Court File and Parties
COURT FILE NO.: CV-23-00701159-00CL
DATE: 20230818
ONTARIO - SUPERIOR COURT OF JUSTICE – 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 and Natasha Rambaran, for the Applicant, Instant Brands
Moshe Melcer and Stephen D. Piraino, U.S. Counsel for the Applicant
Andrew Harmes, Counsel for Proposed Information Officer
Arnold Cohen and Evan Cobb, Counsel for ABL Lender
HEARD: August 18, 2023
ENDORSEMENT
The Applicant, Instant Brands Inc., in its capacity as Foreign Representative, seeks an order recognizing in Canada the Third DIP Amendment Order granted by the United States Bankruptcy Court for the Southern District of Texas on August 8, 2023.
Defined terms in this Endorsement have the meaning given to them in my earlier Endorsements made in this matter and in the motion materials.
The Applicant relies upon the Affidavit of Mr. Adam Hollerbach affirmed August 15, 2023 and the Third Report of the Information Officer. The relief sought today is unopposed, and is supported and recommended by the Information Officer.
I also observe that the Third DIP amendment Order in respect of which recognition here is sought, was unopposed in the US Court.
Among other orders in this proceeding, I granted an order on July 20, 2023 recognizing and giving effect in Canada to the Supplemental Interim DIP Order, the Final DIP Order, the Cash Management Order and the Bidding Procedures Order.
The Third DIP Amendment Order amends the Term Loan DIP Credit Agreement to permit the Chapter 11 Debtors to upsize the new money component of the Term Loan DIP Facility by adding a new super senior, first-out $30 million tranche to the DIP. The US Debtors have already utilized the full $132.5 million commitment under the DIP Facility. Moreover, the new tranche was made available immediately upon entry of the Third DIP Amendment Order in the US Court.
I am satisfied as to the need of the Chapter 11 Debtors, which for clarity include the Canadian Debtors, for additional financing. This is described in the Hollerbach affidavit at paragraphs 41 to 49.
If the new tranche is approved, the revised 13-week cash flow forecast prepared by the Chapter 11 Debtors demonstrates that they will have sufficient liquidity to operate until September 15, 2023. While not all Term Loan DIP Lenders are participating in the upsizing, they have all consented to it, including in particular the first-out structure.
To be clear, the aggregate principal amount of the Term Loan DIP Facility will be $162,500,000. The upsized Amended Final Draw Amount under the Term Loan DIP Facility increased to $52,500,000, being the original $32,500,000 final draw amount, less the $10 million advanced pursuant to the Interim DIP Pull-Forward Amendment, plus the $30 million upsize for which approval is sought today.
I am satisfied that the Third DIP Amendment Order should be recognized and enforced pursuant to section 49 of the CCAA. The Chapter 11 Cases have been recognized as a foreign main proceeding and the Applicant has been recognized as the Foreign Representative. Accordingly, subsection 49(1) of the CCAA gives this Court broad discretion to make appropriate orders, on appropriate terms and conditions, to protect the debtor company’s property and the interests of creditors.
The principle of comity strongly supports the request for the relief sought here. Recognition is in the interests of the Chapter 11 Debtors and their creditors and stakeholders generally and is necessary to continue their business and protect their property. It will permit the Chapter 11 Debtors to pay certain pre-petition accounts payable balances, which in turn are a critical component of agreements reached with certain Key Vendors. This is necessary to ensure uninterrupted supply and to preserve sales revenue.
I am satisfied that there are no more favourable alternatives. Approval and recognition will not prejudice Canadian creditors of the Chapter 11 Debtors, and conversely, a refusal to recognize would, I am satisfied, negatively affect Canadian Creditors since it would jeopardize the business and revenues and stability of the Chapter 11 Debtors as noted above.
The motion is granted. Order to go in the form signed by me today which is effective immediately and without the necessity of issuing and entering.
Osborne J.
Date: August 18, 2023