Court File and Parties
COURT FILE NO.: CV-23-00701159-00CL DATE: 20230615 SUPERIOR COURT OF JUSTICE – ONTARIO – COMMERCIAL LIST
IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF INSTANT BRANDS ACQUISITION HOLDINGS INC., INSTANT BRANDS (TEXAS) INC., INSTANT BRANDS ACQUISITION INTERMEDIATE HOLDINGS INC., INSTANT BRANDS HOLDINGS INC., URS-1 (CHARLEROI) LLC, INSTANT BRANDS LLC, URS-2 (CORNING) LLC, CORELLE BRANDS (LATIN AMERICA) LLC, EKCO GROUP, LLC, EKCO HOUSEWARES, INC., EKCO MANUFACTURING OF OHIO, INC., CORELLE BRANDS (CANADA) INC., INSTANT BRANDS (CANADA) HOLDING INC., INSTANT BRANDS INC. AND CORELLE BRANDS (GHC) LLC
APPLICATION OF INSTANT BRANDS INC. UNDER SECTION 46 OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
BEFORE: Peter J. Osborne J.
COUNSEL: Ashley Taylor and Maria Konyukhova, for the Applicant Evan Cobb, Counsel to ABL Lender Sharon Hamilton, EY, Proposed Information Officer Joe Pasquariello and Andrew Harmes, Counsel to Proposed Information Officer
HEARD: June 15, 2023
Endorsement
This is a foreign recognition application pursuant to the Companies’ Creditors Arrangement Act (CCAA).
The Applicant, Instant Brands Inc. (the “Applicant” or “IB Inc.”), seeks in its capacity as foreign representative of itself and 14 other debtors in possession, each of which filed voluntary petitions for relief pursuant to Chapter 11 of title 11 of the United States Code, (the “Chapter 11 Debtors”), various heads of relief including:
a. declaring the Applicant to be the foreign representative of the Chapter 11 Debtors (the “Foreign Representative”) pursuant to section 45 of the CCAA in respect of the jointly administered insolvency proceedings pending in the United States Bankruptcy Court for the District of Texas (the “US Proceedings”);
b. declaring the US Proceedings to be foreign proceedings, and foreign main proceedings, for the purposes of section 45 of the CCAA;
c. staying all proceedings that might be taken against the Chapter 11 Debtors under the Bankruptcy and Insolvency Act (BIA) or the Winding-up and Restructuring Act (WURA) and related relief;
d. recognizing and enforcing in Canada certain orders made in the US Proceedings on June 13, 2023;
e. appointing Ernst & Young Inc. as Information Officer in respect of this proceeding; and
f. granting an Administration Charge and a D&O Charge.
Defined terms in this Endorsement have the meaning given to them in the Application materials unless otherwise stated.
The relief sought today was unopposed.
The First Day Orders made in the US Proceedings on June 13, 2023 were made by Judge Jones of the United States Bankruptcy Court for the District of Texas.
Counsel have confirmed that none of the relief granted by Judge Jones relevant to the matters before me today (i.e., the appointment of the Applicant as Foreign Representative) was opposed in that court.
There are no other insolvency proceedings involving the Chapter 11 Debtors other than the US Proceedings and now, these proceedings.
The basis for the US Proceedings are set out in the Application materials and in particular, in the Affidavit of Adam Hollerbach affirmed June 14, 2023 with exhibits thereto and the Affidavit of Maria Konyukova sworn June 14, 2023 and exhibits thereto.
The Chapter 11 Debtors design, manufacture and market a global portfolio of consumer lifestyle brands including Instant, Pyrex, Corelle, Corningware, Snapware, Chicago Cutlery and Visions. They lack the requisite liquidity to continue operations absent protection and have been unable to restructure their credit facilities. As that the end of the most recent completed fiscal year, December 31, 2022, they generated approximately $761 million in net revenue as against a net recorded loss on a consolidated basis of approximately $282 million.
All of the Chapter 11 Debtors are incorporated or established under the laws of the United States except for the Applicant, Corelle Brands (Canada) Inc. and Instant Brands (Canada) Holdings Inc. (collectively, the “Canadian Debtors”). All of the Canadian Debtors are incorporated under the laws of Canada with registered offices in Ottawa, Ontario.
The Canadian Debtors and the other Chapter 11 Debtors require a stay of proceedings here and recognition of the First Day Orders to operate their businesses, post-petition, to fund the Chapter 11 Cases, and to preserve the value of the Estates as a going concern. Sufficient liquidity cannot be obtained, including liquidity necessary to operate during a restructuring, absent statutory restructuring protection in both jurisdictions.
I am satisfied that the relief sought should be granted.
Pursuant to the purpose of the cross-border regime set out in s. 44 of the CCAA, s. 46 provides that a person who is a foreign representative may apply to the Court for recognition of a foreign proceeding in respect of which that person is a foreign representative. Pursuant to s. 47, the Court shall make an order recognizing a foreign insolvency proceeding, if the Court is satisfied that the application relates to a foreign proceeding within the meaning of the CCAA and that the applicant is a foreign representative in respect of that foreign proceeding.
I am satisfied here that the US Proceedings are foreign proceedings as defined in s. 45(1) of the CCAA. Accordingly, I recognize them as such pursuant to subsection 47(1).
I am also satisfied that the Applicant is a foreign representative within the meaning of s.45(1). The US Court has already issued an order appointing the Applicant as foreign representative within the meaning of that subsection.
Next, I am satisfied that the foreign proceeding (i.e., the US Proceedings here) is a “foreign main proceeding” and that, in accordance with s. 45(1) of the CCAA, the centre of main interests, or “COMI” is the United States. The registered offices of all of the Chapter 11 Debtors except for the three Canadian Debtors are in the United States. The presumption in s.45(2) is satisfied.
Where a Canadian entity operate in a larger corporate group, courts have considered how COMI should be determined since that is not expressly set out in Part IV of the CCAA: see Angiotech Pharmaceuticals Inc. (Re), 2011 BCSC 115 and Lightsquared LP (Re), 2012 ONSC 2994.
I am satisfied that those factors are satisfied here. The Company operates on a highly integrated basis. All corporate decisions are carried out in the United States. Two of the three directors of the Canadian Debtors reside in the US and managerial services for all three Canadian Debtors are provided in the US by the Chapter 11 Debtors. A significant portion of the intellectual property of the Canadian Debtors is owned by the Chapter 11 Debtors in the US, and Canadian revenue makes up only 8.7% of the Company’s revenue.
I am further satisfied that pursuant to s.48(1) of the CCAA, and as I have recognized the US Proceedings as a foreign main proceeding, that a stay of proceedings here is appropriate. The scope and terms of the stay sought here are consistent with the Model Order recognized by the Commercial List. While there is no statutory limit on the stay set out in the CCAA, I am satisfied that is appropriate here that the stay should be in effect subject to further order of this Court.
EY is appointed as Information Officer. It has become common practice in this Court to appoint an information officer in proceedings under Part IV of the CCAA, pursuant to my discretion that flows from s. 49. In this case in particular, the appointment of an information officer is appropriate and will keep this Court and Canadian stakeholders advised of relevant milestones and steps in the US Proceedings.
Ernst & Young Inc. has previously filled this role in this Court, is a licensed insolvency trustee and its principals involved in this matter are highly experienced. I am satisfied that EY is an appropriate Information Officer here and it has consented to act in this capacity.
The Administration Charge and the Directors & Officers’ Charge are both appropriate here and are approved, the first in the maximum amount of $1 million and the second in the maximum amount of $1.5 million.
I observe that no approval is sought today in respect of debtor-in-possession (“DIP”) financing. The Applicant advises that it intends to seek that approval shortly, and for that purpose this matter is returnable before me next Friday, June 23 commencing at 9:15 AM via Zoom. I can come
Orders to go in the form signed by me today which are effective immediately and without the necessity of issuing and entering.
Osborne J. Date: June 15, 2023