Daniel Pearlman

In a Companies’ Creditors Arrangement Act restructuring, the applicants sought court approval of a sale transaction to BlackRock Kelso Capital Corporation, authorization to assign certain store leases and designated contracts, and related relief.

A former employee also moved to be appointed as representative of terminated employees and to appoint representative counsel funded from transaction proceeds to assist with potential Wage Earner Protection Program Act claims.

The court approved the sale transaction and the assignment of leases and contracts under ss. 36 and 11.3 of the CCAA, finding the sale process reasonable and the transaction maximized value while preserving employment and ongoing operations.

The court declined to appoint representative counsel for terminated employees, holding the proceeding lacked the complexity seen in cases such as Nortel and Canwest, and that WEPPA claims could be addressed in the anticipated bankruptcy process by the trustee.

Funding representative counsel from the purchaser’s transaction funds was also found inappropriate.

The applicants, comprising iMarketing Solutions Group Inc. and its subsidiaries, applied for protection under the Companies' Creditors Arrangement Act (CCAA) due to severe liquidity challenges.

The court granted an Initial Order, including a stay of proceedings, finding that the applicants' businesses could not survive without immediate protection.

The court also approved debtor-in-possession (DIP) financing of $1.0 million, an Administration Charge of $300,000, a Directors' Charge of $1.3 million, the appointment of a Chief Restructuring Officer, and authorization to pay critical suppliers to ensure the continuation of operations during the restructuring process.

In CCAA restructuring proceedings, the applicants sought court approval of a liquidation agreement to close and liquidate inventory at 62 underperforming retail store locations.

The liquidation process involved a competitive solicitation of liquidators, review of bids, and negotiation of an agency agreement providing a minimum guaranteed recovery and a distribution waterfall administered through a monitor-controlled trust account.

Secured creditors supported the proposed transaction and the monitor concluded the solicitation process was fair and produced the most favourable economic outcome.

Applying s. 36 of the Companies’ Creditors Arrangement Act, the court held that the disposition process was reasonable and that the consideration offered by the selected liquidator was superior to competing bids.

The court approved the liquidation agreement and related relief.