Court File and Parties

Court File No.: CV-24-00717340-00CL
Date: 2025-06-30
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

Counsel:

• Leanne Williams, Puya Fesharaki and Shurabi Srikaruna, for the Applicants
• Daniel Richer and Julia Chung, for the Lending Syndicate
• Kelly Bourassa and Jules Monteyne, for the Monitor
• Elaine Gray, for Daimler Truck Financial Services Canada Corporation and Daimler Truck Financial Services USA LLC
• Caroline Descours and Peter Kolla, for Regions Bank, Regions Equipment Finance Corporation and Regions Commercial Equipment Finance LLC
• John Salmas, for Bank of Montreal
• Harvie Chaiton, for Mitsubishi HC Capital
• Shawn Irving, for RBC Securitization
• Heather Meredith and Geoff Hall, for National Bank
• Lee Nicholson, for Move Trust
• R. Brendan Bissell, for Versa Bank
• Meena Alnajar, for Bennington Financial

Heard: June 25, 2025

Endorsement

Introduction

[1] The Applicants seek five orders today:

a. an order approving the Monitor’s 24th through 27th Reports and the activities described therein;
b. an order amending the Wind-Down, Liquidity Contribution Alternative, and Turn-Over Order made in this proceeding dated October 10, 2024, to change the variance reporting requirement for the Monitor from bi-weekly to monthly;
c. a Block 6 Claims Identification Process Order adding Block 6 Holding Inc. as an Applicant in these CCAA proceedings, approving a separate claims process and corresponding administration charge in respect of Block 6;
d. an approval, vesting and distribution order in respect of the sale of the real property at 3550-3650 Boulevard, Pitfield, Pierrefonds, Québec, and approving a distribution of net proceeds to National Bank as hypothecary creditor; and
e. a French discharge order substantively the same as the Pitfield order, approving the registration of the sale and discharge of applicable security interests at the Québec land registry; and
f. a mediation order approving the appointment of The Honourable Thomas McEwen as a Court-appointed mediator to facilitate the mediation of the final allocation of costs in these CCAA proceedings.

[2] The Applicants rely upon the Affidavit of Mr. Randall Benson, the Chief Restructuring Officer, sworn June 18, 2025 and the 28th Report of the Monitor dated June 19, 2025. Defined terms in this Endorsement have the meaning given to them in the motion materials and/or the 28th Report, unless otherwise stated.

[3] The Service List has been served. The first four orders are unopposed. The mediation order is opposed by certain securitization parties at least today. They do not oppose the mediation process or the proposed mediator, but submit that mediation is premature until one threshold issue is determined by this Court.

[4] At the conclusion of the hearing of these motions, I granted the relief sought by the Applicants, with reasons to follow. These are those reasons.

Approval of Monitor’s Reports and Activities

[5] I am satisfied that the Monitor’s 24th to 27th Reports and the activities described in each should be approved. The activities undertaken by the Monitor are consistent with the terms of its original appointment order and have been accretive to the progress of these CCAA Proceedings. They are fully described in the Reports in respect of which approval is sought. Approval is supported by the CRO, and as noted above, is unopposed by any stakeholder.

[6] There are good policy and practical reasons to approve reports of the Monitor and the activities described therein: Target Canada Co., (Re), 2015 ONSC 7574 at paras. 2 and 23.

[7] Accordingly, the 24th through 27th Reports and the activities described therein are approved.

Amendment to the Wind-Down Order Reporting Obligations

[8] Under the Wind-Down, Liquidity Contribution Alternative and Turn-Over Order dated October 10, 2024, the Monitor is required to deliver variance reports to the Service List on a bi-weekly basis.

[9] Given the significantly reduced financial activity in light of the ongoing wind-down of the Pride Entities, it is appropriate that the frequency of reporting be reduced so that it is required monthly instead of bi-weekly. The DIP Agent is supportive of this change.

[10] I am satisfied that this amendment will reduce administrative burdens and associated professional fees, while maintaining sufficient transparency and oversight. It is approved.

Block 6

[11] Block 6 Holding Inc. is a single-purpose holding company that previously owned the real property at 7265-5 Side Road, Milton, Ontario. The property was used for commercial vehicle operations and was sold earlier in this proceeding. Net sale proceeds of approximately $2.64 million are currently held by counsel to the Applicants. If the proposed relief is granted, the funds will be transferred to and held in trust by the Monitor.

[12] Block 6 is not currently an Applicant. It should be. A party may be added as an applicant in an ongoing CCAA proceeding where it satisfies the statutory requirements for protection at the time the motion is brought. Courts will also consider whether the entity sought to be added is closely integrated with existing Applicants, and whether its inclusion is necessary to maximize value for stakeholders: see Cadillac Fairview Inc., Re at paras. 6-7; and Guestlogix Inc., Re, 2016 ONSC 1348 at paras. 5-9.

[13] Block 6 satisfies the statutory requirements for protection under the CCAA, and I am satisfied that it should be added as an Applicant. I am also satisfied that the inclusion of Block 6 as an Applicant is necessary to maximize value for stakeholders. The cash proceeds of the Block 6 Sale are insufficient to pay its balance sheet liabilities. I further observe that while Block 6 was not initially included as an Applicant, it was included as an Additional Stay Party pursuant to the Initial Order, in recognition of its connection to the other entities and the estate generally. By order dated February 5, 2025, I expanded the powers and authorization of the CRO to include Block 6 to effectively facilitate the wind-down of the entire estate.

[14] There is uncertainty as to the potential universe of claimants and claims against Block 6, with the result that the Applicants request, with the consent and support of both the Monitor and the CRO, a restricted claims process to call for claims against Block 6 (but not adjudicate them) at this time. Such a claims process may be approved pursuant to sections 11 and 12 of the CCAA.

[15] I am satisfied that it is appropriate at this time, and the proposed process represents a timely yet comprehensive and fair means of identifying claims against Block 6. Simply put, it is important to identify the universe of possible claimants against Block 6 prior to any distribution. This will facilitate the determination of whether there are funds available for a dividend by Block 6 to 204 Ontario Co. (the shareholder of Block 6) or a distribution to other Pride Entities on account of intercompany indebtedness owing by Block 6 to such Pride Entities.

[16] The claims bar date of August 11, 2025 is reasonable, as is the proposed administration charge of $150,000 specifically applicable to Block 6 and the claims process, since none of the charges created under the broader Second ARIO would apply to Block 6 or its property.

[17] Certain parties have requested further clarification with respect to this relief. It is appropriate to recognize that the relief being granted today in respect of Block 6 is without prejudice to the right of the Applicants, the Monitor or any creditor to seek an order to apply all or part of the net Block 6 Property sale proceeds, after payments of the amount secured by the Block 6 Charge, to payment of the amount secured by the DIP Charge or to the costs of these proceedings.

The 3550 Pitfield Transaction

[18] The Pitfield vendor is an Applicant in these proceedings. The 3550 Pitfield Property was used by the Pride Entities as a mixed-use property for commercial tenants. The property was publicly listed for sale by the appointed broker on March 5, 2024. Over 15 months, three offers were received. The proposed purchaser is arm’s-length, submitted the highest and best offer and this led to the execution of the proposed agreement.

[19] The agreement provides for the sale of the property together with associated leases, permitted encumbrances and movables on an “as is, where is” basis for an aggregate purchase price of $5.3 million.

[20] Given that the property is located in Québec, the Applicants also seek a French discharge order. That is appropriate to facilitate the Québec land registry requirements.

[21] The property is also subject to an immovable deed of hypothec in favour of National Bank. Pursuant to the Rent Enforcement Order made in this proceeding on November 18, 2024; post-filing rents collected from this property have been remitted to NBC on a monthly basis to partially repay obligation secured by the hypothec.

[22] NBC has consented to the sale transaction, and the Monitor is satisfied that the hypothec constitutes an enforceable security obligation in favour of NBC. The title search confirms no other financial encumbrances registered against the property aside from a school tax notice in respect of which arrears have been paid in full.

[23] Jurisdiction to approve such a sale flows from section 36 of the CCAA. I am satisfied that the factors set out in section 36(3), which are not exhaustive or exclusive, as well as the overlapping Soundair Principles, have been met in this case.

[24] The Monitor has approved the process. It has opined that the proposed sale is more beneficial to creditors than a disposition under a bankruptcy. I am satisfied that the consideration to be received is reasonable and fair, taking into account their market value. The efficacy and integrity of the process by which offers were solicited and received, has been maintained. NBC, as mortgagee, supports the transaction.

[25] For all of these reasons, I am satisfied that all of the relief sought in respect of this property is appropriate and should be granted.

Mediation

[26] With respect to the proposed mediation, the Applicants submit, in consultation with the Monitor and the CRO, that the appointment of a Court-appointed mediator is both necessary and beneficial to assist with resolving issues concerning the allocation of costs among the financiers of the Pride Entities.

[27] The cost allocation exercise is complex and in many respects unprecedented, involving divergent positions asserted by multiple stakeholders. Regrettably, this proceeding has been acrimonious from the outset. The Applicants submit that the proposed mediation process will meaningfully advance the resolution or at least narrowing of the allocation issues where possible. It is intended to operate in parallel to these CCAA proceedings which will remain ongoing.

[28] Certain of the financiers of the Pride Entities have incurred costs during these CCAA proceedings related to restructuring efforts and the realization of certain assets. It has long been understood by all stakeholders and this Court that those costs must be allocated among the participating financiers. The Monitor, in consultation with the CRA, has developed a proposed cost allocation model, which has been shared with the affected financiers through multiple rounds of discussion.

[29] Notwithstanding those discussions, however, significant disagreement remains among the financiers regarding the appropriate allocation of costs.

[30] I am satisfied that the proposed mediation process is appropriate, and appropriate at this time. Jurisdiction flows from the general powers granted under section 11 of the CCAA. In the particular circumstances of this case, at this time, I am satisfied that a mediation will further the remedial purposes of the CCAA: 10578 63 B.C. Ltd. (Re), 2022 BCSC 759 (“105 BC”), at para. 44.

[31] This Court has previously approved mediation with respect to allocation issues specifically as they arose between and among various debtor groups. See, for example, the decision of Morawetz, J. (as he then was) in Nortel Networks Corporation (Re), 2011 ONSC 4012 at paras. 17–18.

[32] As noted, the allocation issues here are both complex and acrimonious. Mediation will avoid or at least minimize any further delay in the resolution or determination of the allocation of costs among financiers.

[33] The Honourable Thomas McEwen is uniquely well-suited to fulfil this role. Aside from his general (and very significant) experience managing and mediating issues in complex restructurings as a judge and former Team Lead of the Commercial List, Mr. McEwen formerly served as a mediator in this proceeding, and is familiar with the parties, and particularly the issues as between and among the financiers and the securitization parties in particular.

[34] As noted above, no party opposes the mediation or the appointment of Mr. McEwen. Certain securitization parties submit, however, that the mediation is premature and is unlikely to yield results since a threshold issue of whether the securitization parties (as opposed to the lenders) should be required to contribute to restructuring costs at all, should be determined by this Court first. Other stakeholders, including lenders, support the mediation process being initiated now.

[35] In my view, this case is somewhat analogous to the situation addressed by Fitzpatrick, J. of the British Columbia Supreme Court in 105 BC, where that Court held that mediation was appropriate notwithstanding opposition from certain parties where the anticipated benefits of mediation outweighed the potential disadvantages. The benefits identified there specifically included, as here, the potential to resolve outstanding issues, or to materially reduce the scope of matters in dispute.

[36] For all of these reasons, the proposed mediation is approved, and Mr. McEwen is so appointed.

Result and Disposition

[37] For all of these reasons, I granted the relief sought. Orders to go in the form signed by me which have immediate effect without the necessity of issuing and entering.

Peter J. Osborne