred to make and respond to this motion. These costs alone far exceed any savings identified to date. 21. Too much money has already been spent on these issues. Further review by the Functionary, with its associated professional fees and expenses, is out of all proportion to the potential benefits to the estate. Conclusion and Order Requested 22. For all these reasons, the Edge Companies and Alan Saskin ask this court to dismiss the Functionary s motion to require production of the Bennett Jones dockets.

8 7 ALL OF WHICH IS RESPECTFULLY SUBMITTED this 19th day of January, BEN LLP 3400 One First Canadian Place P.O. Box 130 Toronto, ON M5X 1A4 Fax: S. Richard Orzy (LSUC# ) Tel: Raj Sahni (LSUC# 42942U) Tel: } Emrys Davis (LSUC # 57391B) Tel: Lawyers for The Edge Companies and Alan Saskin

9 APPENDIX A - SERVICE LIST WEIRFOULDS LLP The TD Bank Tower, Suite Wellington Street West, Toronto, ON M5K 1B7 Edmond E.B. Lamek Tel: elamek@weirfoulds.com Danny M. Nunes Tel: dnunes@weirfoulds.com Lawyers for the Urbancorp CCAA Entities DENTONS CANADA LLP 77 King Street West, Suite 400 Toronto, ON M5K OA1 Fax: Neil S. Rabinovitch (LSUC # 33442F) Tel: neil.rabinovitch@dentons.com Kenneth Kraft (LSUC # 31919P) Tel: kenneth.kraft@dentons.com Lawyers for Reznik, Paz, Nevo Trustees Ltd., in its capacity as the Trustee for the Debenture Holders (Series A) and Adv. Guy Gissin, in his capacity as the Israeli Functionary of Urbancorp. Inc. THE FULLER LANDAU GROUP INC. 151 Bloor Street West, 12th Floor Toronto, ON M5S 1S4 Gary Abrahamson Tel: Fax: GAbrahamson@FullerLLP.com Adam Erlich Tel: Fax: AErlich@FullerLLP.com The Proposal Trustee GOLDMAN SLOAN NASH & HABER (GSNH) LLP 480 University Avenue, Suite 1600 Toronto, ON M5G 1V2 Mario Forte Tel: Fax: forte@gsnh.com Robert J. Drake Tel: Fax: drake@gsnh.com Lawyers for the Proposal Trustee

10 2 BENNETT JONES LLP 3400 One First Canadian Place P.O. Box 130 Toronto, ON M5X 1A4 S. Richard Orzy Tel: Raj Sahni Tel: CHAITONS LLP 5000 Yonge Street, 10th Floor Toronto, ON M2N 7E9 Harvey Chaiton Tel: Lawyers for BMO Emrys Davis Tel: Lawyers for The Edge Companies and Alan Saskin TORYS LLP 79 Wellington Street West, 30th Floor Box 270, TD South Tower Toronto, ON M5K 1N2 Scott A. Bomhof Tel: Lawyers for First Capital Realty ROBINS APPLEBY LLP 120 Adelaide Street West, Suite 2600 Toronto, ON M5H 1T1 Leor Margulies Tel: Dominique Michaud Tel: Lawyers for Terra Firma Capital Corporation

11 3 BANK OF MONTREAL First Canadian Place 18th Floor, 100 King Street West Toronto ON M5X 1A1 Greg Fedoryn Tel: Eden Orbach GOWLING WLG (CANADA) LLP One First Canadian Place, Suite 1600, 100 King Street West Toronto, ON M5X 1G5 Clifton Prophet Tel: Lilly Wong Tel: Frank Lamie Tel: Lawyers for CIBC and CIBC Mortgage Inc. DEPARTMENT OF JUSTICE Ontario Regional Office The Exchange Tower, Box King Street West Toronto, ON M5X 1K6 Fozia Chaudary Tel: MINISTRY OF FINANCE 777 Bay Street, 11th Floor Toronto, ON M5G 2C8 Kevin O'Hara Tel: Lawyers for the Ministry of Finance Lawyers for the Department of Justice TORYS LLP 79 Wellington Street West, 30th Floor Box 270, TD South Tower Toronto, ON M5K 1N2 Adam M. Slavens Tel: HARRIS SHEAFFER LLP Yonge Corporate Centre 4100 Yonge Street, Suite 610 Toronto, ON M2P 2B5 Barry Rotenberg Tel: Lawyers for Tarion Warranty Corporation

12 4 ROSENSTEIN LAW P.C Yonge Street, Suite 1300 Toronto, ON M2N 6P4 Jonathan Rosenstein Tel: Lawyers for Aviva Insurance Company of Canada MILLER WASTE SOLUTIONS GROUP INC. 73 Brydon Drive Toronto, ON M9W 4N3 Jason Tower Rob Spinopoli GARFINKLE, BIDERMAN LLP 1 Adelaide Street East, Suite 801 Toronto, ON M5C 2V9 Monica Peters Tel: mpeters@garfinkle.com MVL LEASING LIMITED 1064 South Service Road East Oakville, ON L6J 2X7 Fax: adam@mvl.ca Lawyers for MDG Mechanical Ltd. MVL FINANCIAL SERVICES LIMITED 1064 South Service Road East Oakville, ON L6J 2X7 Fax: adam@mvl.ca CANADIAN MORTGAGE SERVICING CORPORATION 20 Adelaide Street East, Suite 900 Toronto, ON M5C 2T6 Fax: CANADIAN IMPERIAL BANK OF COMMERCE 595 Bay Street, 5th Floor Toronto, ON M5G 2C2 TEPLITSKY, COLSON LLP 70 Bond Street, Suite 200 Toronto, ON M5B 1X2 James M. Wortzman jwortzman@teplitskycolson.com Catherine Allen callen@teplitskycolson.com Tel: Lawyers for Atrium Mortgage Investment Corporation

13 5 LAURENTIAN BANK OF CANADA 1981, av. McGill College, bur Montréal (Québec) H3A 3K3 Alexandre LeBlanc Tel: x alexandre.leblanc2@banquelaurentienne.ca HENDRICK AND MAIN DEVELOPMENTS INC. 85 Hanna Avenue, Suite 400 Toronto, ON M6K 3S3 Tel: Fax: BANK OF MONTREAL, AS ADMINISTRATIVE AGENT First Canadian Place, 11th Floor Toronto, ON M5X 1A1 FIRST CAPITAL 1071 CORPORATION 85 Hannah Avenue, Suite 400 Toronto, ON M6K 3S3 Tel: Fax: LOOPSTRA NIXON LLP 135 Queens Plate Drive, Suite 600 Toronto, ON M9W 6V7 Michael McWilliams Tel: mmcwilliams@loonix.com Lawyers for Ontario Limited carrying on business as Canadian Rental Centres TORKIN MANES LLP 151 Yonge Street, Suite 1500 Toronto, ON M5C 2W7 Kayla Kwinter Tel: kkwinter@torkinmanes.com Lawyers for MDF Mechanical Limited DICKINSON WRIGHT LLP 199 Bay St., Suite 2200 Toronto, ON M5L 1G4 David P. Preger Tel: dpreger@dickinsonwright.com CITY OF TORONTO Legal Services 55 John Street, 26th Floor Toronto, ON M5V 3C6 Christopher P. Henderson chender3@toronto.ca Lawyers for Downing Street Financial Inc.

14 6 FINE & DEO 3100 Steeles Avenue West, Suite 300 Vaughan, ON L4K 3R1 Fax: Jonathan Fine Tel: x226 Maria Dimakas Tel: x247 LEVINE SHERKIN BOUSSIDAN PC 23 Lesmill Road, Suite 300 Toronto, ON M3B 3P6 Kevin Sherkin Tel: Lawyers for Dolvin Mechanical Contractors Ltd. Lawyers for Toronto Standard Condominium Corporation No TERRA FIRMA CAPITAL CORPORATION 22 St. Clair Avenue East, Suite 200 Toronto, ON M4T 2S5 Glenn Watchorn President FIRST CAPITAL REALTY INC. 85 Hannah Avenue, Suite 400 Toronto, ON M6K 3S3 Tel: Fax: FIRST CAPITAL (S.C.) CORPORATION 85 Hannah Avenue, Suite 400 Toronto, ON M6K 3S3 Tel: Fax: TERRA FIRMA CAPITAL CORPORATION 5000 Yonge Street, Suite 1502 Toronto, ON M2N 7E9 Glenn Watchorn President TERRA FIRMA CAPITAL CORPORATION 1 Toronto Street, Suite 700 Toronto, ON M5C 2V6 Glenn Watchorn President gwatchorn@tfcc.ca TERRA FIRMA REALTY CORPORATION 1 Toronto Street, Suite 700 Toronto, ON M5C 2V6 Glenn Watchorn President gwatchorn@tfcc.ca

15 7 GOODMANS LLP Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7 Mark Dunn Tel: Lawyers for Toronto Media Arts Cluster MILLER THOMSON LLP 100 New Park Place, Suite 700 Vaughan, ON L4K 0H9 Enzo Di Iorio Tel: Cara Shamess Tel: Lawyers for Mid-Northern McMILLAN LLP Brookfield Place, Suite Bay Street Toronto, ON M5J 2T3 Paul Avis Tel: Lawyers for RBC and BNS FASKEN MARTINEAU DUMOULIN LLP 333 Bay Street, Suite 2400 Toronto, ON M5H 2T6 Nora Kharouba Tel: Lawyers for HomeLife Landmark Realty Inc. BLAKE, CASSELS & GRAYDON LLP 199 Bay Street, Suite 4000 Commerce Court West Toronto ON M5L 1A9 Steven J. Weisz Tel: Lawyers for Laurentian Bank of Canada DRUDI ALEXIOU KUCHAR LLP 7050 Weston Road Suite 610 Vaughan, ON L4L 8G7 Marco Drudi Tel: Lawyers for Paramount Structures Ltd.

16 8 TORYS LLP 79 Wellington Street West Suite 3000 Toronto, ON M5K 1N2 Scott Bomhof Tel: Crawford Smith Tel: Lawyers for First Captial (King Liberty Retail) Corporation, King Liberty North Corporation, and First Capital (S.C.) Corporation A. FARBER & PARTNERS INC. 150 York Street, Suite 1600 Toronto, ON, M5H 3S5 Hylton Levy, CPA, CA, CIRP, LIT Tel: Financial Advisor for Adv. Guy Gissin, in his capacity as the Israeli Functionary of Urbancorp. Inc. ALVAREZ & MARSAL CANADA INC. 200 Bay Street, Suite 2900 Toronto, ON M5J 2J1 Tony Zaspalis Tel: Amanda Favot Tel: Ryan Gruneir Tel: Construction Receiver over Urbancorp (Leslieville) Developments Inc., Urbancorp (The Beach) Developments Inc., and Urbancorp (Riverdale) Developments Inc. DELZOTTO ZORZI LLP 4810 Dufferin Street, Suite D Toronto, ON M3H 5S8 Robert W. Calderwood Tel.: rcalderwood@dzlaw.com Sabrina Adamski Tel.: sadamski@dzlaw.com Lawyers for Furkin Construction Inc. and GMF Consulting Inc.

17 9 CASSELS BROCK & BLACKWELL LLP 40 King Street West, Suite 2100 Toronto, ON M5H 3C2 Mark St. Cry Tel: Lawyers for Case Realty KSV ADVISORY INC. 150 King Street West, Suite 2308 Toronto, ON M5H 1J9 Bobby Kofman Tel : bkofman@ksvadvisory.com Noah Goldstein Tel : ngoldstein@ksvadvisory.com CCAA Monitor for Urbancorp Toronto Management Inc. et al. DAVIES WARD PHILLIPS & VINEBERG LLP 155 Wellington Street West Toronto, ON M5V 3J7 Robin B. Schwill Tel: tschwill@dwpv.com Jay Swartz Tel: jswartz@dwpv.com Lawyers for KSV Kofman Inc., in its capacity as CCAA Monitor for Urbancorp Toronto Management Inc. et al.

18 Court File No. CV CL IN 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 URBANCORP CUMBERLAND 2 GP INC., URBANCORP CUMBERLAND 2 L.P., BOSVEST INC., EDGE ON TRIANGLE PARK INC., AND EDGE RESIDENTIAL INC. ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) Proceeding commenced at Toronto RESPONDING WRITTEN SUBMISSIONS OF THE EDGE COMPANIES AND ALAN SASKIN BENNETT JONES LLP 3400 One First Canadian Place P.O. Box 130 Toronto, ON M5X 1A4 Fax: S. Richard Orzy (LSUC# ) Tel: Raj Sahni (LSUC# 42942U) Tel: Emrys Davis (LSUC # 57391B) Tel: Lawyers for The Edge Companies and Alan Saskin WSLEGAL\076274\00001\