FACTUM OF THE TRUSTEE IN BANKRUPTCY (Consolidation of Estates and Disclaimer of Lease, Returnable on October 24, 2017)

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1 ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST) Estate No 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 Estate No IN THE MATTER OF THE BANKRUPTCY OF F.P. RETAIL LIMITED, A CORPORATION INCORPORATED UNDER THE LAWS OF ONTARIO, CARRYING ON BUSINESS IN THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO AND Estate No 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 Estate No 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 FACTUM OF THE TRUSTEE IN BANKRUPTCY (Consolidation of Estates and Disclaimer of Lease, Returnable on October 24, 2017) GOLDMAN SLOAN NASH & HABER LLP 480 University Avenue, Suite 1600 Toronto ON M5G 1V2 Fax: Jennifer Stam (LSUC #46735J) Tel: stam@gsnh.com Lawyers for KSV Kofman Inc., in its capacity as Trustee in Bankruptcy

2 [1] PART I - INTRODUCTION 1. KSV Kofman Inc. ( KSV ), in its capacity as trustee in bankruptcy (in such capacity, the Trustee ) of 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 ), moves for an order: a) directing the procedural consolidation of the Estates; and b) directing that the Trustee be authorized to disclaim the lease for the Retail Store (as defined in the Trustee s First Report) effective immediately. PART II - OVERVIEW Procedural Consolidation 2. The Companies were managed by a single finance department from their North York location and operated as a single business. 3. The Companies are all indebted to Bank of Montreal for approximately $1.7 million. The Trustee does not expect that the Companies assets will be sufficient to fully repay that amount. 4. Procedural consolidation of the Estates will result in the most efficient use of the Estates' limited resources and will provide for greater and more certain and timely recoveries for the Estates' stakeholders than would otherwise result if the Estates were administered separately. Lease disclaimer 5. The Companies formerly operated a retail location at a leased premises, which is no longer operating and had little contents as of the date of bankruptcy. The assets of the Companies in that location have since beenmoved to its North York Premises (as defined below).

3 [2] 6. The Trustee is not occupying this location and there is no benefit to the Estates to do so. 7. The Trustee wishes to disclaim the lease for this location before the meeting of creditors and appointment of inspectors. This will ensure no liability to the Estates for this location. It will also be more fair to the landlord to allow it to retrieve possession of this location earlier and be in a position to seek a new tenant. PART III - FACTS The bankruptcy filings 8. On October 17, 2017 the Companies each filed an assignment in bankruptcy pursuant to the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B.-3, as amended (the BIA ). The Trustee has set the date for the first meeting of creditors on November 7, The Companies 9. The following is an overview of the structure of the Companies: 2 a) 247 is a privately owned non-operating holding company with two shareholders, Roger Poirier and Jeremy Logan, which owns the other Companies; b) 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 ); c) F.P Retail, also a subsidiary of 247, was a Fred Perry branded retail store operating from a leased premises located at 964 Queen St. W., Toronto ( Retail Store ); and d) S.A. Online, also subsidiary of 247, operated an online store selling Aigle brand products from the North York Premises. 1 First Report of KSV Kofman Inc. dated October 20, 2017 (the First Report ), paras ; Motion Record, Tab 2. 2 First Report, paras ; Motion Record, Tab 2.

4 [3] 10. The Companies were managed by a single finance department and operated as a single business Bank of Montreal was a lender to some or all of the Companies, and is owed approximately $1.7 million. Independent counsel for the Trustee is reviewing the bank s security and will update the Court on the results of that review at the hearing of this motion The Trustee does not expect that the Companies assets will be sufficient to fully repay the bank s loans. 5 The Retail Store lease 13. The Retail Store is no longer operating. It had negligible inventory as of the date of bankruptcy, which was moved to the North York Premises. The Trustee is not occupying the Retail Store Immediately following its appointment, the Trustee sent a letter to the landlords, including the one for the Retail Store, to communicate that the Trustee would advise shortly of its intentions with respect to the leased premises. In the case of the Retail Store, the Trustee has advised that landlord in writing that the Trustee is not occupying that location. 7 PART I V- ISSUES AND ARGUMENT 15. The issues on this motion are: a) should procedural consolidation of the Estates be ordered; and b) should the Trustee immediately disclaim the lease for the Retail Store? 3 First Report, paras ; Motion Record, Tab 2 4 First Report, paras ; Motion Record, Tab 2 5 First Report, paras ; Motion Record, Tab 2. 6 First Report, paras. 4.02; Motion Record, Tab 2 7 First Report, paras. 4.04; Motion Record, Tab 2

5 [4] Procedural Consolidation of the Estates is warranted 16. Authority to procedurally consolidate multiple estates may be found in Section 183 of the BIA. 17. Procedural consolidation of the Estates will provide for greater administrative efficiency by the Trustee by avoiding unnecessary duplication in the administration of the Estates, both of which arise out of the same overall business (as set forth in detail in the First Report). Further, it seems that there will be no dividends to any creditors beyond Bank of Montreal, which supports this relief. 8 Disclaimer of the Retail Store lease 18. Disclaimer of the lease is not unusual. The BIA provides in section 30(1)(k) that the Trustee may disclaim any lease with the permission of the estate s inspectors. 19. The issue in this case is doing so before the first meeting of creditors, which is when inspectors may be appointed. 20. This issue is addressed in section 19(1) of the BIA, which permits a trustee to seek legal advice and to take such court proceedings as it considers necessary for the protection of the bankrupt s property prior to a first meeting of creditors. 21. Further, Section 34(1) of the BIA allows the Trustee to apply to the Court for directions in relation to any matter affecting the administration of the estate of a bankrupt. 22. In this case, there is no need for the Retail Store lease, and the Trustee believes that it would be a waste of resources of the Estates to incur any liability for occupation rent in that respect Further, Bank of Montreal supports this relief. 24. In addition, this relief will have the effect of allowing the Trustee to disclaim the 8 First Report, paras ; Motion Record, Tab 2 9 First Report, para ; Motion Record, Tab 2

6 [5] Companies interest in the Retail Store more quickly, which will also benefit the landlord of the Retail Store. That landlord will then be able to take steps to find a new tenant or otherwise mitigate its losses sooner, which will be especially important when it seems that no dividend is likely to any creditors subordinate to Bank of Montreal as the secured creditor (even on a preferred basis for a landlord). PART V- ORDER REQUESTED 25. The Trustee accordingly requests an order granting procedural consolidation of the Estates, and authorizing the Trustee to disclaim the lease for the Retail Store immediately. ALL OF WHICH IS RESPECTFULLY SUBMITTED Dated: October 20, per Jennifer Stam, Of counsel to KSV Kofman Inc., in its capacity as Trustee in Bankruptcy

7 SCHEDULE "A" Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended, ss. 19, 30, and 34 Legal advice or action before first meeting 19 (1) The trustee may prior to the first meeting of creditors obtain such legal advice and take such court proceedings as he may consider necessary for the recovery or protection of the property of the bankrupt. In case of emergency (2) In the case of an emergency where the necessary authority cannot be obtained from the inspectors in time to take appropriate action, the trustee may obtain such legal advice and institute such legal proceedings and take such action as he may deem necessary in the interests of the estate of the bankrupt. (3) [Repealed, 2005, c. 47, s. 18] Powers exercisable by trustee with permission of inspectors 30 (1) The trustee may, with the permission of the inspectors, do all or any of the following things: [ ] (k) elect to retain for the whole part of its unexpired term, or to assign, surrender, disclaim or resiliate any lease of, or other temporary interest or right in, any property of the bankrupt; Trustee may apply to court for directions 34 (1) A trustee may apply to the court for directions in relation to any matter affecting the administration of the estate of a bankrupt and the court shall give in writing such directions, if any, as to it appear proper in the circumstances. To report to court after three years (2) Where an estate has not been fully administered within three years after the bankruptcy, the trustee shall, if requested to do so by the Superintendent, report that fact to the court as soon as practicable thereafter, and the court shall make such order as it considers fit to expedite the administration. Notice to Superintendent s division office (3) The trustee must send notice to the Superintendent s division office of the day and time when any application for directions made under subsection (1) is to be heard and of the day and time when the trustee intends to report to the court as required by the Superintendent under subsection (2).

8 SCHEDULE "B" LIST OF AUTHORITIES [None]

9 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 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 Estate File No: 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 IN THE MATTER OF THE BANKRUPTCY OF F.P. RETAIL LIMITED, A CORPORATION INCORPORATED UNDER THE LAWS OF ONTARIO, CARRYING ON BUSINESS IN THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST Proceeding commenced at Toronto FACTUM OF THE TRUSTEE IN BANKRUPTCY (Consolidation of Estates) (returnable October, 2017) GOLDMAN SLOAN NASH & HABER LLP 480 University Avenue, Suite 1600 Toronto ON M5G 1V2 Fax: Jennifer Stam (LSUC #46735J) Tel: stam@gsnh.com Lawyers for the KSV Kofman Inc.in its capacity as Trustee in Bankruptcy