COURT FILE NO.: 31-2743224 DATE: 2022-05-10

SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST) IN BANKRUPTCY AND INSOLVENCY

RE: IN THE MATTER OF THE BANKRUPTCY OF URBANCORP MANAGEMENT INC.

BEFORE: Chief Justice G.B. Morawetz

COUNSEL: Robin Schwill, for the Trustee, KSV Restructuring Inc. Andrew Winton, for Doreen Saskin Kenneth Kraft, for Guy Gissin, the Israeli Court Appointed Functionary Officer and the Foreign Representative of Urbancorp Inc.

HEARD: April 13, 2022

Endorsement

[1] On occasion, parties involved in litigation choose to concentrate on attempting to achieve a perceived strategic advantage over their adversary as opposed to following a path that will lead to a resolution of the issue. This motion illustrates one such example.

[2] KSV Restructuring Inc. (“KSV”) in its capacity as trustee (the “Trustee”) of Urbancorp Management Inc. (“UMI”) brings this motion for an order:

(i) directing Doreen Saskin to deliver to the Trustee all information (the “Information”) in response to the Information Request (as defined in the First Report of the Trustee (the “Report”)) within 10 business days; and

(ii) directing the Trustee to keep confidential all Information and not to disclose it to anyone, including the Foreign Representative (as defined in the Report), other than Mr. Erlich, the sole inspector of the bankrupt estate of UMI.

[3] The evidence tendered on this motion is the Report which is attached (without Appendices) as Schedule “A”.

[4] As noted at 1.3.10 and 1.3.11 of the Report, Doreen Saskin is the spouse of Alan Saskin, the principal of the Urbancorp Group. Doreen Saskin has filed a secured claim for $2.8 million in the bankruptcy of UMI.

[5] As noted at 1.3.18 of the Report, as a result of the UMI Decision, KSV, as Monitor, was directed to distribute $2,049,000 to King Towns North Inc. (“KTNI”) for the benefit of UMI.

[6] At 1.3.21 of the Report, the Trustee notes that the primary issue in UMI’s bankruptcy is the validity and quantum of Ms. Saskin’s secured claim. The Trustee also reports that despite several requests, Ms. Saskin has not responded to the Trustee’s follow-up requests in respect of the Preliminary Information Request.

[7] The Trustee also reports at 1.3.22 that if it is determined that Ms. Saskin does not have a provable secured claim, or if the amount of her claim is materially less than she asserts, Urbancorp Inc. (“UCI”) would be entitled to a significant portion of the monies in the UMI bankruptcy estate.

[8] As stated at 2.0.1 of the Report, according to UMI’s books and records, UMI owes Urbancorp Toronto Management Inc. (“UTMI”) approximately $7.7 million. Any amounts paid to UTMI in respect of this claim will ultimately be paid to UCI as the secured creditor of UTMI.

[9] On September 27, 2021, following the UMI decision, the Trustee requested additional support for the advances made by Ms. Saskin to UMI (the “Trustees Information Request”). The Trustee has several questions regarding Ms. Saskin’s claim which are summarized at 2.0.5 of the Report.

[10] The Monitor also notes that the Foreign Representative is suing Ms. Saskin in Israel.

[11] The Trustee’s Information Request will require disclosure of Information concerning Ms. Saskin’s personal assets, including the source of the money she claims she advanced to UMI. Ms. Saskin’s counsel has advised that she is only prepared to share the Information with the Trustee provided the Trustee reviews and holds it on a confidential basis, including that it not be shared with the Foreign Representative.

[12] As set out in 2.0.9 of the Report, on March 22, 2022, the Trustee proposed the following resolution of this matter to the Foreign Representative and Ms. Saskin:

(a) the Trustee will hold Ms. Saskin’s information concerning the source of her funds on a confidential basis and the Information will not be shared with anyone other than Adam Erlich, the sole inspector of UMI;

(b) the Trustee will provide the Foreign Representative with a summary of its review and analysis of Ms. Saskin’s claim in sufficient detail to permit the Foreign Representative to assess whether there is any merit in opposing the Trustee’s adjudication of the claim; and

(c) notwithstanding the confidentiality provision, the Foreign Representative may seek a subsequent Court order requiring the Information to be delivered to it.

[13] The Trustee’s proposal is not acceptable to the parties. The parties are at an impasse.

Position of the Parties

[14] The Trustee has several outstanding questions regarding Ms. Saskin’s claim and states that it requires the Information to determine the validity of her claim.

[15] Ms. Saskin does not want to provide the Information to the Trustee, fearing that it could be used against her by the Foreign Representative in litigation proceedings in Israel or in Ontario.

[16] Ms. Saskin takes the position that she will only provide the Information on the basis that the Trustee reviews and holds it on a confidential basis, including that it is not to be shared with the Foreign Representative.

[17] The Foreign Representative wants to be able to reserve its rights to seek a subsequent order of the court requiring any or all of the Information be delivered to it.

Analysis

[18] The positions put forth by both Ms. Saskin and the Foreign Representative are not directly related to the issue of determining the validity of Ms. Saskin’s secured claim.

[19] Rather, it seems to me that Ms. Saskin and the Foreign Representative are putting forth arguments in the UMI bankruptcy proceeding in an attempt to improve their respective positions in other litigation proceedings.

[20] In my view, it is appropriate for this court to address only the matters at issue in this bankruptcy proceeding, namely, the Trustee’s review of the secured claim of Ms. Saskin.

[21] Issues relating to collateral litigation, be it in Israel or Ontario, as between the Foreign Representative and Ms. Saskin, should be dealt with in those proceedings.

[22] With respect to this bankruptcy proceeding, Ms. Saskin has submitted a secured claim. The Trustee has requested additional Information in order to review the claim. To date, Ms. Saskin has refused to provide such Information and takes the position that the Trustee has sufficient information to determine her claim. This is a choice that Ms. Saskin is free to make, notwithstanding that it may result in an adverse result for her.

[23] The process to determine Ms. Saskin’s claim is set out in section 135 of the Bankruptcy and Insolvency Act (“BIA”).

[24] As between the Trustee and Ms. Saskin, the Trustee can proceed to determine the validity and quantum of Ms. Saskin’s claim.

[25] The Trustee is aware of the practical realities involved in the determination of Ms. Saskin’s claim and its impact on the Foreign Representative. The Trustee has recognized that although UCI, as represented by the Foreign Representative, is not a creditor of UMI, it has an indirect financial interest in the determination of Ms. Saskin’s claim. (See: Report 2.0.1 and 2.0.6). If Ms. Saskin’s claim is disallowed in whole or in part, funds flowing to UMI are likely to ultimately flow to UCI. The Trustee can make a determination as to whether it considers it appropriate to inform the Foreign Representative of the steps that it proposes to take in the determination of Ms. Saskin’s claim.

[26] If the Trustee follows the s. 135 BIA process to determine the claim of Ms. Saskin, the directions requested by the Trustee are not required.

Disposition

[27] Accordingly, I decline to issue the requested directions to the Trustee.

Chief Justice G.B. Morawetz Date: May 10, 2022

SCHEDULE ‘A’

First Report to Court of KSV Restructuring Inc. as Licensed Insolvency Trustee of Urbancorp Management Inc. April 6, 2022

Contents Page

1.0 Introduction.............................................................................................................. 1 1.1 CCAA proceedings...................................................................................... 1 1.2 Urbancorp Inc., Recognition of Foreign Proceedings................................. 1 1.3 Urbancorp Management Inc........................................................................ 2 1.4 Purposes of this Report............................................................................... 4 1.5 Currency...................................................................................................... 5 2.0 Urbancorp Management Inc.................................................................................... 5 3.0 Conclusion and Recommendation.......................................................................... 7

Schedules and Appendices

Schedules Cumberland CCAA Entities.................................................................................... A

Appendix Tab Letter dated February 25, 2021 from Davies to Lax............................................... A Letter dated September 27, 2021 from the Trustee to Ms. Saskin’s counsel........ B Letter dated March 25, 2022 from Davies to Lax................................................... C Letter dated April 4, 2022 from Lax to the Trustee................................................ D

Estate File No.: 31-2743224 ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) IN BANKRUPTCY AND INSOLVENCY IN THE MATTER OF THE BANKRUPTCY OF URBANCORP MANAGEMENT INC. OF THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO FIRST REPORT OF KSV Restructuring INC. AS LICENSED INSOLVENCY TRUSTEE OF URBANCORP MANAGEMENT INC. APRIL 6, 2022

1.0 Introduction

1.1 CCAA proceedings

1. On April 21, 2016, Urbancorp (St. Clair Village) Inc. (“St. Clair”), Urbancorp (Patricia) Inc. (“Patricia”), Urbancorp (Mallow) Inc. (“Mallow”), Urbancorp Downsview Park Development Inc. (“Downsview”), Urbancorp (Lawrence) Inc. (“Lawrence”) and Urbancorp Toronto Management Inc. (“UTMI”) each filed a Notice of Intention to Make a Proposal (“NOI Proceedings”) pursuant to Section 50.4(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (collectively, St. Clair, Patricia, Mallow, Downsview, Lawrence and UTMI are referred to as the “NOI Entities”). KSV Kofman Inc. (“KSV Kofman”) was appointed as the Proposal Trustee of each of the NOI Entities. On August 31, 2020, KSV Kofman changed its name to KSV Restructuring Inc. (“KSV”).

2. Pursuant to an Order dated May 18, 2016 made by the Ontario Superior Court of Justice (Commercial List) (the “Court”), the NOI Entities, together with the entities listed on Schedule “A” attached (collectively, the "Cumberland CCAA Entities") were granted protection under the Companies’ Creditors Arrangement Act (the “CCAA”) and KSV was appointed monitor (the “Monitor”) of the Cumberland CCAA Entities.

1.2 Urbancorp Inc., Recognition of Foreign Proceedings

1. On April 25, 2016, the District Court in Tel Aviv-Yafo, Israel issued a decision appointing Guy Gissin as the Foreign Representative (the “Foreign Representative”) of Urbancorp Inc. (“UCI”) and granted the Foreign Representative certain powers, authorities and responsibilities over UCI (the “Israeli Proceedings”).

2. On May 18, 2016, the Court issued two orders under Part IV of the CCAA which: a) recognized the Israeli Proceedings as a “foreign main proceeding”; b) recognized Mr. Gissin as Foreign Representative of UCI; and c) appointed KSV as the Information Officer.

3. UCI was incorporated on June 19, 2015 to raise debt in the public markets in Israel. Pursuant to a Deed of Trust dated December 7, 2015, UCI made a public offering of debentures (the “IPO”) in Israel of NIS180,583,000 (approximately $64 million based on the exchange rate at the time of the IPO) (the “Debentures”).

4. The Foreign Representative has advised the Monitor that UCI’s obligations owing to its creditors have not been paid in full and that it does not expect that they will be.

1.3 Urbancorp Management Inc.

1. Urbancorp Management Inc. (“UMI”) provided management services to other entities in the Urbancorp group.

2. Certain of the Cumberland CCAA Entities had an interest in geothermal assets (the “Geothermal Assets”) located at four condominiums developed by entities in the Urbancorp Group, being the Edge, Bridge, Fuzion and Curve condominiums. Urbancorp Renewable Power Inc. (“URPI”) was incorporated to manage the Geothermal Assets. Pursuant to a Court order made on June 28, 2018, KSV was appointed as the receiver (the “Receiver”) of URPI.

3. The Geothermal Assets were sold for approximately $25 million by KSV as Receiver. Additional recoveries from settlements reached between the Receiver and the condominium corporations for each of the Curve, Edge, Bridge and Fuzion condominiums totalled approximately $7 million. Net of realization costs and harmonized sales tax remitted, the proceeds from the geothermal transactions have been distributed as set out in the table below.

(unaudited; $000s)

Edge	Bridge	Fuzion	Curve	Total
UCI	1,584	5,725	2,675	12
Fuller Landau		8,288	700
King Towns North Inc.			2,049
Other [1]			2,182
Total	9,872	7,774	4,857	712

4. The Bridge condominium is located at 38 Joe Shuster Way, Toronto. The vast majority of the boreholes related to the Bridge Geothermal System are located on real property owned by King Towns North Inc. (“KTNI”), which is across the road from the Bridge condominium (the “Berm Lands”).

5. Pursuant to a Declaration of Trust dated December 27, 2012, KTNI declared to be holding its interests in the Berm Lands in trust for UMI. The Monitor understands that The A. Saskin Family Trust is the sole shareholder of UMI.

6. Pursuant to a lease (the “Berm Lease”) dated July 10, 2010 between KTNI, as landlord, and Vestaco Homes Inc. and URPI, as tenants, KTNI leased the Berm Lands to the Tenants for $100 per year.

7. In connection with the sale of the Geothermal Assets, the Berm Lease was purchased by Enwave Energy Corporation (“Enwave”). Enwave allocated $2,049,000 (the “Berm Lease Funds”) to the Berm Lease and the Receiver accepted Enwave’s allocation.

8. The Receiver’s sale approval motion regarding the Enwave transaction was heard on December 11, 2020 and was unsuccessfully opposed by KTNI. The sale approval and vesting order was issued by the Court on December 23, 2020 and the sale closed on December 31, 2020.

9. On January 21, 2021, KSV, as Monitor, brought an Application for a Bankruptcy Order against UMI.

10. On February 22, 2021, Doreen Saskin, the spouse of Urbancorp’s principal, Alan Saskin, issued an Application for an order appointing RSM Canada Limited as receiver and manager of the property, assets and undertaking of UMI pursuant to section 243 of the BIA and section 101 of the Courts of Justice Act (the “Receivership Application”).

11. Ms. Saskin brought the Receivership Application in the context of a $2.8 million secured claim she filed against UMI. Ms. Saskin registered her security on September 13, 2019, being approximately 3.5 years after the commencement of the NOI Proceedings, and after substantially all the funds had been advanced to UMI [2].

12. On February 25, 2021, Davies Ward Phillips & Vineberg LLP (“Davies”), the Monitor’s legal counsel, sent a letter to Ms. Saskin’s legal counsel, Lax O’Sullivan Lisus & Gottlieb LLP (“Lax”) (who was also counsel to KTNI), requesting certain preliminary information from Ms. Saskin regarding her secured claim (the “Preliminary Information Request”). Davies requested, among other things, copies of bank statements and cheques, bank drafts and electronic fund transfers supporting the amounts advanced by Ms. Saskin. A copy of this letter is attached as Appendix “A”.

13. On March 12, 2021, Lax provided some of the information requested in the Preliminary Information Request, including certain cheques and UMI’s bank statements.

14. The receivership and bankruptcy motions were heard by the Court on April 12, 2021. On May 20, 2021, Chief Justice Morawetz released his decision that a bankruptcy order should be made against UMI, named KSV as Trustee and stayed the Receivership Application, pending the completion of a review of Ms. Saskin’s secured claim by KSV as Trustee. A key issue on the receivership motion was the validity of the indebtedness supporting any security interest.

15. On April 13, 2021, KSV as Monitor brought a motion regarding the distribution of the proceeds from the geothermal transactions which, in part, recommended the distribution of the Berm Lease Funds to Vestaco Homes Inc. as the owner of the Geothermal Assets in the Bridge Condominium (the “Distribution Motion”). The Distribution Motion was opposed by KTNI who argued that the Berm Lease Funds ought to be distributed to it.

16. As of the date of bankruptcy, being May 20, 2021, the issue as to whether UMI would have any funds available for distribution to its creditors was dependent upon the results of the Distribution Motion.

17. Subsequent to May 20, 2021, there were discussions among Lax, Davies, and counsel to the Foreign Representative, Dentons Canada LLP (“Dentons”), regarding Ms. Saskin providing additional information in support of her secured claim. Ms. Saskin was of the view that there was no point in incurring the costs of providing this information given that there may never be funds in UMI requiring an adjudication of her claim, which was dependent on whether KTNI was entitled to the Berm Lease Funds.

18. On September 16, 2021, the Court released a decision (the “UMI Decision”), which found in favour of KTNI and directed the Monitor to distribute $2,049,000 to KTNI, for the benefit of UMI.

19. On November 4, 2021, the Foreign Representative filed a motion seeking leave to appeal the UMI Decision (the “Motion for Leave”) and accordingly, the Monitor maintained a holdback of $2,049,000 (the “UMI Holdback”).

20. On March 3, 2022, the Ontario Court of Appeal dismissed the Motion for Leave (the “Leave Decision”). In accordance with the Leave Decision, the Monitor paid the UMI Holdback to UMI.

21. The primary issue in UMI’s bankruptcy is the validity and quantum of Ms. Saskin’s secured claim. Despite several requests by the Trustee, Ms. Saskin has not responded to the Trustee’s follow-up requests in respect of the Preliminary Information Request. These requests are further discussed in Section 2.5 below.

22. If Ms. Saskin is determined not to have a provable secured claim, or if the amount of her claim is materially less than she asserts, UCI would be entitled to a significant portion of the monies in the UMI bankruptcy estate.

1.4 Purposes of this Report

1. The purposes of this report (“Report”) are to: a) discuss a dispute between the Trustee and Ms. Saskin regarding the delivery by Ms. Saskin of support for her claim, which the Trustee requires to determine her claim; and b) recommend that the Court issue an order requiring that within ten business days of making the recommended order, Ms. Saskin provide, in accordance with paragraph 2.9 below, the support the Trustee has requested so that it can determine the validity and amount of her claim.

1.5 Currency

1. Unless otherwise stated, all currency references in this Report are to Canadian dollars.

2.0 Urbancorp Management Inc.

1. According to UMI’s books and records, UMI owes UTMI approximately $7.7 million. Amounts paid to UTMI in respect of this claim will ultimately be paid to UCI as the secured creditor of UTMI [3].

2. Prior to the UMI Decision on September 16, 2021, UMI had no material assets other than its possible entitlement to the Berm Lease Funds. Accordingly, counsel to the Foreign Representative agreed that the Trustee’s fees and disbursements could be covered from any future distributions to UCI should that prove necessary. There is no formal written agreement pertaining to this understanding.

3. On September 27, 2021, following the UMI Decision, the Trustee sent a letter to Ms. Saskin’s counsel requesting additional support for the advances made by Ms. Saskin to UMI (the “Trustee’s Information Request”). A copy of this letter is attached in Appendix “B”.

4. Ms. Saskin’s claim is comprised of over 40 advances made to UMI during the period from May 2016 to December 2020, which is a period following the commencement of the NOI Proceedings. No advances were purportedly made by Ms. Saskin prior to May 16, 2016.

5. The Trustee has several questions regarding Ms. Saskin’s claims as summarized below: a) the Trustee is not aware of the rationale for the advances from Ms. Saskin to UMI after the commencement of the NOI Proceedings. The Trustee notes that UMI is being sued in Israel by the Foreign Representative so UMI could be incurring costs in that litigation. The Trustee is not involved in the Israeli litigation involving UMI; b) it is unclear how Ms. Saskin is funding UMI in light of Ms. Saskin’s sworn testimony in connection with the Receivership Application and the bankruptcy motion that she was a social worker and never worked for Urbancorp; c) on cross examination of Ms. Saskin in the context of the Receivership Application, Ms. Saskin refused to answer questions with respect to the origination of the funds advanced to UMI, including whether the funds were originally derived from UMI or any member of the Urbancorp group, inherited wealth or premarital property; d) several advances that are part of Ms. Saskin’s claim appear to have been made from entities in the Urbancorp group; e) the Trustee cannot verify that certain advances claimed by Ms. Saskin were in fact made to UMI as they cannot be identified in UMI’s general ledger; and f) the principal amount claimed by Ms. Saskin is approximately $400,000 more than the support provided with her claim.

6. To the extent that Alan Saskin or entities controlled by him had access to funds to pay certain expenses, such as Israeli legal fees, orchestrating the lending of such funds to UMI on a secured basis to be used in turn by UMI to pay such expenses directly prejudices UMI’s unsecured creditors, the main one being UTMI. Furthermore, if UMI received no actual value in return for granting the security, then that is also relevant to the determination of the validity and enforceability of the security.

7. The Foreign Representative is also suing Ms. Saskin in Israel. The Trustee’s Information Request will require disclosure of information concerning Ms. Saskin’s personal assets, including the source of the monies she claims she advanced to UMI. Lax has advised the Monitor that Ms. Saskin is only prepared to share the requested information with the Trustee provided the Trustee review and hold it on a confidential basis, including that it not be shared with the Foreign Representative.

8. The Foreign Representative’s counsel, Dentons, initially advised the Trustee’s counsel, Davies, that the Foreign Representative would not consent to the information being provided to the Trustee on a confidential basis.

9. On March 22, 2022, in response to concerns raised by Lax and Dentons on behalf of their respective clients, the Trustee proposed the following resolution of this matter to the Foreign Representative and Ms. Saskin: a) the Trustee will hold Ms. Saskin’s information concerning the sources of her funds on a confidential basis and the information will not be shared with anyone other than Adam Erlich, the sole inspector of UMI; b) the Trustee will provide the Foreign Representative with a summary of its review and analysis of Ms. Saskin’s claim in sufficient detail to permit the Foreign Representative to assess whether there is any merit in opposing the Trustee’s adjudication of the claim; and c) notwithstanding the confidentiality provision, the Foreign Representative may seek a subsequent Court order requiring the information be delivered to it.

10. On March 24, 2022, Dentons advised that the proposed resolution was acceptable to the Foreign Representative.

11. On March 25, 2022, Davies sent Lax a draft letter agreement pertaining to the Trustee’s proposed resolution, with a request for any comments. A copy of this letter is attached as Appendix C.

12. On April 4, 2022, Lax sent a letter to the Trustee advising, among other things, that it will not provide the Trustee with any additional information concerning the funds Ms. Saskin advanced to UMI. A copy of this letter is attached as Appendix “D”.

13. The Trustee cannot advance the UMI bankruptcy proceedings without receiving the information detailed in the Information Request.

3.0 Conclusion and Recommendation

1. The Trustee recommends that the Court issue an order that Ms. Saskin provide within 10 business days the information the Trustee requires to determine her claim in accordance with the terms in paragraph 2.9 above. The Trustee believes that the terms are reasonable and appropriate as they balance the interests of Ms. Saskin and the Foreign Representative, including that no confidential information will be shared by the Trustee with the Foreign Representative unless otherwise ordered by this Court.

All of which is respectfully submitted,

KSV RESTRUCTURING INC. IN ITS CAPACITY AS LICENSED INSOLVENCY TRUSTEE OF URBANCORP MANAGEMENT INC. AND NOT IN ITS PERSONAL CAPACITY

[1] Mainly represents distributions to First Capital Realty Inc. in respect of a mortgage on the Fuzion geothermal assets.

[2] Approximately $130,000 was advanced after September 13, 2019. The balance was advanced prior to that date.

[3] Cumberland CCAA Entities provided funding to UTMI during the CCAA Proceedings. Those advances are secured by an Intercompany Charge. UCI is the ultimate beneficiary of any monies repaid in respect of the Intercompany Charge.