SUPERIOR COURT OF JUSTICE - ONTARIO

Court File and Parties

COURT FILE NO.: CV-24-00715202-00CL DATE: 2024-02-21

RE: IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, C. C-36, AS AMENDED AND IN THE MATTER OF HORNBLOWER CRUISES AND EVENTS CANADA LTD., HORNBLOWER CANADA ENTERTAINMENT LIMITED, HORNBLOWER CANADA CO., HORNBLOWER CANADIAN HOLDINGS, INC. AND HORNBLOWER CRUISES AND EVENTS, INC.

APPLICATION OF HORNBLOWER GROUP, INC. UNDER SECTION 46 OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, C. C-36, AS AMENDED

BEFORE: Chief Justice Geoffrey B. Morawetz

Counsel

Alex MacFarlane, Roger Jaipargas and Nick Hollard, for the Applicant Hornblower Group Inc.

Raj Sahni, for the Proposed Information Officer (Grant Thornton Ltd.)

Linc Rogers and Caitlin McIntyre, for GLAS Trust Company LLC

Martino Calvaruso, Ben Muller and Tracy Sandler, for Deutsche Bank AG

HEARD: February 21, 2024

ENDORSEMENT

[1] This application was brought under Part IV of the Companies’ Creditors Arrangement Act (the “CCAA”) and section 106 of the Courts of Justice Act (the “CJA”) by Hornblower Group, Inc. (“Hornblower Group”) as the proposed foreign representative of Hornblower Canada Entertainment Limited (“Hornblower Entertainment”), Hornblower Cruises and Events Canada Ltd. (“Hornblower Cruises”), and Hornblower Canada Co. (“Hornblower Canada”) (collectively, the “Canadian Debtors”), as well as Hornblower Canadian Holdings, Inc. and Hornblower Cruises and Events, Inc. (the “US Debtors”), for an interim stay of proceedings in connection with proceedings (the “US Proceedings”) under Chapter 11 of Title 11 (“Chapter 11”) of the United States Code (the “US Code”) commenced by Hornblower Group and certain of its affiliates (collectively, the “Debtors”), including the Canadian Debtors, in the United States Bankruptcy Court for the Southern District of Texas (the “US Court”).

[2] The factual basis for this application is set out in the Affidavit of Jonathan Hickman, Chief Restructuring Officer of Hornblower Holdings LLC and certain of its affiliates, sworn February 21, 2024 (the “Hickman Affidavit”).

[3] Capitalized terms not otherwise defined have meanings set out in the Hickman Affidavit.

[4] The motion was not opposed.

[5] The Debtors, including the Canadian Debtors and US Debtors, are part of a worldwide travel and tourism group of companies (“Hornblower” or the “Company”), providing sightseeing boat tours and ferries, walking tours, rail excursions, outback adventures, and a wide array of tourist experiences.

[6] Hornblower’s business consists of three divisions:

(a) The Hornblower Silo, which carries on the City Experiences business, which provides sightseeing ferries and cruises, as well as walking tours in Canada, the US, Mexico, South America, Europe, Asia, and Africa;

(b) The AQV Silo, carrying on the American Queen Voyages (“AQV”) business, which primarily provides sightseeing cruises in the US; and

(c) The Journey Beyond Silo, carrying on the Journey Beyond business, which provides a variety of a sightseeing and experience-based activities in Australia.

[7] Hornblower’s largest presence is in the U.S. The revenue generated by the Canadian Debtors for the year ended December 31, 2023, represented approximately 7% of the Company’s consolidated revenue for such period.

[8] The Debtors’ total funded debt is approximately $1.2 billion (the “Prepetition Secured Debt”). The Canadian Debtors and US Debtors are guarantors of a substantial portion of the Debtors’ secured debt.

[9] The Canadian Debtors and US Debtors are not co-borrowers under any of the Prepetition Secured Debt Agreements.

[10] The Canadian Debtors are guarantors of the Prepetition Secured Debt (except the Incremental Superpriority Facility in the amount of $148.5 million) and have provided general security agreements over their assets, properties, and undertaking in support of the obligations arising under such guarantees and the obligations of the loan parties under the loan documents for the Prepetition Secured Debt (including, for greater certainty, the Incremental Superpriority Facility) (and, in the case of the Superpriority Facility and the First Lien Term Facility, the obligations of Journey Beyond Holdings, LLC, a limited liability company incorporated pursuant to the laws of Delaware).

[11] The Canadian Debtors are members of the broader, integrated network of the Hornblower entities, which is centrally managed by the Company’s senior leadership team principally from Hornblower Group’s offices in San Francisco, California.

[12] Hornblower Cruises is a corporation incorporated under the laws of Ontario with its registered office located at 207 Queens Quay West, Suite 425, Toronto, Ontario.

[13] Hornblower Canada is a corporation incorporated under the laws of Nova Scotia with its registered office located at 5775 River Road, Unit 110, Niagara Falls, Ontario.

[14] Hornblower Entertainment is a corporation incorporated under the laws of Canada with its registered office located at 5775 River Road, Unit 110, Niagara Falls, Ontario. Hornblower Entertainment is a dormant company with no operations, employees, or assets, and is in the process of being wound down.

[15] After years of growth, Hornblower suffered significant financial hardship due to the COVID-19 pandemic and related shutdown orders throughout the world that had a substantial and negative impact on the Company’s operations. After taking on substantial debt to weather the pandemic, Hornblower has faced difficulties servicing its debt due to rising interest rates and underperformance of certain of its business operations, which have not rebounded to pre-pandemic levels.

[16] In an effort to preserve value and effect an orderly restructuring of the business, the Debtors commenced the US Proceedings on February 20, 2024 (the “Petition Date”) by filing voluntary petitions for relief (the “Petitions”) under Chapter 11 in the US Court. A hearing before the US Court is scheduled for 5:00 p.m. (CST) February 21, 2024 (the “First Day Hearing”), at which time the Debtors will seek various first day orders pursuant to the US Code (the “First Day Orders”), including, among other things, an order appointing Hornblower Group as the foreign representative for the US Proceedings (in such capacity, the “Foreign Representative”).

[17] At this time, Hornblower Group, as the proposed Foreign Representative of the US Proceedings, is requesting an order from this Court granting an interim stay of proceedings (the “Interim Stay”) in respect of the Canadian Debtors, the US Debtors and Hornblower Group in Canada (the “Interim Stay Order”). If the US Court grants the requested First Day Orders, Hornblower Group anticipates returning before this Court to seek two additional orders, namely:

(a) an order (the “Initial Recognition Order”), among other things, (i) declaring the Hornblower Group as the Foreign Representative in respect of the Chapter 11 Cases; (ii) recognizing the Chapter 11 Cases as a “foreign main proceeding” in respect of the Debtors; and (iii) granting a stay of proceedings in respect of the Canadian Debtors.

(b) an order (the “Supplemental Order”), among other things, (i) recognizing certain First Day Orders, (ii) granting a stay of proceedings in respect of the U.S. Debtors and Hornblower Group, and their respective directors and officers in Canada; (iii) appointing Grant Thornton Limited as the information officer in respect of these proceedings (in such capacity, the “Information Officer”), (iv) granting an administration charge over the assets and property of the Canadian Debtors in Canada in favour of Canadian counsel to the Canadian Debtors, the Information Officer and counsel to the Information Officer, (v) granting a directors’ charge over the assets and property of the Canadian Debtors in Canada in favour of the directors and officers of the Canadian Debtors to secure the Canadian Debtors’ indemnification obligations, and (vi) granting a charge over the assets and property of the Canadian Debtors in Canada to secure the interim financing that has been negotiated by the Debtors (the “DIP Financing”).

[18] The issue to be considered on this application is whether this Court should grant the Interim Stay Order providing for the Interim Stay in Canada.

[19] This Court has previously granted interim orders providing for a temporary stay of proceedings in Canada following the initiation of Chapter 11 (See: Lightsquared LP, Re, 2012 ONSC 2994 at para 3; Paladin Labs Canadian Holding Inc., 2022 ONSC 4748 at para 20 [Paladin Interim Stay Endorsement] and YRC Freight Canada Company (Re) 2023 ONSC 4492, 2023 CarswellOnt 12928 (Yellow)).

[20] In Paladin Labs Inc., I observed that granting the interim stay and other relief as proposed in the interim order was “in accordance with the principles of cooperation and comity” and within the Court’s jurisdiction.

[21] In my view, the granting of the requested Interim Stay is within the Court’s jurisdiction, consistent with this Court’s practice in recent Part IV recognition proceedings, and important for the preservation of the value of the Canadian Business as part of Hornblower’s orderly restructuring efforts.

[22] I am also satisfied that this Court has the jurisdiction to grant a stay with respect to non-applicant debtor companies. In the context of a recognition proceeding, the Court’s jurisdiction arises from its authority under subsection 49(1) of the CCAA and pursuant to section 106 of the CJA. A stay of proceedings is also consistent with the principles of comity and cooperation embodied in section 52 of the CCAA. (See: Tamerlane Ventures Inc, Re, 2013 ONSC 5461 at para 21; Pacific Exploration & Production Corp, Re, 2016 ONSC 5429 at para 26; Paladin Interim Stay Endorsement at paras 24-25).

[23] Hornblower Group submits that the balance of convenience favours granting the stay of proceedings in favour of the Debtors, as such protection is critical to preserve overall stability and allow the Company to maximize value for stakeholders and implement an orderly wind-down. For the purpose of this motion, I accept this submission.

[24] I am satisfied that it is both appropriate and necessary to grant the Interim Stay Order.

[25] In the event that the U.S. Court grants the requested First Day Orders, arrangements can be made for Hornblower Group to schedule a recognition motion returnable on Tuesday, February 27, 2024 at 11:00 a.m. before me.

Chief Justice Geoffrey B. Morawetz

Date: February 21, 2024