Court File and Parties

Court File No.: CV-23-00701159-00CL Date: 2023-06-23 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, for the Applicant, Instant Brands Joanna McDonald and Stella Li, U.S. Counsel for the Applicant, Instant Brands Evan Cobb, Counsel to ABL Lender Sharon Hamilton, Counsel to EY, Proposed Information Officer Joe Pasquariello and Andrew Harmes, Counsel to Proposed Information Officer

Heard: June 23, 2023

Endorsement

[1] Instant Brands Inc. (“IB Inc.”), in its capacity as Foreign Representative (the “Foreign Representative”), moves pursuant to section 49 of the Companies’ Creditors Arrangement Act (“CCAA”) for an order recognizing and enforcing the Interim DIP Order issued by the United States Bankruptcy Court for the Southern District of Texas on June 14, 2023 together with approval of the corresponding priority charge.

[2] Defined terms in this Endorsement have the meaning given to them in the motion materials, the First Report of the Information Officer dated June 21, 2023, and/or the US Court Order, unless otherwise stated.

[3] The Foreign Representative relies on the Affidavit of Adam Hollerbach sworn June 20, 2023 together with exhibits thereto, as well as the First Report.

[4] The Service List has been served with the motion materials. The relief sought today is unopposed.

[5] The background for this matter is set out in the motion materials. On June 15, 2023, I granted an order declaring the Foreign Representative to be the foreign representative of the Chapter 11 Debtors (which include the Canadian Debtors) in respect of the Chapter 11 Cases, recognizing the Chapter 11 Cases as foreign main proceedings under the CCAA, and granting a stay. I also issued an order recognizing numerous First Day Orders and granting an Administration Charge and a D&O Charge.

[6] Pursuant to the Interim DIP Order, the Chapter 11 Debtors were given authority from the US Court (on an interim basis) to enter into the credit agreements for the ABL DIP Facility and the Term Loan DIP Facility (collectively, the “DIP Facilities”). The ABL DIP Facility is a senior secured super priority post-petition priming debtor-in-possession asset-based revolving credit facility with commitments in the initial aggregate principal amount of USD $125 million.

[7] The proceeds of the ABL DIP Facility were used to pay, in full, all outstanding obligations under the Prepetition ABL Facility as part of a full rollup, as more particularly described in the Hollerbach Affidavit at paragraph 14.

[8] The Term Loan DIP Facility is a senior secured, super priority post-petition multi-draw priming debtor-in-possession term loan facility that provides USD $132,500,000 of incremental new liquidity funded by almost all of the Chapter 11 Debtors’ Prepetition Term Loan Lenders. In particular, USD $100 million became available following entry of the Interim DIP Order in the US Court, and the balance will become available following entry of the Final DIP order.

[9] The amount of USD $55 million of the proceeds from the Term Loan DIP Facility (in addition to certain additional amounts in respect of accrued and unpaid interest, fees and/or expenses) were used to repay in full the Reimbursement Note in connection with the Unsub Payoff Event, with the remaining proceeds being applied to pay fees and expenses incurred in connection with the DIP Facilities and to pay down a portion of the ABL DIP Facility in order to create availability under the ABL DIP Facility that can be used to fund the operations of the Chapter 11 Debtors in the administration of the Chapter 11 Cases.

[10] The amounts actually borrowed by that Chapter 11 Debtors under the DIP Facilities are intended to be secured by, among other things, the priority charge sought today by the Foreign Representative over the current and future assets, undertakings and properties of the Chapter 11 Debtors located in Canada.

[11] The principal issue on this motion is whether this Court should recognize and enforce the Interim DIP Order in Canada and if so, whether it should grant the corresponding priority charge to secure advances made under the DIP Facilities. As noted above, Court approval is sought pursuant to section 49 of the CCAA.

[12] Section 49(10) of the CCAA gives this Court the jurisdiction, where a foreign proceeding has been recognized pursuant to Part IV of the CCAA, and upon application of the Foreign Representative, to make any order that the Court considers appropriate, if it is satisfied that it is necessary for the protection of the debtor company’s property or the interests of one or more creditors.

[13] Section 49 is based on the overarching principle of comity: see ss. 44(a) and 52(1) and Hollander Sleep Products, LLC, 2019 ONSC 3238 (“Hollander”) at para. 41.

[14] In the main, a principal objective is to advance comity and cooperation in cross-border insolvency proceedings, with a view, as noted by the Court in Hollander, to avoid multiple proceedings, inconsistent judgments and general uncertainty, all of which could enure to the detriment of stakeholders. The coordination of international insolvency proceedings is particularly critical in ensuring the equal and fair treatment of creditors regardless of their location: Hollander, at para. 41.

[15] It is also important to emphasize that in this matter, this Court is, intentionally, performing an ancillary role to the foreign main proceeding. It follows that this Court should not lightly undertake a second-guessing exercise in respect of decisions made by the US Court. In addition, the CCAA, as remedial legislation, should be given a liberal interpretation to facilitate its objectives: Babcock & Wilcox Canada Ltd., Re.

[16] It was pursuant to the above principles and objectives that I appointed the Foreign Representative and recognized the Chapter 11 Cases as foreign main proceedings earlier. Those same principles and objectives apply in respect of the relief sought today.

[17] I am satisfied based on the material in the Record that the Interim DIP Order should be recognized and the corresponding DIP Charge granted. The Chapter 11 Debtors require the incremental new liquidity and revolving credit facility afforded by the USD $132,500,000. Without access to those funds, the Chapter 11 Debtors would be unable to cover operating costs going forward or the projected restructuring costs.

[18] I am also satisfied that the Interim DIP Order does not violate any applicable Canadian law and nor is it inconsistent with the exercise of my jurisdiction pursuant to Part IV of the CCAA.

[19] I observe in particular that it was a condition to the provision of the ABL DIP Facility that it include a full rollup of the outstanding obligations under the Prepetition ABL Credit Facility. Certain key terms of the DIP Facilities are summarized in the helpful chart found at paragraph 20 of the First Report of the Information Officer.

[20] I recognize that section 11.2(1) of the CCAA provides that an interim financing charge may not secure an obligation that existed prior to the granting of an initial order under the CCAA. The DIP ABL Facility involves the outstanding borrowings under the Prepetition ABL Facility, which total approximately $121.4 million as of the Petition Date, being deemed to be substituted and exchanged for ABL DIP Obligations on a cashless dollar for dollar basis, and the approximately $22.3 million of issued letters of credit being deemed to be letters of credit issued under the DIP ABL Facility.

[21] Canadian courts have held that this rollup of prepetition debt into post-petition super priority financing can, and in appropriate circumstances should, be approved in the context of foreign recognition proceedings pursuant to Part IV of the CCAA: See Hollander, at paras. 46 – 50, citing with approval Hartford Computer Hardware Inc, (Re), 2012 ONSC 964 at paras. 18 - 19. In so doing, other Canadian courts have recognized, as do I, that the same relief may not be granted in plenary CCAA proceedings.

[22] In my view, Part IV of the CCAA, and section 49 in particular, when considered and interpreted as against the objectives and principles of comity as noted above and the fact that the foreign main proceedings here are the Chapter 11 Cases, I am satisfied that the relief sought is appropriate.

[23] I have noted above my conclusion as to the necessity of the additional liquidity and funding provided by the facilities now sought to be approved, to the benefit of the Chapter 11 Debtors (which include, to be clear), the Canadian Debtors.

[24] Moreover, I observe that the Canadian Debtors are already exposed in any event. IB Inc. is a co-borrower, together with IB Holdings, under the Prepetition ABL Facility, and is jointly and severally liable with IB Holdings for all obligations under the Prepetition ABL Facility. Those total approximately $121.4 million of outstanding borrowings and approximately $22.3 million of issued letters of credit as of the Petition Date, even though, to the understanding of the Information Officer, IB Inc. has not directly borrowed any amounts under the Prepetition ABL Facility to date. In addition, each of Corelle and IBCH are jointly and severally liable for the obligations of IB Inc. and IB Holdings under the Prepetition ABL Facility as a result of having provided secured guarantees.

[25] In similar fashion, with respect to the DIP Term Loan Facility, and notwithstanding that none of the Canadian Debtors is a borrower under the Prepetition Term Loan, the Canadian Debtors provided secured guarantees, such that they are liable on a joint and several basis for the obligations of IB Holdings under the Prepetition Term Loan Credit Facility.

[26] Accordingly, the DIP Term Loan Facility provides, with respect to the Canadian Debtors, new funds in the amount of $132.5 million in borrowing capability, supported by the same asset base as was the Prepetition Term Loan. Counsel to the Information Officer has provided to the Information Officer its opinion that, subject to the usual assumptions and qualifications, the security relating to the Prepetition ABL Facility creates a validly perfected security interest in favour of the Prepetition ABL Agent in substantially all of the present and after-acquired personal property of the Canadian Debtors to which the Personal Property Security Act (Ontario) applies.

[27] As a result, I am satisfied that the Canadian Debtors are not materially prejudiced or put in a relatively worse off position than they already are, by the granting of the relief sought today. On the other hand, they are advantaged by the liquidity provided by the facility sought to be approved, which will provide the funding necessary for ongoing operations and restructuring costs.

[28] It follows that the corresponding DIP Charge should also be approved. It will be a super priority charge over all Property in Canada ranking subordinate to the Administration Charge and the D&O Charge in favour of the post-petition lenders under the DIP Facilities. The other charges continue, unamended as to quantum.

[29] For all of the above reasons, the relief sought is granted. Order to go in the form signed by me today which is effective immediately and without the necessity of issuing and entering.

Released: June 23, 2023 Osborne J.