SUPERIOR COURT OF JUSTICE - ONTARIO

Commercial List

COURT FILE NO.: CV-12-9719-00CL

DATE: 20120706

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT ,

R.S.C. 1985, c. C 36 , AS AMENDED

APPLICATION OF LIGHTSQUARED LP UNDER SECTION 46 OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT , R.S.C. 1985, c. C 36, AS AMENDED

RE: IN THE MATTER OF CERTAIN PROCEEDINGS TAKEN IN THE UNITED STATES BANKRUPTCY COURT WITH RESPECT TO LIGHTSQUARED INC., LIGHTSQUARED INVESTORS HOLDINGS INC., ONE DOT FOUR CORP., ONE DOT SIX CORP. SKYTERRA ROLLUP LLC, SKYTERRA ROLLUP SUB LLC, SKYTERRA INVESTORS LLC, TMI COMMUNICATIONS DELAWARE, LIMITED PARTNERSHIP, LIGHTSQUARED GP INC., LIGHTSQUARED LP, ATC TECHNOLOGIES LLC, LIGHTSQUARED CORP., LIGHTSQUARED FINANCE CO., LIGHTSQUARED NETWORK LLC, LIGHTSQUARED INC., OF VIRGINIA, LIGHTSQUARED SUBSIDIARY LLC, LIGHTSQUARED BERMUDA LTD., SKYTERRA HOLDINGS (CANADA) INC., SKYTERRA (CANADA) INC. AND ONE DOT SIX TVCC CORP. (COLLECTIVELY, THE “CHAPTER 11 DEBTORS”) , Applicants

BEFORE: MORAWETZ J.

COUNSEL: Shayne Kukulowicz and Jane Dietrich, for Lightsquared LP

Brian Empey, for Alvarez and Marsal Inc., Proposed Information Officer

HEARD &

ENDORSED: MAY 18, 2012

REASONS: JULY 6, 2012

ENDORSEMENT

[ 1 ] On May 14, 2012, Lightsquared LP (“LSLP” or the “Applicant”) and various of its affiliates (collectively, the “Chapter 11 Debtors”) commenced voluntary reorganization proceedings (the “Chapter 11 Proceedings”) in the United States Bankruptcy Court for the Southern District of New York (the “U.S. Court”) by each filing a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”).

[ 2 ] The Chapter 11 Debtors have certain material assets in other jurisdictions, including Ontario and indicated at an interim hearing held on May 15, 2012 that they would be seeking an order from the U.S. Court authorizing LSLP to act as the Foreign Representative of the Chapter 11 Debtors, in any judicial or other proceeding, including these proceedings (the “Foreign Representative Order”).

[ 3 ] At the conclusion of the interim hearing of May 15, 2012, I granted the Interim Initial Order to provide for a stay of proceedings and other ancillary relief. A full hearing was scheduled for May 18, 2012.

[ 4 ] At the hearing on May 18, 2012, the record demonstrated that LSLP had been authorized to act as Foreign Representative by order of The Honorable Shelley C. Chapman dated May 15, 2012. This authority was granted on an interim basis pending a final hearing scheduled for June 11, 2012.

[ 5 ] LSLP brought this application pursuant to ss. 44-49 of the Companies’ Creditors Arrangement Act (“CCAA”), seeking the following orders:

(a) an Initial Recognition Order, inter alia :

(i) declaring that LSLP is a “foreign representative” pursuant to s. 45 of the CCAA;

(ii) declaring that the Chapter 11 Proceeding is recognized as a “foreign main proceeding” under the CCAA; and

(iii) granting a stay of proceedings against the Chapter 11 Debtors; and

(b) a “Supplemental Order” pursuant to s. 49 of the CCAA, inter alia :

(i) recognizing in Canada and enforcing certain orders of the U.S. Court made in the Chapter 11 Proceedings;

(ii) appointing Alvarez and Marsal Canada Inc. (“A&M”) as the Information Officer in respect of this proceeding (in such capacity, the “Information Officer”);

(iii) staying any claims against or in respect of the Chapter 11 Debtors, the business and property of the Chapter 11 Debtors and the Directors and Officers of the Chapter 11 Debtors;

(iv) restraining the right of any person or entity to, among other things, discontinue or terminate any supply of products or services to Chapter 11 Debtors;

(v) granting a super priority charge up to the maximum amount of $200,000, over the Chapter 11 Debtors’ property, in favour of the Information Officer and its counsel, as security for their professional fees and disbursements incurred in respect of these proceedings (the “Administration Charge”).

[ 6 ] Counsel to LSLP submitted that this relief was required in order to:

(i) alleviate any potential harm to the Chapter 11 Debtors or their Canadian assets during the interim period;

(ii) ensure the protection of the Chapter 11 Debtors’ Canadian assets during the course of the Chapter 11 Proceedings; and

(iii) ensure that this court and the Canadian stakeholders are kept properly informed of the Chapter 11 Proceedings.

[ 7 ] The Chapter 11 Debtors are in the process of building a fourth generation long-term evolution open wireless broadband network that incorporates satellite coverage throughout North America and offers users, wherever they may be located, the speed, value and reliability of universal connectivity.

[ 8 ] The Chapter 11 Debtors consist of approximately 20 entities. All but four of these entities have their head office or headquarter location in the United States.

[ 9 ] Two of the Chapter 11 Debtors are incorporated pursuant to the laws of Ontario, being SkyTerra Holdings (Canada) Inc. (“SkyTerra Holdings”) and SkyTerra (Canada) Inc. (“SkyTerra Canada”). One of the Chapter 11 Debtors is incorporated pursuant to the laws of Nova Scotia, being Lightsquared Corp. “LC” and together with SkyTerra Holdings and SkyTerra Canada, the “Canadian Debtors”). Each of the Canadian Debtors is a wholly-owned subsidiary, directly or indirectly, of the Applicant.

[ 10 ] Other than the Canadian Debtors and Lightsquared Bermuda Ltd., all of the Chapter 11 Debtors are incorporated pursuant to the laws of the United States.

[ 11 ] The operations of the Canadian Debtors were summarized by LSLP as follows:

(a) SkyTerra Canada: this entity was created to hold certain regulated assets which, by law, are required to be held by Canadian corporations. SkyTerra Canada holds primarily three categories of assets: (i) the MSAT – 1 satellite; (ii) certain Industry Canada licences; (iii) contracts with the Applicant’s affiliates and third parties. SkyTerra Canada has no third party customers or employees at the present time and is wholly dependent on the Applicant for the funding of its operations;

(b) SkyTerra Holdings: this entity has no employees or operational functions. Its sole function is to hold shares of SkyTerra Canada; and

(c) LC: this entity was created for the purposes of providing mobile satellite services to customers located in Canada based on products and services that were developed by the Chapter 11 Debtors for the United States market. LC holds certain Industry Canada licences and authorizations as well as certain ground-related assets. LC employs approximately 43 non-union employees out of its offices in Ottawa, Ontario. LC is wholly dependent on the Applicant for all or substantially all of the funding of its operations.

[ 12 ] Counsel to LSLP also submitted that the Chapter 11 Debtors, including the Canadian Debtors, are managed in the United States as an integrated group from a corporate, strategic and management perspective. In particular:

(a) corporate and other major decision-making occurs from the consolidated offices in New York, New York and Ruston, Virginia;

(b) all of the senior executives of the Chapter 11 Debtors, including the Canadian Debtors, are residents of the United States;

(c) the majority of the management of the Chapter 11 Debtors, including the Canadian Debtors, is shared;

(d) the majority of employee administration, human resource functions, marketing and communication decisions are made, and related functions taken, on behalf of all of the Chapter 11 Debtors, including the Canadian Debtors, in the United States;

(e) the Chapter 11 Debtors, including the Canadian Debtors, also share a cash-management system that is overseen by employees of the United States-based Chapter 11 Debtors and located primarily in the United States; and

(f) other functions shared between the Chapter 11 Debtors, including the Canadian Debtors, and primarily managed from the United States include, pricing decisions, business development decisions, accounts payable, accounts receivable and treasury functions.

[ 13 ] Counsel further submits that the Canadian Debtors are wholly dependent on the Applicant and other members of the Chapter 11 Debtors located in the United States for all or substantially all of their funding requirements.

[ 14 ] Further, the Canadian Debtors have guaranteed the credit facilities which were extended to LSLP as borrower and such guarantee is allegedly secured by a priority interest on the assets of the Canadian Debtors. As such, counsel submits that the majority of the creditors of the Chapter 11 Debtors are also common.

[ 15 ] The Interim Initial Order granted on May 15, 2012, reflected an exercise of both statutory jurisdiction and the court’s inherent juridical discretion. In arriving at the decision to grant interim relief, I was satisfied that it was appropriate to provide such relief in order to alleviate any potential harm to the Chapter 11 Debtors or their Canadian assets during the interim period.

[ 16 ] The issue for consideration on this motion is whether the court should recognize the Chapter 11 Proceedings as a “foreign main proceeding” pursuant to the CCAA and grant the Initial Recognition Order sought by the Applicant and, if so, whether the court should also grant the Supplemental Order under s. 49 of the CCAA to (i) recognize and enforce in Canada certain orders of the U.S. Court made in the Chapter 11 Proceedings; (ii) appoint A&M as Information Officer in respect of these proceedings; and (iii) grant an Administration Charge over the Chapter 11 Debtors’ property.

[ 17 ] Section 46 (1) of the CCAA provides that a “foreign representative” may apply to the court for recognition of a “foreign proceeding” in respect of which he or she is a “foreign representative”.

[ 18 ] Court proceedings under Chapter 11 of the Bankruptcy Code have consistently been found to be “foreign proceedings” for the purposes of the CCAA. In this respect, see Re Massachusetts Elephant & Castle Group Inc. (2011), 81 C.B.R. (5 th ) 102 and Re Lear Canada (2009), 2009 37931 (ON SC) , 55 C.B.R. (5 th ) 57.

[ 19 ] I accept that the Chapter 11 Proceedings are “foreign proceedings” for the purposes of the CCAA and that LSLP is a “foreign representative”.

[ 20 ] However, it is noted that the status of LSLP as a foreign representative is subject to further consideration by the U.S. Court on June 11, 2012. If, for whatever reason, the status of LSLP is altered by the U.S. Court, it follows that this issue will have to be reviewed by this court.

[ 21 ] LSLP submits that the Chapter 11 Proceedings should be declared a “foreign main proceeding”. Under s. 47 (1) of the CCAA, it is necessary under s. 47 (2) to determine whether the foreign proceeding is a “foreign main proceeding” or a “foreign non-main proceeding”.

[ 22 ] Section 45 (1) of the CCAA defines a “foreign main proceeding” as a “foreign proceeding in a jurisdiction where the debtor company has the centre of its main interests”.

[ 23 ] Section 45 (2) of the CCAA provides that for the purposes of Part IV of the CCAA, in the absence of proof to the contrary, a debtor company’s registered office is deemed to be the centre of its main interests (“COMI”).

[ 24 ] In this case, the registered offices of the Canadian Debtors are in Canada. Counsel to the Applicant submits, however, that the COMI of the Canadian Debtors is not in the location of the registered offices.

[ 25 ] In circumstances where it is necessary to go beyond the s. 45 (2) registered office presumption, in my view, the following principal factors, considered as a whole, will tend to indicate whether the location in which the proceeding has been filed is the debtor’s centre of main interests. The factors are:

(i) the location is readily ascertainable by creditors;

(ii) the location is one in which the debtor’s principal assets or operations are found; and

(iii) the location is where the management of the debtor takes place.

[ 26 ] In most cases, these factors will all point to a single jurisdiction as the centre of main interests. In some cases, there may be conflicts among the factors, requiring a more careful review of the facts. The court may need to give greater or less weight to a given factor, depending on the circumstances of the particular case. In all cases, however, the review is designed to determine that the location of the proceeding, in fact, corresponds to where the debtor’s true seat or principal place of business actually is, consistent with the expectations of those who dealt with the enterprise prior to commencement of the proceedings.

[ 27 ] When the court determines that there is proof contrary to the presumption in s. 45 (2), the court should, in my view, consider these factors in determining the location of the debtor’s centre of main interests.

[ 28 ] The above analysis is consistent with preliminary commentary in the Report of UNCITRAL Working Group V (Insolvency Law) of its 41 st Session (New York, 30 April – 4 May, 2012) (Working Paper AICN.9/742, paragraph 52. In my view, this approach provides an appropriate framework for the COMI analysis and is intended to be a refinement of the views I previously expressed in Re Massachusetts Elephant & Castle Group Inc., supra.

[ 29 ] Part IV of the CCAA does not specifically take into account corporate groups. It is therefore necessary to consider the COMI issue on an entity-by-entity basis.

[ 30 ] In this case, the foreign proceeding was filed in the United States and based on the facts summarized at [11] – [14], LSLP submits that the COMI of each of the Canadian Debtors is in the United States.

[ 31 ] After considering these facts and the factors set out in [25] and [26], I am persuaded that the COMI of the Canadian Debtors is in the United States. It follows, therefore, that in this case, the “foreign proceeding” is a “foreign main proceeding”.

[ 32 ] Having recognized the “foreign proceeding” as a “foreign main proceeding”, subsection 48 (1) of the CCAA requires the court to grant certain enumerated relief subject to any terms and conditions it considers appropriate. This relief is set out in the Initial Recognition Order, which relief is granted in the form submitted.

[ 33 ] Additionally, s. 50 of the CCAA provides the court with the jurisdiction to make any order under Part IV of the CCAA on the terms and conditions it considers appropriate in the circumstances.

[ 34 ] The final issue to consider is whether the court should grant the Supplemental Order sought by the Applicant under s. 49 of the CCAA and (i) recognize and enforce in Canada certain orders of the U.S. Court made in the Chapter 11 Proceedings; (ii) appoint A&M as Information Officer in respect of these proceedings; and (iii) grant an Administration Charge over the Chapter 11 Debtors’ property.

[ 35 ] If an order recognizing the “foreign proceedings” has been made (foreign main or foreign non-main), subsection 49 (1) of the CCAA provides the authority for the court, if it is satisfied that it is necessary for the protection of the debtor company’s property or the interests of a creditor or creditors, to make any order that it considers appropriate.

[ 36 ] In this case, the Applicant is requesting recognition of the first day orders granted in the U.S. Court. Based on the record, I am satisfied that it is appropriate to recognize these orders.

[ 37 ] Additionally, I am satisfied that the appointment of A&M as Information Officer will help to facilitate these proceedings and the dissemination of information concerning the Chapter 11 Proceedings and this relief is appropriate on the terms set forth in the draft order. The proposed order also provides that the Information Officer be entitled to the benefit of an Administration Charge, which charge shall not exceed an aggregate amount of $200,000, as security for their professional fees and disbursements. I am satisfied that the inclusion of this Administration Charge in the draft order is appropriate.

[ 38 ] The ancillary relief requested in the draft order is also appropriate in the circumstances.

[ 39 ] Accordingly, the Supplemental Order is granted in the form presented. The Supplemental Order contains copies of the first day orders granted in the U.S. Court.

[ 40 ] Finally, on an ongoing basis, it would be appreciated if counsel would, in addition to filing the required paper record, also file an electronic copy by way of a USB key directly with the Commercial List Office.

MORAWETZ J.

Date: July 6, 2012