SUPERIOR COURT OF JUSTICE – ONTARIO

(Commercial List)

Court File No.: CV-12-9761-00CL
Date: 2012-06-29

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C 36, AS AMENDED

RE: IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF NORTHSTAR AEROSPACE, INC., NORTHSTAR AEROSPACE (CANADA) INC., 2007775 ONTARIO INC. AND 3024308 NOVA SCOTIA COMPANY, Applicants

BEFORE: MORAWETZ J.

COUNSEL:
Ashley Taylor and Dan Murdoch, for Northstar

Jacqueline L. Wall, for Her Majesty The Queen in Right of Ontario as represented by the Ministry of the Environment

Deborah S. Grieve, for Heligear Canada Acquisition Corporation

Monique Jilesen, for GE Canada

Craig Hill and Sam Rappos, for the Monitor

Grant Moffat, for Chief Restructuring Officer

Barry Wadsworth, for CAW-Canada

Steven Weisz, for Fifth Third Bank as DIP Agent and Agent for Existing Lenders

Alex Cobb, for Versa

Paul Guy, for Former Directors and Officers of Northstar

Clifton Prophet, for Boeing Capital Loan Corporation

HEARD & ENDORSED: JUNE 27, 2012
REASONS: JUNE 29, 2012

ENDORSEMENT

[1] These reasons relate to my endorsement of June 27, 2012. These reasons cover matters relating to:

(a) increased priority to the Priority Charges;

(b) the suspension of the CCAA Entities’ obligations to make special payment pension contributions with respect to the IPP; and

(c) approval of the Harris Williams Engagement Letter.

[2] The issues relating to the KEIP and the KEIP Charge were deferred.

[3] The Applicants filed a comprehensive factum which provided a factual summary and statements of law.

[4] I am satisfied that the court has the jurisdiction to order super-priority for the Priority Charges in question. See CCAA section 11.2, 11.4, 11.51 and 11.52.

[5] I am also satisfied that notice of this motion has been provided to parties likely to be affected by such an order.

CRITICAL SUPPLIERS, DIP LENDERS, DIRECTORS

[6] I accept the statements in the factum at 43-45 (Critical Suppliers), 47-49 (DIP Lenders) and 50 ( Directors’ Charge). I also accept the statements in the factum of 51-60.

[7] In the circumstances of this case, the interests of the various stakeholders have to be considered in the context of the pension beneficiary. In this case, there is but one pension beneficiary, who has been served but did not appear on this motion.

[8] In the circumstances, the submissions in the factum are accepted and the super-priority is granted in the form requested.

SUSPENSION OF SPECIAL PAYMENTS

[9] This issue is summarized at 61-66 of the factum. I accept these submissions. In the circumstances of this case, I am satisfied that it is appropriate to grant the relief in the form requested.

HARRIS WILLIAMS ENGAGEMENT LETTER

[10] This issue is summarized at 80-85 of the factum. I am satisfied that the Applicants have established that it is appropriate to approve the engagement of Harris Williams on the terms set out. The approval of the engagement letter is without prejudice to the rights of the DIP Agent, the DIP Lenders and Fifth Third Bank as agent for the Existing Lenders under the Existing Security (as defined in the DIP Agreement) to object to the interpretation of the terms of the engagement letter and the calculation of any amounts claimed to be payable thereunder.

MISCELLANEOUS

[11] Counsel to the MOE indicated that the MOE is considering its position with respect to two MOE Orders, dated March 15, 2012 and May 31, 2012. This position has been noted.

[12] The Confidential Supplement to the First Report of the Monitor has been sealed. This issue was addressed in the oral reasons. The materials may have to be referenced when addressing the KEIP issue. The continued sealing of the portions of the supplement relating to KEIP issues will be revisited when the KEIP issues are heard.

[13] It is recognized that Priority Charges have now been granted. Proper notice was provided to parties that are the subject of subordination. In my view, it is appropriate to recognize that the beneficiary of any Priority Charge is entitled to rely on their respective charges up to and including the day on which such Priority Charge or the priority granted to such Charge may be varied or amended.

[14] An order has been signed to give effect to the foregoing.

MORAWETZ J.

Date: June 29, 2012