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1 First Report to Court of KSV Kofman Inc. as Trustee in Bankruptcy of the Estates of Standard Apparel Inc., SA Online Inc., F.P. Retail Limited, and Ontario Inc. October 20, 2017

2 Contents Page 1.0 Introduction Purposes of this Report Currency Restrictions Background Procedural Consolidation Retail Store Lease Rationale for Disclaiming the Retail Store Lease Conclusion... 5 Appendices Tab Certificates of Appointment...A Trustee s Letters to the Landlords...B Trustee s October 20 th letter to the Retail Store Landlord... C ksv advisory inc. Page i of i

3 Court File Nos.: ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) IN THE MATTER OF THE BANKRUPTCY OF STANDARD APPAREL INC., A CORPORATION INCORPORATED UNDER THE LAWS OF ONTARIO, CARRYING ON BUSINESS IN THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO AND IN THE MATTER OF THE BANKRUPTCY OF F.P. RETAIL LIMITED, A CORPORATION, ESTABLISHED UNDER THE LAWS OF ONTARIO, CARRYING ON BUSINESS IN THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO AND IN THE MATTER OF THE BANKRUPTCY OF SA ONLINE INC., A CORPORATION INCORPORATED UNDER THE LAWS OF ONTARIO, CARRYING ON BUSINESS IN THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO AND IN THE MATTER OF THE BANKRUPTCY OF ONTARIO INC., A CORPORATION INCORPORATED UNDER THE LAWS OF ONTARIO, CARRYING ON BUSINESS IN THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO FIRST REPORT OF KSV KOFMAN INC. AS TRUSTEE IN BANKRUPTCY OCTOBER 20, 2017 ksv advisory inc. Page 1 of 5

4 1.0 Introduction 1. On October 17, 2017, Standard Apparel Inc ( Standard Apparel ), F.P. Retail Limited ( F.P. Retail ), SA Online Inc. ( SA Online ), and Ontario Inc. ( 247 and together with Standard Apparel, F.P. Retail and SA Online, the Companies or the Estates ) each filed an assignment in bankruptcy pursuant to the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B.-3, as amended (the BIA ). 2. On October 18, 2017, the Official Receiver issued Certificates of Appointment appointing KSV Kofman Inc. ( KSV ) as Trustee in Bankruptcy (in such capacity, the Trustee ) of each of the Estates, subject to affirmation at the First Meeting of Creditors to be held on November 7, Copies of the Certificates of Appointment are attached as Appendix A. 3. This first report (the Report ) is filed by KSV in its capacity as Trustee. 1.1 Purposes of this Report 1. The purposes of this Report are to: a) provide background information about the Companies; and b) recommend that an order be issued: (i) (ii) consolidating procedurally the Estates for the purpose of simplifying the administration of these proceedings in order to reduce the costs of the bankruptcy; and authorizing the trustee to disclaim the lease for the Retail Store (as defined below) in advance of the First Meeting of Creditors. 1.2 Currency 1. Unless otherwise noted, all currency referenced in this Report are to Canadian dollars. 1.3 Restrictions 1. In preparing this Report, the Trustee has relied upon unaudited financial information prepared by the Companies representatives, the Companies books and records and discussions with the Companies representatives. The Trustee has not performed an audit or other verification of such information. ksv advisory inc. Page 2 of 5

5 2.0 Background is a privately owned non-operating holding company with two shareholders, Roger Poirier and Jeremy Logan. 2. Standard Apparel, a subsidiary of 247, distributed products under licenses for several brands, including Fred Perry, Aigle International ( Aigle ), Mother, Ragdoll Los Angeles, Aviator Nation and Hudson s Bay Company. Standard Apparel operates from a leased premises in North York that includes its head office, a warehouse and a showroom ( North York Premises ). 3. F.P. Retail, also a subsidiary of 247, was a Fred Perry branded retail store operating from a leased premises located in downtown Toronto ( Retail Store ); 4. S.A. Online, also a subsidiary of 247, operated an online store selling Aigle brand products from the North York Premises. 5. The Companies finances were managed by a single finance department working from the North York Premises. The Companies operated as a single business. 6. As at the date of the bankruptcies, Bank of Montreal (the Bank ) was owed approximately $1.7 million. The Trustee has requested that its counsel Goldman, Sloan, Nash & Haber LLP, conduct a security review on the Bank s security. The Trustee will update the Court on the status of the security review on the return of this motion. 7. The Companies business and assets will not be sufficient to fully repay the Bank. 8. As a result of the bankruptcies, all of the Companies employees were terminated on the date of bankruptcy. The Companies workforce was not unionized and the Companies did not maintain any pension plans. 9. Additional information about the Companies insolvency proceedings is available on the Trustee s website at: Procedural Consolidation 1. The Trustee believes it is appropriate to procedurally consolidate each of the Estates as doing so will promote cost efficiency and avoid costs related to administering four separate bankruptcies. Anticipated efficiencies include: a) convening a joint meeting of creditors through one combined meeting notice, provided that the results of any creditors vote are to be tabulated separately for each of the Companies; b) issuing consolidated reports to Court; ksv advisory inc. Page 3 of 5

6 c) preparing consolidated filings and mailings required under the BIA; and d) appointing a single group of inspectors and convening one inspectors meetings for all Estates instead of four separate ones. 2. In the Trustee s view, procedural consolidation: a) reduces the administrative complexity of the proceedings; and b) will result in cost savings. 3. The Bank, being the primary economic stakeholder in each of the Estates, supports the Trustee s motion for an order procedurally consolidating the bankruptcy proceedings. The Trustee does not believe that any stakeholder will be prejudiced by virtue of the procedural consolidation. 4.0 Retail Store Lease 1. The Retail Store is located at 964 Queen Street West in Toronto. 2. The Retail store is no longer operating and its inventory, which was negligible at the date of bankruptcy, has been transferred to the North York Premises. As at the date of this Report, the Trustee is not occupying the Retail Store. 3. Based on the F.P. Retail s books and records, monthly occupancy costs for the Retail Store are approximately $6,800 and rent has been paid through September 30, Immediately following its appointment, the Trustee sent a letter to each landlord, including the Retail Store s landlord, copies of these letters are attached as Appendix B. The letter noted, among other things, that the Trustee would advise shortly of its intentions with respect to the leased premises. On October 20, 2017, the Trustee advised the Retail Store landlord in writing that it is not presently occupying the Retail Store. A copy of the October 20, 2017 letter is attached as Appendix C. 4.1 Rationale for Disclaiming the Retail Store Lease 1. Pursuant to Section (30)(1)(k) of the BIA, the Trustee may elect to disclaim any lease in any property of the bankrupt with the permission of the estate s Inspectors. As the Estates First Meeting of Creditors is scheduled for November 7, 2017, Inspectors have yet to be appointed. 2. In the absence of Inspectors prior to a First Meeting of Creditors, Section 19(1) of the BIA permits a trustee to seek legal advice and take such court proceedings as it considers necessary for the protection of the bankrupt s property. Further, Section 34(1) of the BIA allows the Trustee to apply to the Court for direction in relation to any matter affecting the administration of the estate of a bankrupt. ksv advisory inc. Page 4 of 5

7 3. The Trustee believes it is appropriate for this Honourable Court to grant an order authorizing the Trustee to disclaim the Retail Store Lease effective immediately for the following reasons: a) The Trustee has no need for the Retail Store space; b) Paying occupancy costs for this location is a waste of Estate assets; and c) The relief requested is consistent with Section 19(1) of the BIA as it is necessary to protect the Companies bankrupt estates. 4. The Bank, as the Companies primary creditor, supports the Trustee s decision to seek an order authorizing the Trustee to forthwith disclaim the Retail Store lease. 5.0 Conclusion 1. For the reasons set out in this Report, the Trustee respectfully recommends that this Honourable Court make an Order granting the relief detailed in Section 1.1 (1)(b) of this Report. All of which is respectfully submitted, * * * KSV KOFMAN INC. IN ITS CAPACITY AS TRUSTEE IN BANKRUPTCY OF THE ESTATES OF STANDARD APPAREL INC., F.P. RETAIL LIMITED, SA ONLINE INC. AND ONTARIO INC. AND NOT IN ITS PERSONAL CAPACITY ksv advisory inc. Page 5 of 5

8 Appendix A

9 District of: Ontario Division No.: 09 - Toronto Court No.: Estate No.: In the Matter of the Bankruptcy of: Standard Apparel Inc. Debtor KSV KOFMAN INC. Licensed Insolvency Trustee Ordinary Administration Date and time of bankruptcy: October 18, 2017, 09:38 Security: $0.00 Date of trustee appointment: October 18, 2017 Meeting of creditors: November 07, 2017, 14:00 Hyatt Regency Toronto 370 King St W (Studio C) Toronto, Ontario Canada, Chair: Trustee CERTIFICATE OF APPOINTMENT - Section 49 of the Act; Rule 85 I, the undersigned, official receiver in and for this bankruptcy district, do hereby certify that: - the aforenamed debtor filed an assignment under section 49 of the Bankruptcy and Insolvency Act; - the aforenamed trustee was duly appointed trustee of the estate of the debtor. The said trustee is required: - to provide to me, without delay, security in the aforementioned amount; - to send to all creditors, within five days after the date of the trustee's appointment, a notice of the bankruptcy; and - when applicable, to call in the prescribed manner a first meeting of creditors, to be held at the aforementioned time and place or at any other time and place that may be later requested by the official receiver. E-File/Dépôt Electronique Date: October 18, 2017, 10:15 Official Receiver 151 Yonge Street, 4th Floor, Toronto, Ontario, Canada, M5C2W7, (877)

10 District of: Ontario Division No.: 09 - Toronto Court No.: Estate No.: In the Matter of the Bankruptcy of: SA Online Inc. Debtor KSV KOFMAN INC. Licensed Insolvency Trustee Ordinary Administration Date and time of bankruptcy: October 18, 2017, 09:52 Security: $0.00 Date of trustee appointment: October 18, 2017 Meeting of creditors: November 07, 2017, 15:00 Hyatt Regency Toronto 370 King St. W (Studio C) Toronto, Ontario Canada, Chair: Trustee CERTIFICATE OF APPOINTMENT - Section 49 of the Act; Rule 85 I, the undersigned, official receiver in and for this bankruptcy district, do hereby certify that: - the aforenamed debtor filed an assignment under section 49 of the Bankruptcy and Insolvency Act; - the aforenamed trustee was duly appointed trustee of the estate of the debtor. The said trustee is required: - to provide to me, without delay, security in the aforementioned amount; - to send to all creditors, within five days after the date of the trustee's appointment, a notice of the bankruptcy; and - when applicable, to call in the prescribed manner a first meeting of creditors, to be held at the aforementioned time and place or at any other time and place that may be later requested by the official receiver. E-File/Dépôt Electronique Date: October 18, 2017, 10:05 Official Receiver 151 Yonge Street, 4th Floor, Toronto, Ontario, Canada, M5C2W7, (877)

11 District of: Ontario Division No.: 09 - Toronto Court No.: Estate No.: In the Matter of the Bankruptcy of: F.P. Retail Limited Debtor KSV KOFMAN INC. Licensed Insolvency Trustee Ordinary Administration Date and time of bankruptcy: October 18, 2017, 09:33 Security: $0.00 Date of trustee appointment: October 18, 2017 Meeting of creditors: November 07, 2017, 14:30 Hyatt Regency Toronto 370 King Street W (Studio C) Toronto, Ontario Canada, Chair: Trustee CERTIFICATE OF APPOINTMENT - Section 49 of the Act; Rule 85 I, the undersigned, official receiver in and for this bankruptcy district, do hereby certify that: - the aforenamed debtor filed an assignment under section 49 of the Bankruptcy and Insolvency Act; - the aforenamed trustee was duly appointed trustee of the estate of the debtor. The said trustee is required: - to provide to me, without delay, security in the aforementioned amount; - to send to all creditors, within five days after the date of the trustee's appointment, a notice of the bankruptcy; and - when applicable, to call in the prescribed manner a first meeting of creditors, to be held at the aforementioned time and place or at any other time and place that may be later requested by the official receiver. E-File/Dépôt Electronique Date: October 18, 2017, 09:59 Official Receiver 151 Yonge Street, 4th Floor, Toronto, Ontario, Canada, M5C2W7, (877)

12 District of: Ontario Division No.: 09 - Toronto Court No.: Estate No.: In the Matter of the Bankruptcy of: Ontario Inc. Debtor KSV KOFMAN INC. Licensed Insolvency Trustee Ordinary Administration Date and time of bankruptcy: October 18, 2017, 09:32 Security: $0.00 Date of trustee appointment: October 18, 2017 Meeting of creditors: November 07, 2017, 15:15 Hyatt Regency Toronto 370 King st W (studio C) Toronto, Ontario Canada, Chair: Trustee CERTIFICATE OF APPOINTMENT - Section 49 of the Act; Rule 85 I, the undersigned, official receiver in and for this bankruptcy district, do hereby certify that: - the aforenamed debtor filed an assignment under section 49 of the Bankruptcy and Insolvency Act; - the aforenamed trustee was duly appointed trustee of the estate of the debtor. The said trustee is required: - to provide to me, without delay, security in the aforementioned amount; - to send to all creditors, within five days after the date of the trustee's appointment, a notice of the bankruptcy; and - when applicable, to call in the prescribed manner a first meeting of creditors, to be held at the aforementioned time and place or at any other time and place that may be later requested by the official receiver. E-File/Dépôt Electronique Date: October 18, 2017, 09:55 Official Receiver 151 Yonge Street, 4th Floor, Toronto, Ontario, Canada, M5C2W7, (877)

13 Appendix B

14 Jonathan Joffe ksv advisory inc. 150 King Street West, Suite 2308 Toronto, Ontario, M5H 1J9 T F jjoffe@ksvadvisory.com ksvadvisory.com October DELIVERED BY COURIER Palm One Investments LLC 79 Wingold Ave., Unit 1, Toronto, Ontario M6B 1P8 Dear Sirs/Mesdames, Re: Standard Apparel Inc., SA Online Inc., F.P. Retail Limited and Ontario Inc. (together the Companies ) 87 Wingold Ave, North York, ON M6B 1P8 (the Premises ) On October 17, 2017, the Companies made an assignment in bankruptcy and KSV Kofman Inc. was appointed as trustee in bankruptcy ( Trustee ) of the Companies. Pursuant to the provisions of the Bankruptcy and Insolvency Act, the Trustee is entitled to occupy the Premises. The Trustee will pay all occupancy costs while in occupation of the Premises. The Trustee will advise you in due course of its intentions with respect to the Premises. Thank you in advance for your cooperation. Should you have any questions with respect to the above, please contact Jonathan Joffe at (416) Yours very truly, KSV KOFMAN INC. IN ITS CAPACITY AS TRUSTEE IN BANKRUPTCY OF STANDARD APPAREL INC., SA ONLINE INC., F.P. RETAIL LIMITED AND ONTARIO INC., AND NOT IN ITS PERSONAL CAPACITY

15 Jonathan Joffe ksv advisory inc. 150 King Street West, Suite 2308 Toronto, Ontario, M5H 1J9 T F jjoffe@ksvadvisory.com ksvadvisory.com October 18, 2017 DELIVERED BY COURIER Ontario Inc Danforth Avenue Toronto, Ontario M1L 1C4 Dear Sirs/Mesdames, Re: Standard Apparel Inc., SA Online Inc., F.P. Retail Limited and Ontario Inc. (together the Companies ) 964 Queen St W, Toronto, ON M6J 1G8 (the Premises ) On October 17, 2017, the Companies made an assignment in bankruptcy and KSV Kofman Inc. was appointed as trustee in bankruptcy ( Trustee ) of the Companies. Pursuant to the provisions of the Bankruptcy and Insolvency Act, the Trustee is entitled to occupy the Premises. The Trustee will pay all occupancy costs while in occupation of the Premises. The Trustee expects to vacate the Premises promptly and does not expect to occupy the Premises for more than a few days. Thank you in advance for your cooperation. Should you have any questions with respect to the above, please contact Jonathan Joffe at (416) Yours very truly, KSV KOFMAN INC. IN ITS CAPACITY AS TRUSTEE IN BANKRUPTCY OF STANDARD APPAREL INC., SA ONLINE INC., F.P. RETAIL LIMITED AND ONTARIO INC., AND NOT IN ITS PERSONAL CAPACITY

16 Appendix C

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