1906849 Ontario Limited (fka Muskoka Grown Limited)

Status Updates

NOI

On May 5, 2020, Muskoka Grown Limited (the “Company”) filed a Notice of Intention to Make a Proposal (the “NOI”) under Section 50.4 of the Bankruptcy and Insolvency Act,¸ R.S.C 1985, c. B-3, as amended (the “BIA”) and B. Riley Farber Inc. (“B. Riley Farber”) was appointed as trustee under the NOI (the “Proposal Trustee”).

The NOI filing provides for a stay of proceedings against the Company, pursuant to s. 69(1) of the BIA, subject to certain limitations, while the Company formulates a restructuring plan and attempts to develop a viable proposal for its creditors.

The Ontario Superior Court of Justice (Commercial List) (the “Court”) has issued several orders in respect of these NOI proceedings, which are posted below. Among other things, the Court has ordered that the time within which the Company is to make a proposal has been extended to November 4, 2020.

Sale and Investment Solicitation Process

The Court, pursuant to the Order of Justice Koehnen dated August 4, 2020, approved, among other things, a sale and investment solicitation process (the “SISP”), including the bidding procedures for the SISP (the “Bidding Procedures”) and a “stalking horse” asset purchase agreement (the “Stalking Horse APA”) as a public, opening bid in the SISP. Details on the SISP, Bidding Procedures and Stalking Horse APA are posted below.

Interested parties were able to obtain a non-disclosure agreement by contacting the Proposal Trustee. The deadline for bids was 3:00 p.m. (Toronto time) on September 15, 2020.

SISP Update

On October 2, 2020, Justice Koehnen issued two Orders:

1. Approval and Vesting Order (the “AVO”): The AVO provides for, among other things, the Court’s approval of:
   a. the transaction contemplated by the Stalking Horse APA (the “Transaction”);
   b. the vesting of all purchased assets in the purchaser free and clear of all Encumbrances (as defined in the AVO) other than those permitted encumbrances outlined in the Stalking Horse APA;
   c. the preservation of the lien claim of 2089871 Ontario Limited, carrying on business as Eastview Construction, registered against title to the Company’s real property (the “Eastview Lien Claim”), to the extent that the Eastview Lien Claim has priority over the Zwingenberger Mortgage (as defined in the AVO) and which priority shall be determined at a later date;
   d. the change of the style of cause to the NOI proceedings after closing of the Transaction; and
   e. other relief as is necessary to facilitate the closing of the Transaction.
2. Ancillary Order (the “Ancillary Order”): The Ancillary Order provides for, among other things, the Court’s approval of:
   a. the Second Amended and Restated DIP Term Sheet and corresponding maximum value of the DIP Lender’s Charge;
   b. the extension of the time within which the Company must file a proposal to November 4, 2020; and
   c. other relief related to the administration of the estate.

CCAA

On November 4, 2020, the Court heard an application brought by Arthur Zwingenberger (the “Applicant”), a creditor of the Company, to an Order (the “CCAA Initial Order”) that orders, authorizes and/or directs that:

• B. Riley Farber is appointed as the Monitor (the “Monitor”), an officer of this Court, to monitor the business and financial affairs of the Company with the powers and obligations set out in (i) the Companies’ Creditors Arrangement Act, S.C. 1985, c. C-36, as amended (the “CCAA”), (ii) the CCAA Initial Order, and (iii) any other Order of Court in these proceedings;
• the Company’s proceedings bearing Estate/Court File No. 31-2643278 (the “Proposal Proceedings”) commenced under the BIA are taken up and continued under the CCAA and that, as of such date, the provisions of Part III of the BIA shall have no further application to the Company, save that any and all steps, agreements and procedures validly taken, done or entered into by the Company during the Proposal Proceedings shall remain valid and binding, notwithstanding the commencement of the CCAA proceedings, including, without limitation, the sale of any assets, property or undertaking of the Company that was approved by the Court or otherwise permitted in the Proposal Proceedings, including, but not limited to (a) the Transaction (as defined in the Fifth Report), (b) the Second Amended and Restated DIP Term Sheet, (c) the appointment of Edge Financial Consulting Services Corp. as the chief restructuring officer (in such capacity, the “CRO”) of the Company, (d) any transaction entered into pursuant to paragraph 24 of the NOI Process Order of the Honourable Mr. Justice Koehnen dated May 6, 2020 issued in the Proposal Proceedings (the “NOI Process Order”), and (e) any Order issued in the Proposal Proceedings;
• the continued stay of proceedings up to and including November 13, 2020;
• David Grand is removed as director of the Company pursuant to subsection 11(5)(i) of the CCAA;
• The powers and authorities of the CRO are expanded to include such authorities outlined in paragraph 5 of the CCAA Initial Order;
• The Company shall not be deemed to have made an assignment based on its failure to file a proposal with the official receiver notwithstanding s. 50.4(8) of the BIA; and
• The Company 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.

The Court issued the CCAA Initial Order and granted the relief outlined therein. The CCAA Initial Order can be found below.

The Applicant is also seeking additional relief at a hearing scheduled for November 13, 2020 at 3:00 p.m. (the “Comeback Hearing”). Such relief includes, among other things, the extension of the stay of proceedings to February 26, 2021. If the relief requested, which is found in the Application Record dated October 29, 2020, is opposed, the hearing will proceed as scheduled via Zoom. Otherwise, the Court may dispense with the relief requested in writing. Interested parties may contact the Monitor for additional information.

CCAA Update – November 13, 2020

No parties served materials, or otherwise requested to be heard, prior to the Comeback Hearing. As such, the Comeback Hearing proceeded in writing and the Court issued an order (the “CCAA Stay Extension Order”) approving, among other things, an extension of the stay of proceedings to February 26, 2021. Copies of the CCAA Stay Extension Order and Justice Koehnen’s endorsement, both dated Novembers 13, 2020, can be found below.

CCAA Update – April 21, 2021

On April 19, 2021, the Monitor filed its Second Report (“Second Report“) and a motion returnable on April 21, 2021 to seek, inter alia:

1. approval of the monitor’s activities, reports, and fees and disbursements;
2. discharge of the Monitor and the CRO; and
3. termination of the CCAA Proceedings.

On April 21, 2021, the Court issued a discharge order (the “Discharge Order“) approving the reports and activities of the Monitor and its legal counsel; the accounts of the Monitor and its legal counsel; discharging the Monitor and the CRO; and terminating the CCAA Proceedings. A copy of the Second Report of the Monitor and the Discharge Order can be found below.

Bankruptcy

On February 26, 2021, the Company filed an Assignment in Bankruptcy and B. Riley Farber was also appointed as Bankruptcy Trustee. A copy of the bankruptcy documents are posted below.

Creditor Enquiries

For creditor enquiries, please contact:

Geanina Schmidt
Associate | Restructuring
T: 437.294.4647
E: [email protected]

The case updates and court filed documents on this website are for information purposes only and you should consult your financial or legal adviser if you have any questions or concerns about your rights or obligations. Additional updates on the status of these proceedings may become available in the future.

Documents

Bankruptcy Documents

• Creditors Package
• Certificate of Appointment – February 26, 2021
• Trustee’s Preliminary Report to Creditors – March 16, 2021

Proposal Documents

• Creditors Package – Notice of Intention to Make a Proposal – Filed May 5, 2020

CCAA Documents

• Notice to Creditors
• List of Creditors

Court Orders & Endorsements

• Order of Justice Koehnen – May 6, 2020
• Endorsement of Justice Koehnen – May 6, 2020
• Endorsement of Justice Koehnen – May 8, 2020
• Signed Debentures attachment to Endorsement of Justice Koehnen – May 8, 2020
• Order of Justice Koehnen – July 17, 2020
• Order of Justice Koehnen – August 4, 2020
• Order of Justice Koehnen – Approval and Vesting Order – October 2, 2020
• Order of Justice Koehnen – Ancillary Order – October 2, 2020
• Order of Justice Koehnen – CCAA Initial Order – November 4, 2020
• Endorsement of Justice Koehnen – November 9, 2020
• Order of Justice Koehnen – CCAA Stay Extension Order – November 13, 2020
• Endorsement of Justice Koehnen – November 13, 2020
• Order of Justice Koehnen – CCAA Discharge Order – April 21, 2021

Court Reports

• First Report of the Proposal Trustee – May 5, 2020
• Second Report of the Proposal Trustee – July 13, 2020
• Third Report of the Proposal Trustee – July 27, 2020
• Fourth Report of the Proposal Trustee – September 25, 2020
• Fifth Report of the Proposal Trustee and Report of the Proposed Monitor – October 29, 2020
• Second Report of the Monitor – April 19, 2021

Motion Materials

• Motion Record of Muskoka Grown Limited – returnable May 6, 2020
• Factum of Muskoka Grown Limited – May 6, 2020
• Motion Record of Muskoka Grown Limited – July 13, 2020
• Factum of Muskoka Grown Limited – July 28, 2020
• Motion Record of Muskoka Grown Limited – July 28, 2020
• Factum of the Respondent – 2655060 Ontario Inc. – July 31, 2020
• Motion Record of the Respondent – 2655060 Ontario Inc. – July 31, 2020
• Motion Record Muskoka Grown Limited – September 25, 2020 (Volume 1 of 3)
• Motion Record Muskoka Grown Limited – September 25, 2020 (Volume 2 of 3)
• Motion Record Muskoka Grown Limited – September 25, 2020 (Volume 3 of 3)
• Responding Motion Record of 2089871 Ontario Limited – September 30, 2020
• Factum of the Proposal Trustee – October 1, 2020
• Factum of the Respondent – 2089871 Ontario Limited – October 1, 2020
• Motion Record Muskoka Grown Limited – returnable April 21, 2021

Sale Process

• Opportunity Teaser
• Bidding Procedures

CCAA Court Materials

• Application Record of the Applicant (Arthur Zwingenberger) – October 29, 2020
• Affidavit of John Fowler – October 30, 2020
• Affidavit of Aaron Holtzman – November 2, 2020
• Factum of the Applicant (Arthur Zwingenberger) – November 3, 2020
• Email Notice from the Monitor to the e-Service List – November 4, 2020

Service List

• Service List as at August 28, 2020