Court File No. CV-09-8194-00CL 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 PROPOSED PLAN OF COMPROMISE OR ARRANGEMENT OF W.C. WOOD CORPORATION, LTD., W.C. WOOD HOLDINGS INC. AND W.C. WOOD CORPORATION INC. (together the Applicants or W.C. Wood ) MOTION RECORD OF W.C. WOOD (Directions re Inter-company accounts) McCarthy Tétrault LLP Suite 5300, Toronto Dominion Bank Tower Toronto ON M5K 1E6 Kevin McElcheran LSUC# 22119H Tel. 416-601-7730 Fax: 416-868-0673 Email: kmcelcheran@mccarthy.ca Heather L. Meredith LSUC#: 48354R Tel: 416-601-8342 Fax: 416-868-0673 Email: hmeredith@mccarthy.ca Solicitors for the Applicants/Moving Parties
ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) Court File No. CV-09-8194-00CL IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISE OR ARRANGEMENT OF W.C. WOOD CORPORATION, LTD., W.C. WOOD HOLDINGS INC. AND W.C. WOOD CORPORATION INC. Applicants INDEX TAB 1. 2. Notice of Motion DESCRIPTION Affidavit of Joseph Angi, sworn August 26, 2009 Exhibit A Affidavit of Michael Hadjinian sworn May 18, 2009 Exhibit B Affidavit of Michael Hadjinian sworn May 22, 2009 Exhibit C Affidavit of Joseph Angi sword June 16, 2009 Exhibit D Affidavit of Joseph Angi sword July 22, 2009 Exhibit E Endorsement of Justice Pepall dated May 19, 2009 and unofficial transcription Exhibit F Order of Justice Pepall dated May 25, 2009, the Amended Initial Order and the endorsement of Justice Pepall and unofficial transcription Exhibit G Order of Mr. Justice Morawetz dated June 18, 2009 Exhibit H Order of Mr. Justice Campbell dated July 28, 2009 Exhibit I Accommodation Agreement dated May 21, 2009 Exhibit J Cash Flow Statement
Wood Motion Record p. 1 ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) Court File No. CV-09-8194-00CL IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISE OR ARRANGEMENT OF W.C. WOOD CORPORATION, LTD., W.C. WOOD HOLDINGS INC. AND W.C. WOOD CORPORATION INC. Applicants/Moving Parties NOTICE OF MOTION (Returnable on August 28, 2009) The Applicants, W.C. Wood Corporation, Ltd., W.C. Wood Holdings Inc. and W.C. Wood Corporation Inc. ( W.C. Wood or the Applicants ), will bring a motion to a judge presiding over the Commercial List on Friday, August 28, 2009, at 10:00 a.m., or as soon after that time as the motion can be heard, at 330 University Avenue, Toronto, Ontario, or at such other place as may be directed by the Court. PROPOSED METHOD OF HEARING: The motion is to be heard orally THE MOTION IS FOR AN ORDER: (a) (b) (c) Abridging the time for the service of this Notice of Motion and the materials filed in support thereof and dispensing with further service thereof; Giving directions to the Applicants concerning the payment of inter-company balances owing by W.C. Wood Corporation, Ltd. ( Wood Canada ) to W. C. Wood Corporation, Inc. ( Wood U.S. ); Declaring that the officers of Wood Canada and directors and officers of Wood U.S. (collectively, the Directors and Officers ) shall incur no personal liability of any nature or kind arising from the continued operation
Wood Motion Record p. 2 of the business in accordance with such cash flow projections as may be approved by the DIP Lenders; (d) (e) (f) (g) In the alternative to (c), above, authorizing the Directors and/or Officers to resign and declaring that they shall have no personal liability whatsoever for so doing; Extending the Stay Period, as defined in the Order of the Honourable Madam Justice Pepall dated May 19, 2009, to September 30, 2009; If necessary, appointing the Monitor as Interim Receiver, Receiver and Manager or such other appointment as may, to this courts seem appropriate if the Directors and Officers resign as authorized pursuant to paragraph (d), above; and Such further and other relief as counsel may advise and this Honourable Court deems just. THE GROUNDS FOR THE MOTION ARE: BACKGROUND 1. On Tuesday May 19, 2009, the Honourable Madam Justice Pepall granted an order providing protections to Wood Canada and Wood U.S. under the Companies Creditors Arrangement Act ( CCAA ) (the Initial Order ). 2. The Initial Order granted a stay of proceedings until June 18, 2009 and appointed BDO Dunwoody Limited ( BDO ) as Monitor. 3. On May 25, 2009, the Honourable Madam Justice Pepall granted a further order amending the Initial Order (the Amended Initial Order ) to include an additional Applicant, W.C. Wood Holdco, approving Debtor in Possession (DIP) financing under the terms of an Accommodation Agreement with the existing first lien lenders (Exhibit I to the Affidavit of Joseph Angi, sworn August 26, 2008 (the Accommodation Agreement )) and approving the sale process for the Applicants Mexican business. 4. On June 18, 2009, the United States Bankruptcy Court in the District of Delaware entered an order granting recognition of the Canadian proceedings as a foreign main proceeding and recognized the Initial Order on a final basis.
Wood Motion Record p. 3 5. On June 18, 2009, the Honourable Mr. Justice Morawetz granted an extension of the stay of proceedings to August 31, 2009 and authorized the DIP financing facility between the Applicants and Whirlpool Corporation. 6. On July 28, 2009, the Honourable Mr. Justice Campbell granted an order approving the sale of the Mexican subsidiaries of the Applicants ( Wood Mexico ). However, because the purchaser has been unable to finance the transaction, the sale of Wood Mexico has been postponed and the Applicants may not be successful in completing any sale of Wood Mexico. CASH FLOW DISPUTE 7. The Applicants have been unable to reach an agreement with their DIP Lenders (CIT Business Credit Canada Inc. and Bank of Montreal (the Canadian Lenders ) and The CIT Group/Business Credit, Inc. and Bank of Montreal Chicago Branch (the U.S. Lenders ) (together the DIP Lenders )) as to the Applicants cash flow forecasts going forward. 8. The Applicants have prepared cash flow projections (attached as Exhibit J to the Affidavit of Joseph Angi, sworn August 26, 2008 (the Cash Flow Projections )), which would allow them to continue operations through to at least the end of September 30, 2009 (the Applicants requested stay extension period) and which would also enable the Applicants to make appropriate and necessary payments in relation to intercompany balances, certain royalty payments and necessary raw material purchases each of which are critical payments and must be paid if the business is to continue. 9. However, the DIP Lenders have refused to approve the Cash Flow Projections and have advised the Applicants that they will not approve cash flow forecasts that require payment of inter-company balances or the purchase of raw material inventory for future delivery. 10. Since the commencement of these proceedings, Wood Canada has been accumulating a significant debt to Wood U.S. In essence, Wood Canada has been benefitting from the shipment of goods to it from Wood U.S. without paying it for the goods.
Wood Motion Record p. 4 11. If the inter-company balances are not settled, Wood U.S. will not be able to operate because its availability is not sufficient to purchase raw material inventory and pay payroll. Accordingly, implementing the cash flows required by the DIP Lenders will result in extended closures of the Wood U.S. operations to the detriment of both Applicants. 12. Wood Mexico has been dependent on Wood U.S. for funding and has not been able to operate. The Applicants entered into an agreement to sell Wood Mexico but unfortunately that transaction has not closed because the purchaser has been unable to finance the transaction. It is now unclear whether the Applicants will be able to sell Wood Mexico or will have to liquidate it. 13. The Directors and Officers, acting in the best interests of all stakeholders, are pursuing a sale of the business of the Applicants as a going concern (the Applicants, with the consent of the DIP Lenders have retained Lincoln Group to run a marketing process to find an investor or a buyer for the business as a going concern). 14. The Directors and Officers are doing their best to ensure that the business continues to operate as a going concern while meeting the stringent and difficult requirements of the DIP Lenders. 15. The Directors and Officers believe that implementing the requirements of the DIP Lenders would be unfair to Wood U.S. and Wood Mexico and could be detrimental to the continuation of the business of the Applicants as it will force the closure of Wood U.S. despite its outstanding order book and waiting customers. 16. The Directors and Officers are not prepared to execute the alternative cash flow required by the DIP Lenders unless specifically directed by this Court to do so and unless the Court makes a declaration that they would not thereby incur personal liability. 17. The Directors and Officers have no doubt that the Monitor is ready, willing and able to act as Interim Receiver or Receiver and Manager and they are prepared to assist in the orderly transition of management if their resignation becomes necessary.
Wood Motion Record p. 5 18. The Applicants also rely upon: (a) (b) (c) (d) (e) Rules 1.05, 2.03, 3.02, 5 of the Rules of Civil Procedure; The provisions of the CCAA and the equitable jurisdiction of this Honourable Court; Section 47 of the Bankruptcy and Insolvency Act; Section 101 of the Courts of Justice Act; and Such other grounds as counsel may advise and this Honourable Court may permit. THE FOLLOWING DOCUMENTARY EVIDENCE WILL BE USED AT THE HEARING OF THE MOTION: (a) (b) the affidavit of Joseph Angi sworn August 26, 2009; and such further and other evidence as counsel may advise and this Honourable Court may permit. August 26, 2009 McCARTHY TÉTRAULT LLP Barristers and Solicitors Suite 5300, Box 48 Toronto Dominion Bank Tower Toronto-Dominion Centre Toronto, ON M5K 1E6 Kevin McElcheran Tel: (416) 601-7730 Fax: (416) 868-0673 Law Society No. 22119H Heather L. Meredith Tel: (416) 601-8342 Fax: (416) 868-0673 Law Society No. 48354R Solicitors for the Applicants
Wood Motion Record p. 6 TO: Ogilvy Renault LLP / S.E.N.C.R.L., s.r.l. Suite 3800 Royal Bank Plaza, South Tower 200 Bay Street, P.O. Box 84 Toronto, Ontario, M5J 2Z4 Attention: Orestes Pasparakis Tel: 416-216-4815 Fax: 416-216-3930 Email: opasparakis@ogilvyrenault.com Solicitors for the Lenders, CIT Business Credit Canada Inc., The CIT Group/Business Credit, Inc., Bank of Montreal and Bank of Montreal Chicago Branch AND TO: Aird & Berlis LLP Barristers & Solicitors Suite 1800 181 Bay Street Toronto ON M5J 2T9 Attention: Robb English Tel: 416-865-4748 Fax: 416-863-1515 Email: renglish@airdberlis.com Solicitors for the Monitor, BDO Dunwoody Limited AND TO: Miller Thomson LLP One London Place 255 Queens Avenue, Suite 2010 London, ON N6A 5R8 Attention: Alissa K. Mitchell Tel: 519-931-3510 Fax: 519-858-8511 E-mail: amitchell@millerthomson.com Solicitor for Danby Canada
Wood Motion Record p. 7 AND TO: Lang Michener LLP Brookfield Place Suite 2500, 181 Bay Street Toronto ON M5J 2T7 Attention: Leslie A. Wittlin/Aaron Rousseau Tel: 416-307-4087/416-307-4081 Fax: 416-365-1719 E-mail: lwittlin@langmichener.ca / arousseau@langmichener.ca Solicitors for Whirlpool Corporation AND TO: Fernandes Hearn LLP 155 University Avenue Suite 700 Toronto ON M5H 3B7 Attention: Gordon Hearn Tel: 416-203-9503 Fax: 416-203-9444 E-mail: gord@fernandeshearn.com Solicitor for ITN Transborder Services Inc. AND TO: Burstein & Greenglass LLP The Royal Bank Building Suite 200 7481 Woodbine Avenue Markham, Ontario L3R 2W1 Attention: Martin Greenglass Tel: 416-498-9830/ 905-475-1266 Fax: 905-475-7851 E-mail: greenglass@bglaw.ca Solicitors for Panasonic Canada Inc.
Wood Motion Record p. 8 AND TO: Frederick Caplan Barrister & Solicitor 4 Centre Street P.O. Box 430 St. Catharines ON L2R 6V9 Frederick Caplan Tel: 905-688-8811 Fax: 905-688-8933 E-mail: caplan@cogeco.net Solicitor for Minus Forty Technologies Corp. AND TO: FRASER MILNER CASGRAIN LLP 1 First Canadian Place 100 King Street West Toronto, ON M5X 1B2 Alex L. MacFarlane/ Kate H. Stigler Tel: 416-863-4582/416-862-3482 Fax: 416-863-4592 E-mail: alex.macfarlane@fmc-law.com/ kate.stigler@fmc-law.com Solicitors for Huntsman International LLC AND TO: HUNTSMAN INTERNATIONAL LLC 10003 Woodloch Forest Drive The Woodlands, Texas 77380 David A. Kocian Tel: 281-719-4406 Fax: 281-719-4045 Email: David_Kocian@huntsman.com Commercial Counsel to Huntsman International LLC AND TO: SHELL ENERGY NORTH AMERICA (CANADA) 400-4th Avenue Southwest PO Box 100, Station M Calgary, Alberta T2P 2H5 Gina Kim Tel: 403-691-3291 E-mail: gina.kim@shell.com
Wood Motion Record p. 9 SHELL ENERGY NORTH AMERICA (CANADA) Shell Oil Company 909 Fannin, Plaza Level 1 Houston, Texas 77010 Jennifer M. Gore Tel: (713) 230-3070 Fax: (713) 265-3070 E-mail: Jennifer.gore@shell.com SHELL ENERGY NORTH AMERICA (CANADA) 90 Sheppard Ave East Suite 600 Toronto, ON M6N 2Y6 Alan Arneill Tel: (416) 227-7317 E-mail: alan.arneill@shell.com Internal Counsels to Shell Energy North America (Canada)
Wood Motion Record p. 10 ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) Court File No. CV-09-8194-00CL IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISE OR ARRANGEMENT OF W.C. WOOD CORPORATION, LTD., W.C. WOOD HOLDINGS INC. AND W.C. WOOD CORPORATION INC. Applicants AFFIDAVIT OF JOSEPH ANGI, SWORN AUGUST 26, 2009 SAY: I, Joseph Angi, of the City of Rochester, in the State of Michigan MAKE OATH AND 1. I am the Chief Operating Officer of W.C. Wood Corporation, Ltd. ( Wood Canada ), W.C. Wood Corporation Inc. ( Wood U.S. ) and W.C. Wood Holdings, Inc. ( Wood Holdings and collectively with Wood Canada and Wood US, W.C. Wood ) and as such have personal knowledge of the facts to which I depose, except where I have indicated that I have obtained facts from other sources, in which case I believe those facts to be true. 2. I make this Affidavit in support of the motion by the Applicants for relief set out in the Notice of Motion, including an order for directions to the Applicants concerning the payment of inter-company balances owing by Wood Canada to Wood U.S., authorizing the officers of Wood Canada and directors and officers of Wood U.S. (collectively, the Directors and Officers ) to resign if the DIP Lenders do not approve the Cash Flow Statement (defined below), and appointing the Monitor as Interim Receiver, Receiver and Manager or such other appointment as may, to this courts seem appropriate if the Directors and Officers resign and for no other or improper purpose. 3. Capitalized terms not defined in this affidavit are as defined in the affidavits of Michael Hadjinian sworn May 18 and 22, 2009 (the Initial Order Affidavits ) and my earlier affidavits,
Wood Motion Record p. 11-2 sworn June 16, 2009 and July 22, 2009 (the Angi Affidavits ). A copy of the Initial Order Affidavits and the Angi Affidavits, without exhibits, are attached hereto as Exhibits A, B, C and D, respectively. BACKGROUND 4. W.C. Wood is a leading manufacturer and marketer of chest, upright residential and commercial freezers and dehumidifiers in North America. W.C. Wood is headquartered in Guelph, Ontario and has production facilities in Guelph, Ontario and Ottawa, Ohio as well as a production facility in Torreon, Mexico owned by the Mexican subsidiary of W.C. Wood U.S. (the Facilities ). Additional background regarding W.C. Wood and the facts leading to this application are set out in the Initial Order Affidavits and the Angi Affidavits. 5. On Tuesday May 19, 2009, the Honourable Madam Justice Pepall granted an order providing protections to W.C. Wood Canada and W.C. Wood U.S. under the CCAA (the Initial Order ). Attached hereto as Exhibit E is a copy of the Endorsement of Justice Pepall, together with an unofficial transcription thereof. 6. The Initial Order granted a stay of proceedings until June 18, 2009 and appointed BDO Dunwoody Limited ( BDO ) as Monitor. 7. On May 25, 2009, the Honourable Madam Justice Pepall granted a further order amending the Initial Order (the Amended Initial Order ) to include an additional Applicant, W.C. Wood Holdco, approving Debtor in Possession (DIP) financing under the terms of an Accommodation Agreement with the existing first lien lenders, and approving the sale process for the Applicants Mexican business. Attached hereto as Exhibit F is a copy of the Order of Justice Pepall dated May 25, 2009, the Amended Initial Order and the endorsement of Justice Pepall, together with an unofficial transcription thereof. 8. On June 18, 2009, the United States Bankruptcy Court in the District of Delaware entered an order granting recognition of the Canadian proceedings as a foreign main proceeding and recognized the Initial Order on a final basis.
Wood Motion Record p. 12-3 9. On June 18, 2009, the Honourable Mr. Justice Morawetz granted an extension of the stay of proceedings to August 31, 2009 and authorized the DIP financing facility between the Applicants and Whirlpool Corporation. Attached hereto as Exhibit G is a copy of the Order of Mr. Justice Morawetz dated June 18, 2009. 10. On July 28, 2009, the Honourable Mr. Justice Campbell granted an order approving the sale of the Mexican subsidiaries of the Applicants ( Wood Mexico ). Attached hereto as Exhibit H is a copy of the Order of Mr. Justice Campbell dated July 28, 2009. MEXICAN SALE POSTPONED 11. As described more completely in my affidavit of July 22, 2009 (Exhibit D hereto), the Applicants determined that sale of Wood Mexico was in the best interest of the Applicants and the Applicants stakeholders given the capital output required to maintain the Wood Mexico and the Applicants declining revenues and severe working capital constraints. 12. Following a sales process, the Applicants identified a purchaser (the Purchaser ) and completed substantial work to facilitate the sale. However, despite these efforts and following approval of the sale by Mr. Justice Campbell in the July 28, 2009 Order, the Applicants became aware that the Purchaser had misrepresented its bank financing and that the Purchaser was unable to finance the transaction. 13. Accordingly, the sale of Wood Mexico pursuant to the July 28, 2009 Order has been postponed. At this time, it now appears extremely unlikely that Wood Mexico will be sold to the Purchaser and the Applicants may not be successful in completing any sale of Wood Mexico as a going concern and may be forced to liquidate Wood Mexico. Under the Accommodation Agreement, the Applicants covenanted to complete the sale of all Mexican operations and assets or a sale of all real estate of Wood Canada on or before August 1, 2009 (see article 6.1(n)). Attached as Exhibit I is a copy of the Accommodation Agreement.
Wood Motion Record p. 13-4 CASH CONSTRAINTS AND CASH FLOW ISSUES 14. The Applicants financing is provided under the Accommodation Agreement, which essentially follows the pattern of an ABL loan, a loan advanced on the basis of the value of current assets of the debtors as reflected in borrowing base certificates provided to the Lenders from time to time. Under the Accommodation Agreement, the Lenders have dominion over the Applicants cash, meaning that all of the cash receipts of the Applicants are deposited into a deposit account from which they are transferred directly to the Lenders. The Applicants have no access to their own receipts and only receive funds for operation through new borrowings from the Lenders. The amount that they are entitled to borrow is calculated by reference to accounts receivable and inventory that the Lenders consider eligible and subject to reserves that the Lenders can make in their discretion. 15. An oddity of the Accommodation Agreement is that it provides for two separate funding arrangements, with two sets of borrowing base calculations and two sets of lenders. CIT Business Credit (Canada) and Bank of Montreal are the lenders to Wood Canada and CIT US and Bank of Montreal Chicago Branch are the lenders to Wood U.S. From the perspective of the Applicants, this dichotomy of different lender interests has created enormous difficulty for the Applicants in the conduct of their integrated North American business and may be at the root of the current crisis which will be described below. 16. Throughout these proceedings, the Applicants operations have been substantially curtailed by restrictions on cash imposed through the exercise of the Lenders discretion to take reserves, deferrals of payment by customers concerned about potential warranty claims, the ineligibility of inter-company payables generated through the ordinary course operations of the Applicants and the requirement of many suppliers of custom made raw material inputs that they be paid in full at the time the Applicants order new raw material inventory and components. 17. The proposed sale of Wood Mexico as previously approved in these proceedings would have alleviated the cash restraints to some degree. However, the failure of the purchaser to close that transaction, particularly given the circumstances of that failure, have placed the Applicants in dire straits and dependent on the Lenders for further accommodation and support.
Wood Motion Record p. 14-5 18. During the week ending August 21, 2009, the Applicants prepared a cash flow forecast for the 8 weeks beginning August 24, 2009 contemplating continuing manufacturing operations during that period. As required by the Initial Order and the Accommodation Agreement, the Applicants consulted with the Monitor in the preparation of the cash flow forecast. 19. The Applicants cash flow forecasts would allow them to continue operations through the requested stay extension period and would permit completion of a going concern transaction if one is identified by Lincoln Capital in the marketing process that was initiated earlier in August with the consent of the Lenders. 20. The Applicants cash flow projections contemplated payment of appropriate and necessary payments in relation to intercompany balances which have accrued after the commencement of these proceedings, certain royalty payments and necessary raw material purchases each of which are critical payments and must be paid if the business is to continue. Attached hereto as Exhibit J is a copy of the cash flow statements prepared by the Applicants (the Cash Flow Statement ). 21. By way of explanation, because of the unique specifications of the material needed to manufacture the Applicants products, a number of its key suppliers have required the Applicants to pay at the time the order is placed. Since the lead times for some inventory delivery is 6 to 12 weeks and since the company must make progress payments on these purchases, the Applicants must order and pay for raw material inventory today that is needed to continue production in late September and October. The implication for the Applicants is that, unless they can place orders and make payments for new inventory required in September and October, they will simply run out of raw material inventory and have to close. 22. The Applicants presented the Cash Flow Statement to the Lenders for their consideration and approval in accordance with the Accommodation Agreement. The DIP Lenders have refused to approve the Cash Flow Statement and have advised that they will not approve any cash flow forecast that contemplates payment of the outstanding inter-company balance owing by Wood Canada to Wood U.S.
Wood Motion Record p. 15-6 23. The Cash Flow Statement does not require advances from the Lenders in excess of availability restrictions in the Accommodation Agreement. Even using availability in Wood Canada to pay inter-company balances owing to Wood U.S., the Applicants strained liquidity will result in the U.S. facilities being closed for 3 of the next 8 weeks. IMPORTANCE OF SETTLING INTER-COMPANY BALANCES 24. The Applicants and their Mexican subsidiary carry on a fully integrated business, using their manufacturing facilities and distribution networks in the most efficient manner possible. 25. Under the integrated manufacturing model used by the Applicants, some finished goods that are sold in Canada are manufactured in the United States or in Mexico. Similarly, goods sold in Mexico and the United States are manufactured in Canada and goods sold in the United States are manufactured in Canada or Mexico. 26. In order to complete local sales of all products, each of the Wood entities ships finished goods and sometimes components to the other creating inter-company balances among the Applicants and their Mexican affiliate. 27. Since the commencement of these proceedings, Canada has been accumulating a significant debt to Wood U.S. totaling approximately $900,000. MARKETING PROCESS 28. The Applicants, with the consent of the DIP Lenders have retained Lincoln Group to run a marketing process to find an investor or a buyer for the business as a going concern. As a backstop, and at the insistence of the DIP Lenders and the Monitor, the Applicants have cooperated with the inspection of its assets and premises by six different liquidation firms. 29. The Directors and Officers, acting in the best interests of all stakeholders, are pursuing a sale of the business as a going concern and doing their best to ensure that the business continues to operate as a going concern while meeting the stringent and difficult requirements of the DIP Lenders.
Wood Motion Record p. 16-7 30. The position of the DIP Lenders on the issue of inter-company balances, if given effect, is not only unfair to Wood U.S. and Wood Mexico, but also it is entirely incompatible with the continuation of the business as it will force the closure of Wood U.S. despite its outstanding order book and waiting customers. In the opinion of the Directors and Officers, the DIP Lenders position undermines the going concern value of the business, which will either serve to stifle the Lincoln Group s marketing process or severely impair the valuation and ultimate recovery for all classes of stakeholders. 31. The Directors and Officers are not prepared to execute a cash flow that has been modified to prevent the payment of post-filing inter-company payables for the following reasons: (a) (b) (c) (d) (e) The prohibition is unfair to Wood U.S. and its stakeholders; The prohibition prevents Wood U.S. from continuing to operate, depriving the Applicants of the upright freezers manufactured exclusively by Wood U.S. The prohibition prevents Wood U.S. from being able to order inventory it will need to continue in operation in September and October; The prohibition seriously undermines the Applicants attempts to sell their business as a going concern; and The prohibition, by endangering the operations of Wood U.S., effectively ends any chance of selling Wood Mexico and dooms it to liquidation. 32. The Directors and Officers have no doubt that the Monitor is ready, willing and able to act as Interim Receiver or Receiver and Manager and they are prepared to assist in the orderly transition of management following their resignation. STAY EXTENSION 33. Throughout the Stay Period, the Applicants have acted and continue to act in good faith and with due diligence. 34. If the Cash Flow Statement is approved, the Applicants would require an extension of the stay. An extension of the Stay Period (defined in the Initial Order and extended in the June 18, 2009 Order of Justice Morawetz) to September 30, 2009 would be necessary in order to provide stability
Wood Motion Record p. 17-8 to the business while the Applicants work to prepare a restructuring plan in the interests of its stakeholders and pursue the marketing process. 35. The Cash Flow Statement shows that the Applicants have sufficient funds to fund the proceedings during the requested stay extension period. 36. I do not believe any stakeholders will be materially prejudiced in the Stay Period is extended as requested provided that the Cash Flow Statement is approved by the Lenders. RELIEF REQUESTED 37. Accordingly, this affidavit is sworn in support of a motion by the Applicants for an order, among other things: (a) Giving directions to the Applicants concerning the payment of inter-company balances owing by W.C. Wood Corporation, Ltd. ( Wood Canada ) to W. C. Wood Corporation, Inc. ( Wood U.S. ); (b) Extending the Stay Period to September 30, 2009 if the Cash Flow Statement is approved by the DIP Lenders; (c) Authorizing the Directors and Officers to resign if the DIP Lenders do not approve the Cash Flow Statement; (d) Appointing the Monitor as Interim Receiver, Receiver and Manager or such other appointment as may, to this courts seem appropriate if the Directors and Officers resign; and, (e) Such further and other relief as counsel may advise and this Honourable Court deems just.
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IN THE MATTER OF THE COMPANIES CREDITORS ARRANGEMENT ACT, AS AMENDED R.S.C. 1985, c. C-36 AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISE OR ARRANGEMENT WITH RESPECT TO W.C. WOOD CORPORATION, LTD., W.C. WOOD HOLDINGS INC. AND W.C. WOOD CORPORATION INC. Wood Motion Record p. 19 Court File No. CV-09-8194-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) Proceeding Commenced at Toronto AFFIDAVIT OF JOSEPH ANGI McCarthy Tétrault LLP Suite 4700, Box 48 Toronto Dominion Bank Tower Toronto-Dominion Centre Toronto, ON M5K 1E6 Kevin McElcheran LSUC# 22119H Tel. (416) 601-7730 Heather L. Meredith LSUC# 48354R Tel: (416) 601-8342 Fax: (416) 868-0673 Solicitors for the Applicants 623893
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Wood Motion Record p. 146
Wood Motion Record p. 147
Wood Motion Record p. 148
Wood Motion Record p. 149
Wood Motion Record p. 150
Wood Motion Record p. 151
Wood Motion Record p. 152
Wood Motion Record p. 153
Wood Motion Record p. 154
IN THE MATTER OF THE COMPANIES CREDITORS ARRANGEMENT ACT, AS AMENDED R.S.C. 1985, c. C-36 AND IN THE MATTER OF A PROPOSED PLAN OF COMPROMISE OR ARRANGEMENT WITH RESPECT TO W.C. WOOD CORPORATION, LTD., W.C. WOOD HOLDINGS INC. AND W.C. WOOD CORPORATION INC. Court File No. CV-09-8194-00CL ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) Proceeding Commenced at Toronto MOTION RECORD (motion returnable August 28, 2009) McCarthy Tétrault LLP Suite 4700, Box 48 Toronto Dominion Bank Tower Toronto-Dominion Centre Toronto, ON M5K 1E6 Kevin McElcheran LSUC# 22119H Tel. (416) 601-7730 Fax (416) 868-0673 Heather L. Meredith LSUC# 48354R Tel: (416) 601-8342 Fax: (416) 868-0673 Solicitors for the Applicants/Moving Parties 618188