COURT FILE NO.: CV-24-00717340-00CL

DATE: 2024-09-03

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 A PLAN OF COMPROMISE OR ARRANGEMENT OF PRIDE GROUP HOLDINGS INC. and those Applicants listed on Schedule “A” hereto (each, an “Applicant”, and collectively, the “Applicants”)

RE: Pride Group Holdings Inc. et al., Applicants

BEFORE: Peter J. Osborne J.

COUNSEL: Leanne Williams, Puya Fesharaki and Ines Ferreira, Counsel for the Applicants Raj Sahni, Counsel for the Directors and Officers Craig Colraine, Counsel for PACCAR FINANCIAL Ltd Graham Phoenix, Counsel for Finloc 2000 Inc. Jeffrey Levine, Counsel for Roynat Inc. and The Bank of Nova Scotia Stuart Brotman, Daniel Richer and Aubrey E. Kauffman, Counsel for The Lending Syndicate Shaun Parsons and Steven L. Graff, Counsel for TD Equipment Finance Canada Pam Huff, Kelly Bourassa and Chris Burr, Counsel for the Monitor John Salmas, Counsel for Bank of Montreal Marc Wasserman and Harvey Chaiton, Counsel for Mitsubishi HC Capital Rania Hammad and Ashley Taylor, Counsel for MOVETRUST and Boat Capital LP Elaine Gray, Counsel for Daimler Truck Financial Services Canada Corporation and Daimler Truck Financial Services USA LLC John MacDonald, Counsel for RBC as Financial Service Agent Caroline Descours and Erick Axell, Counsel for Regions Bank, Regions Equipment Finance Corporation and Regions Commercial Equipment Finance LLC Heather Meredith, Counsel for National Bank of Canada Nicholas Kluge and Thomas Gertner, Counsel for VFS Jennifer Stam, Counsel for the Proposed Receiver R. Brendan Bissell, Counsel for Versa Finance and Aviator Financial Valerie Cross, Counsel for RBC – formerly HSBC Bank Canada John Russo, Counsel for Meredian OneCap Credit Corp. Trevor Courtis, Counsel for Bennington Financial Corp. Kevin Bunt, Counsel for Ford Credit Joshua Foster, Counsel to the Pride Entities’ Directors and Officers Alex Fernet Brochu, Counsel for Hilco Industrial Monique Sassi, Counsel for Flagstar Abir Shamim and Andrew J. Hatnay, Counsel for Anna Kazmierska and other employees

HEARD: September 3, 2024

ENDORSEMENT

1. There are several motions before the Court, some of which were scheduled to be heard today, and others of which were not scheduled but are said to be urgent.

2. In general, the parties are at a complete impasse as to the direction of this proceeding, and the path forward. The Applicants, supported by the Monitor, seek relief related to the continued development and implementation of their proposed wind-down plan for the Tpine business, and the sale of the logistics business (PGL) as a going concern.

3. Neither of those initiatives has the support of the Financiers, equipment lessors and the syndicate. They have begun developing their own version of a wind-down plan and oppose the sale of PGL as currently proposed. They seek the termination of this CCAA proceeding in respect of PGL, the termination of the mandate of each of the Monitor and CRO with respect to PGL, and the appointment of a Receiver.

4. In particular, the Applicants, supported by the Monitor, seek:

a. a Monetization Order as described in the Motion Record to provide for funding to maintain operations through September, 2024;

b. an order amending the terms of the Amended and Restated Protocols Order to enable the Applicants to sell certain vehicles without requiring prior consent of applicable Financiers;

c. an order amending the terms of the Governance Protocol Amendment Order;

d. an order increasing the quantum of the Administration Charge from $3 million to $5 million;

e. an order approving the PGL Going Concern Transaction, or, in the alternative, advice and directions with respect to the PGL Wind-Down Plan, including a possible mediation, together with advice and directions with respect to the wind-down of the Applicants other than the PGL Entities, including necessary funding required to implement that wind-down; and

f. an order expunging and discharging any liens registered against any assets owned by the Applicants pursuant to the Repair and Storage Lien Act (Ontario), or equivalent statutes, upon payment of the amount of such lien as registered in the applicable personal property registry to the Monitor in trust, pending the resolution or determination of the validity and/or quantum of such lien claims.

5. PACCAR Financial Ltd, PACCAR Financial Services Ltd. and PACCAR Financial Corp. seek:

a. an order lifting the stay of proceedings to permit them to recover and sell, outside these proceedings, their trucks that remain unsold by the Applicants and are sitting idle on truck lots operated by the Applicants;

b. an order permitting them to sell their trucks that are subject to non-performing leases entered into between the Applicants and third-party truck operators;

c. an order dispensing with all notice requirements applicable on the repossession and disposal of trucks, including but not limited to any Notice of Disposition of Collateral required pursuant to any applicable state version of Section 9-611 of the Uniform Commercial Code and section 63 of the Personal Property Security Act;

d. an order permitting those parties to recover and receive the proceeds of sale of the trucks referred to above in accordance with their valid purchase money security interests with respect to trucks that are not Multiple Collateral Vehicles (MCVs); and

e. an order that those entities receive their entitlements with respect to their trucks that are MCVs in accordance with the MCV Governance Protocol.

6. VFS Canada Inc. seeks similar relief in the form of an order lifting the stay of proceedings to allow it to issue notices of assignment to the third-party lessees of the TLCC Administered Lease Units in respect of the TLCC Administered Leases other than the Excluded Units.

7. Mitsubishi Capital also seeks an order lifting the stay of proceedings in order that it can dispose of its own vehicles as described in its Motion Record.

8. The Bank of Montréal and BMO Bank N.A. seek an order lifting the stay of proceedings similarly to address their own vehicles.

9. Daimler Truck Financial Services Canada Corporation also seeks an order lifting the stay to repossess and sell the PDF Idle Collateral.

10. TD Equipment Finance Canada, together with certain other equipment Financiers of PGL, including but not limited to The Bank of Nova Scotia, oppose the approval of the PGL going-concern transaction sought by the Applicants and instead seek an order:

a. terminating the CCAA proceedings as they relate to PGL and discharging the Monitor and CRO; and

b. appointing The Fuller Landau Group Inc. as Receiver of the assets and properties of PGL.

11. Defined terms in this Endorsement have the meaning given to them in the motion materials and/or the 14^th^ Report of the Monitor and the Supplement to the 14^th^ Report, unless otherwise stated.

12. The various motions before the Court are reflective of the fundamental differences in perspective as to how matters should proceed, and which parties should fund steps and to what extent.

13. Numerous parties, and particularly the equipment Financiers and lessors, including but certainly not limited to the syndicate, are frustrated given the limited opportunities for recovery of amounts for which they are exposed, and this frustration is exasperated by a number of the unique features of this case, well-known to all stakeholders, but worth repeating here: the logistical complexity of this business and the fact that the assets representing the overwhelming proportion of value (and therefore possible recovery) consist of tractors and trailers that are not only located in virtually every jurisdiction in Canada and the United States, but that also, at least in some cases, move around on literally a daily basis.

14. At the same time, the value of these assets needs to be maximized, and that yields significant and robust differences of view with respect to how and by whom they should be maintained, and how and by whom they should be monetized in a manner so as to minimize the effect of diluting an already saturated market.

15. There is general consensus that the Tpine business needs to be wound down. Indeed, in the circumstances where there is no new DIP financing available, and the current DIP facility is effectively fully drawn, there is little practical alternative.

16. Some Financiers including the syndicate have proposed the discharge of the Monitor and the CRO with respect to that element of the business, and the appointment of a receiver. The proposal is that the receiver would implement a wind-down plan, but the parties sponsoring that proposal submit that the proposed receiver is not able to particularize that wind-down plan beyond the extent to which it has already done so, absent the provision of significantly more information and materials than (they submit) have been forthcoming from the Monitor to date.

17. The Applicants, supported by the Monitor, accept that a wind-down of the Tpine business will be necessary, but submit vigourously that it should be implemented in an orderly manner that is transparent, fair and does not grant, intentionally or inadvertently, a preference to any similarly ranked creditor over another.

18. The Financiers have not yet shared the particulars of their proposed wind-down plan with the Applicants and the Monitor, although it is apparently well along in its development.

19. At the same time, the Applicants, supported by the Monitor, seek a going concern sale of PGL, and that is further vigourously supported both by the directors of the Pride Entities and the employees, many of whom are here today and whose livelihoods will be directly affected by the direction taken.

20. The going concern sale is not supported by any of the Financiers or lessors, including but not limited to those lenders who in the aggregate, comprise the fulcrum creditors. Consideration of the transaction is complicated by the fact that the principals of the proposed purchaser entities are the current principals of the Pride Entities, and this adds a layer of complexion to the proposed transaction as against which the total consideration and outcome with all of its benefits for all stakeholders, must be considered.

21. There has been much discussion both at earlier court appearances in this matter, including the most recent court appearance, and indeed earlier today, about the possibility of a mediation in respect of at least some of the issues. At the same time, those parties who are seeking to have lift stay motions heard have in some cases had those motions pending for a period of time.

22. There has, regrettably, not been the level of communication and candour that would be optimal, with the result that frustration and a lack of order remain.

23. Accordingly, I am directing that all affected parties attend before The Honourable Thomas McEwen, former Team Lead of the Commercial List and an extremely experienced commercial mediator, on September 9 and if and as necessary and as he may direct, September 10, to mediate these issues and attempt to resolve or at least narrow the issues.

24. To be clear, the secured creditors of PGL should attend and participate in that aspect of the mediation, and the secured creditors and securitization parties (to the extent affected by the wind-down) should attend the balance of the mediation, all as Mr. McEwen (the Mediator) may direct.

25. I am further directing that the parties provide to Mr. McEwen, no later than 12 PM noon on Thursday, September 5, a position paper outlining their position and proposed path forward. Position papers are not to exceed five pages in length. Parties may collaborate on their position papers and file them jointly if and as appropriate.

26. The parties will participate in an introductory Zoom call before Mr. McEwen on Friday, September 6, with a view to sorting out as he may direct the sequence of events for September 9 and 10. I would ask the Monitor and the CRO to take an active role in the coordination of that to maximize efficiency.

27. With respect to the mechanics of the mediation process, the following communication and confidentiality protocol will apply:

a. the Court and the Mediator may communicate between one another directly to discuss on an ongoing basis the conduct of the Mediation in the manner in which it will be coordinated with these CCAA Proceedings;

b. the Court will not disclose to the Mediator how it will decide any matter that may come before the Court for determination, and the Mediator will not disclose to the Court the negotiating positions or confidential information of any of the parties in the mediation;

c. any notes, records, statements made, discussions had, and recollections of the Mediator in conducting the mediation shall be confidential and are without prejudice and protected from disclosure for all purposes as set out above; and

d. the Mediator shall not be liable to any party or participant for any act or omission in connection with the mediation and shall have the immunity of a judge of a Superior Court in Canada.

28. To the extent that matters are not resolved in the judicially directed mediation, I will hear such motions as may be necessary, including the lift stay motions that are pending, and the opposed motion with respect to the going concern sale of PGL. Those motions are adjourned in the interim.

29. I will speak with the Commercial List Trial Coordinator to see what judicial resources can be freed up to address those matters as may be necessary during the week of September 16.

30. In the interim, I am granting the monetization order sought by the Applicants, recommended by the Monitor and (perhaps reluctantly) not opposed by any other party, in order to ensure the continuation of operations through the use of lease payments to fund operations, such as they are, until the completion of the mediation process or further order of the Court.

31. The increase in the quantum of the Administration Charge is not opposed by any party and is also recommended by the Monitor. I am satisfied that the proposed increase is appropriate, necessary and it is approved.

32. Similarly, the lien regularization relief is not opposed by any party, it is appropriate, and it is approved.

33. The allocation of Deferred Payments will be addressed at a later date, and all parties have reserved their rights in that regard.

34. The Applicants advise that certain Financiers have brought motions in the US Proceedings, currently returnable September 12 for effectively the same relief as they seek in the motions before this Court, and which I have adjourned pending the judicial mediation, which, as noted above, I am hopeful will narrow, if not resolve, the issues. As I advised the parties at the conclusion of this hearing, it would be my expectation that those Financiers would not proceed with those motions in the US Proceedings at this time in order that the mediation proceed in good faith and this Court can address remaining issues thereafter.

35. Orders to go in the form signed by me which are effective immediately and without the necessity of issuing and entering.

Osborne J.