Court File and Parties

COURT FILE NO.: CV-16-11541-00CL

DATE: 2022-05-31

SUPERIOR COURT OF JUSTICE - ONTARIO

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

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF URBANCORP CUMBERLAND 2 GP INC., URBANCORP CUMBERLAND 2 L.P., BOSVEST INC., EDGE ON TRIANGLE PARK INC., EDGE RESIDENTIAL INC. AND WESTSIDE GALLERY LOFTS INC.

BEFORE: Chief Justice G.B. Morawetz

COUNSEL: Robert J. Drake, for the Monitor Kenneth Kraft, for Guy Gissin, Foreign Representative of Urbancorp Inc. Jonathan Rosenstein, for Aviva Insurance Co. of Canada

HEARD: May 31, 2022

ENDORSEMENT

[1] The Fuller Landau Group Inc., Monitor of the Applicants (the “Monitor”), moves for (i) an extension of the Stay of Proceedings to October 7, 2022; (ii) approval of the Monitor’s activities as described in the Monitor’s Fortieth Report (the “Report”); and (iii) approval of the Monitor’s and its legal counsel’s fees and disbursements for the period of February 1, 2022 to April 30, 2022.

[2] The motion was not opposed.

[3] The evidentiary basis to support the requested relief is set out in the Report.

[4] As outlined in the Report, the Monitor has reduced the number of outstanding issues in these CCAA proceedings.

[5] One issue that remains outstanding is a priority issue which inhibits the Monitor’s ability to make an interim distribution. The Monitor’s ability to make an interim distribution is restricted due to the necessity to maintain an appropriate reserve for, among other things, disputed secured claims. The Monitor reports that there is currently one disputed secured claim that is holding up any distribution, namely, the secured claim of Aviva Insurance Co. of Canada (“Aviva”) in the amount of $13.3 million. Aviva acted as a surety of the Applicants and deposited a $13.3 million bond with Tarion Warranty Corporation (“Tarion”) to support the Applicants’ warranty obligations (the “Aviva Bond”). Aviva has made a claim in the estate that mirrors any obligation that it may have to Tarion if calls on the Aviva Bond are made.

[6] The Monitor reports that it is not aware of any material calls on the Aviva Bond by Tarion, and further, that the consummation of a settlement with Toronto Standard Condominium Corporation 2448 should eliminate any risk of material draws on the Aviva Bond. All that remains are a small amount of “Major Structural Defect” warranty obligations for a small number of units. The Monitor expects that such warranty obligations can be actuarially determined by Tarion and most (if not all) of the Aviva Bond can be released. The Monitor also reports that it cannot independently calculate the total risk of the Major Structural Defect claims or the resulting maximum exposure of its Tarion warranty obligations and, as a result, it cannot appropriately reserve an amount of money to cover the Aviva claim.

[7] I appreciate the dilemma that is currently facing the Monitor and would encourage the parties directly involved – Tarion and the Monitor – to use their best efforts to expeditiously resolve outstanding issues so that the Monitor can be in a position to make an interim distribution to the unsecured creditors.

[8] The current Stay Period expires on June 3, 2022. Pursuant to s. 11.02 of the CCAA, the court may extend the stay of proceedings where circumstances exist that make the order appropriate, and the debtor company satisfies the court that it has been acting in good faith and with due diligence.

[9] Having reviewed the record and hearing submissions, I am satisfied that the Applicant has been and continues to act in good faith and with due diligence in its effort to resolve the outstanding issues. I am also satisfied that the request to extend the Stay Period to October 7, 2022, is reasonable in the circumstances. In arriving at this conclusion, I have taken into account that the motion was not opposed and that the Monitor has reported that no creditors are expected to suffer material prejudice because of the extension of the Stay Period. I note that the Required Cash Flow Forecast indicates that the Applicants will have sufficient liquidity to maintain its operations through to October 7, 2022.

[10] With respect to the Monitor’s activities as set out in the Report, the Monitor states that its actions, conduct and activities are in accordance with previous court orders and with the CCAA more generally. No party took issue with this statement or with any of the activities of the Monitor. I am satisfied that it is appropriate to approve the Monitor’s activities, as described in the Report.

[11] I am also satisfied that the fees and disbursements of the Monitor and of its counsel appear to be reasonable in the circumstances and they are also approved. In arriving at this conclusion, I have also taken into account that the Monitor has been granted “super Monitor” power and obligations and has maintained a predominant role in these CCAA proceedings.

[12] Accordingly, the motion is granted and the order to reflect the foregoing has been signed in the form presented.

Chief Justice G.B. Morawetz

Date: May 31, 2022