canada restructuring inc. as court- appointed receiver of … · richter as receiver1 as a result...

LEGAL_1:24513533.1

Fourth Report of Duff & Phelps

Canada Restructuring Inc. as Court-

Appointed Receiver of Priszm

Income Fund, Priszm Canadian

Operating Trust, Priszm Inc., KIT

Finance Inc. and Priszm LP

September 6, 2012

Duff & Phelps Canada Restructuring Inc. Page i of i

ContentsPage

1.0 Introduction..........................................................................................................1

1.1 Purposes of this Report............................................................................2

1.2 Currency ..................................................................................................3

1.3 Restrictions ..............................................................................................3

2.0 Background .........................................................................................................4

3.0 Operations...........................................................................................................4

3.1 Employees ...............................................................................................5

3.2 Cash Position...........................................................................................5

3.3 Revenu Québec .......................................................................................6

4.0 Lease Assignment Update...................................................................................7

5.0 Sale Process .......................................................................................................7

5.1 Sale to Olympus.......................................................................................8

5.2 Recommendation .....................................................................................9

5.3 Occupation Agreement...........................................................................10

5.4 Consent Agreement and Assignment of Franchise Agreements.............11

5.5 Need for Confidentiality ..........................................................................12

5.6 Overview of the Receiver’s Activities......................................................12

6.0 Conclusion and Recommendation .....................................................................14

Appendices

Receivership Order................................................................................................................... A

Revenu Québec, relevant sections from the First, Second and Third Reports ....................... B

Receiver’s First Report to Court ............................................................................................... C

Redacted copy of APA.............................................................................................................. D

Consent Agreement.................................................................................................................. E

Assignment of Franchise Agreements ......................................................................................F

Confidential Appendices

Un-redacted copy of APA ..........................................................................................................1

Duff & Phelps Page 1 of 14

Court File No.: CV-11-9375-00CL

ONTARIOSUPERIOR COURT OF JUSTICE

IN BANKRUPTCY AND INSOLVENCY(COMMERCIAL LIST)

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, PRUCO LIFE INSURANCECOMPANY AND PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY

-and-

PRISZM INCOME FUND, PRISZM CANADIAN OPERATING TRUST, PRISZM INC.,KIT FINANCE INC. AND PRISZM LP

FOURTH REPORT OF DUFF & PHELPS CANADA RESTRUCTURING INC.IN ITS CAPACITY AS COURT-APPOINTED RECEIVER

September 6, 2012

1.0 Introduction

a) Pursuant to an order of the Ontario Superior Court of Justice (Commercial List)(“Court”) made on March 31, 2011, as amended and restated pursuant to an orderof the Court made on April 29, 2011 (“CCAA Order”), Priszm Income Fund, PriszmCanadian Operating Trust, Priszm Inc., Kit Finance Inc. and Priszm LP(collectively, “Company”) commenced proceedings (“CCAA Proceedings”) underthe Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended(“CCAA”). FTI Consulting Canada Inc. was appointed as the monitor (“Monitor”)in the CCAA Proceedings.

b) Pursuant to an order of the Court made on September 14, 2011 (“CCAATermination Order”), following the closing of the FMI Transaction (as definedbelow), the CCAA Proceedings were to be terminated.

c) Pursuant to an application of The Prudential Insurance Company of America,Pruco Life Insurance Company and Prudential Retirement Insurance and AnnuityCompany (collectively, “Prudential”), the Court made a further order on September14, 2011 (“Receivership Order”) which provided that following the closing of theFMI Transaction, RSM Richter Inc. (“Richter”) was to be appointed as receiver(“Receiver”) of the assets, undertakings and properties of the Company. The FMITransaction closed on September 19, 2011.


d) The termination of the CCAA Proceedings and the appointment of the Receiver(along with the commencement of the proceedings relating thereto (“ReceivershipProceedings”)) became effective on September 21, 2011. A copy of theReceivership Order is attached as Appendix “A” to this Report.

e) Pursuant to a Court order made on December 12, 2011 (“Substitution Order”),Duff & Phelps Canada Restructuring Inc. (“D&P”), was substituted in place ofRichter as Receiver1 as a result of D&P’s acquisition of the Toronto restructuringpractice of Richter.

1.1 Purposes of this Report

The purposes of this report (“Report”) are to:

a) Provide background information about the Company and these proceedings;

b) Update the Court on the status of the lease assignments to Hi-Flyer Food(Canada) Inc. (“HFFI”), the purchaser of the majority of the Company’s locationsin Alberta and Manitoba (“HFFI Transaction”);

c) Update the Court on the sale process conducted by the Receiver for theCompany’s remaining stores located in Québec, including the offer received fromOlympus Food (Canada) Inc. (“Olympus”), a Company that shares commonownership with HFFI, and Wholesome Foods Inc. as guarantor, for 652 of the 69Québec stores; and

d) Recommend that this Honourable Court make an order:

Approving the asset purchase agreement related to the Transaction(defined in Section 5.1(a) of this Report) (“APA”);

Approving the Occupation Agreement (defined in Section 5.1(a) of thisReport), which is appended as a schedule to the APA;

Authorizing the Receiver to execute the Consent Agreement (defined inSection 5.4(c) of this Report);

Authorizing the Receiver to execute the Assignment of FranchiseAgreements (defined in Section 5.4(d) of this Report);

1On December 9, 2011, the assets used by Richter in its Toronto restructuring practice were acquired by D&P.

Pursuant to the Substitution Order, D&P was substituted in place of Richter in certain ongoing mandates,including acting as Receiver in these proceedings. The licensed trustees/restructuring professionals overseeingthis mandate prior to December 9, 2011 remain unchanged.2

Olympus is to purchase the equipment from the remaining four locations but does not intend to operate fromthose locations.


Authorizing and directing the Receiver to execute such additionaldocuments and to take such additional steps as are necessary to completethe Transaction;

Vesting in Olympus, as of closing, the Purchased Assets (defined inSection 5.1(a) of this Report), free and clear of all liens, charges, securityinterests and other encumbrances;

Authorizing and directing the Receiver to make payments to the Franchisor(defined in Section 2.0 (a) of this Report) totalling approximately $2.6million from the proceeds of the Transaction3;

Approving the Receiver’s activities as set out in the Receiver’s firstsupplement to the third report to the Court dated July 30, 2012 (“FirstSupplement to the Third Report”) and as set out in this Report; and

Sealing Confidential Appendix “1” to this Report.

1.2 Currency

a) Unless otherwise noted, all currency references in this Report are to Canadiandollars.

1.3 Restrictions

a) In preparing this Report, the Receiver has relied upon the Company’s books andrecords, including information assembled by and analyses performed by Companyemployees. The Receiver has not performed an audit or other verification of suchinformation.

b) An examination of the Company’s financial forecasts as outlined in the CanadianInstitute of Chartered Accountants Handbook has not been performed.

c) Future oriented financial information relied upon in this Report is based on theReceiver’s assumptions regarding future events; actual results achieved may varyfrom this information and these variations may be material.

d) The Receiver expresses no opinion or other form of assurance with respect to theaccuracy of any financial information presented in this Report, or relied upon bythe Receiver in preparing this Report.

3See footnote 10.


2.0 Background

a) The Company is a franchisee of Yum! Restaurants International (Canada) LP(“Franchisor”).

b) At the time the CCAA Order was made, the Company was the largest operator ofKFC franchises in Canada.

c) In addition to operating KFC franchises, the Company operates a limited numberof multi-branded restaurants that combine a KFC restaurant with either a TacoBell or Pizza Hut restaurant.

d) During the CCAA Proceedings, the Company completed the sale of the majority ofits locations in British Columbia and Ontario to Soul Foods Canada Inc. (“Soul”)(“Soul Transaction”), and the majority of its locations in Nova Scotia and NewBrunswick to FMI Atlantic Inc. (“FMI”) (“FMI Transaction”). Stores in theseprovinces that were excluded from the Soul Transaction and FMI Transactionhave been closed.

e) On May 28, 2012, the Receiver completed the sale of the majority of theCompany’s locations in Alberta and Manitoba to HFFI. Stores in these provincesthat were excluded from the HFFI Transaction have been closed.

f) Additional information concerning the Company and these proceedings isprovided in the application materials filed in the Receivership Proceedings and inthe CCAA Proceedings, including:

the affidavit of Paul Procyk, a Vice-President of Prudential InvestmentManagement, Inc. sworn September 9, 2011;

the Receiver’s reports to Court, which are available on the Receiver’swebsite at www.duffandphelps.com/restructuringcases; and

the affidavits, motion materials and reports filed by the Monitor in theCCAA Proceedings, which are available on the Monitor’s website athttp://cfcanada.fticonsulting.com/priszm/.

3.0 Operations

a) The Company continues to operate 69 locations in Québec. The Company’shead office is located in Vaughan, Ontario.

b) On August 14, 2012, the Receiver sent a disclaimer letter to Semaj EnterprisesLimited, the landlord of the Company’s storage facility in Toronto (“StorageFacility”). The disclaimer was effective as of August 25, 2012.


c) Since the date of the Receiver’s Third Report to Court dated June 28, 2012 (“ThirdReport”), three stores have been closed (two in Alberta and one in Manitoba), andthe respective leases have been repudiated.

3.1 Employees

a) Pursuant to the terms of the Receivership Order, employees remain employed bythe Company. The Company has written to its employees on two occasionsregarding their employment status.

b) The store closures resulted in the termination of 31 employees in Alberta and 20employees in Manitoba. HFFI has hired 22 employees from closed Alberta storesand 17 employees from closed Manitoba stores.

c) As previously reported to the Court, in order to secure the continued assistance ofcritical employees, retention bonuses have been paid to such individualsthroughout the proceedings. Since the date of the Third Report, additionalretention bonuses have been offered to eight employees to secure their continuedassistance.

3.2 Cash Position

a) As at September 5, 2012 the Receiver was holding approximately $42.4 million inthe estate bank account (including $33 million in short-term GIC’s). These fundsprimarily represent proceeds generated from the Soul Transaction, the FMITransaction and the HFFI Transaction.

b) As at September 5, 2012 the Receiver also has approximately $4.7 million ondeposit in a trust account. These funds represent the HFFI Transaction proceedsallocable to locations for which lease assignments have not yet been obtained. Inthe event that these leases are not assigned to HFFI within six months of closingthe HFFI Transaction (subject to extension upon agreement by the Receiver andHFFI), the Receiver is required to repay HFFI the portion of the HFFI Transactionpurchase price allocated to the unassigned locations in the amounts set out inSchedule D of the HFFI APA.

c) In addition to the amounts detailed in a) and b) above, there was approximately$6.9 million in the Company’s operating account at August 31, 2012 4 . TheCompany has accrued obligations that will consume the vast majority of thesemonies.

d) The Receiver has not been required to borrow under the Receiver’s borrowingcharge.

4Net of outstanding cheques.


3.3 Revenu Québec

a) As previously reported to the Court, the Receiver was advised at the outset of theReceivership Proceedings that Revenu Québec required the Company to installspecialized sales recording module equipment (“SRM Equipment”) in each of itsQuébec stores. The estimated cost to install this equipment is $200,000. Giventhe context of a receivership proceeding, and the uncertainty surrounding thefuture of the Québec operations (that is, the potential termination or sale of theQuébec operations), it did not appear (and does not appear) appropriate for theCompany to bear the cost of these capital expenditures.

b) As at August 17, 2012, Revenu Québec had levied fines against 52 Québecstores5 totalling approximately $200,800. It appears, however, that such claimswould be subordinate to the interests of the Company’s secured creditors.

c) The Receiver reported on this matter in Section 3.4 of its First Report to Courtdated November 11, 2011 (“First Report”), Section 3.3 of its Second Report toCourt dated May 11, 2012 (“Second Report”) and Section 5.3 of its Third Report toCourt dated June 28, 2012. Copies of the relevant sections of each report areattached as Appendix “B”.

d) In advance of service of the First Report, the Receiver added its contact atRevenu Québec to the service list and accordingly Revenu Québec was servedwith the First Report.

e) On April 3, 2012, at the request of counsel to Revenu Québec, counsel to RevenuQuébec was added to the service list. Counsel to Revenu Québec has beenserved with all materials provided to the service list subsequent to that date,including the Second Report in respect of the motion returnable May 11, 2012 andthe Third Report in respect of the motion returnable July 10, 2012 (which wassubsequently adjourned to July 31, 2012). Revenu Québec did not appear ateither of those motions.

f) On August 8, 2012, the Receiver received another letter from counsel to RevenuQuébec. The Receiver’s counsel responded to the letter on August 9, 2012 andhas been in a dialogue with counsel to Revenu Québec since that date. TheReceiver and Revenu Québec are hopeful of a consensual resolution to this issueresulting from the sale of the Québec operations to Olympus. The Receiver willupdate the Court as to the status of this issue on the return date of this motion.

5Certain locations have received up to four fines of $2,510 each.


4.0 Lease Assignment Update

a) Following the closing of the HFFI Transaction, pursuant to the terms of anoccupation agreement entered into between the Company and HFFI, HFFIcontinued to operate from Company locations where the leases had yet to beassigned.

b) As of August 27, 2012, 146 of the leases subject to the HFFI Transaction have notyet been assigned. The Receiver continues to work with HFFI and the landlordsto complete the lease assignments.

5.0 Sale Process

a) As previously reported to the Court, the Company’s sale process in the CCAAProceedings did not generate acceptable offers for the stores in Alberta, Manitobaand Québec. Accordingly, on November 16, 2011, the Court issued an orderapproving, inter alia, a revised sale process, with a bid deadline of November 21,2011 (“Revised Bid Deadline”) for the stores in these markets. Details regardingthe sale process were provided in the First Report. A copy of the First Report(without appendices) is attached as Appendix “C”.

b) The Receiver received seven offers for the Company’s locations in variousregions on the Revised Bid Deadline; however, an acceptable offer was notreceived for the stores in Québec.

c) A prospective purchaser for the Québec Locations (“Prospective Purchaser”)emerged after the Revised Bid Deadline. As at the date of the Third Report theReceiver was in negotiations with that party. The negotiations, however,ultimately did not result in a transaction.

d) Shortly after the negotiations with the Prospective Purchaser came to an end,HFFI expressed an interest to acquire the Québec business and assets.

e) Olympus, an affiliate of HFFI, executed the APA on September 6, 2012.

6This excludes the three leases identified by the Receiver in its First Supplement to the Third Report as being

disputed between the Receiver and the landlord as it relates to the classification of the leases as notice leasesversus consent leases. HFFI is working directly with the landlord regarding the assignment of those locations.


5.1 Sale to Olympus

a) A summary of key terms of the APA is as follows:

Olympus is to acquire 65 stores located in Québec (“Transaction”),including all of the interests and rights of the Receiver, if any, and theCompany, respectively, in the leases and the leased premises, the relatedfranchise agreements, equipment, trade fixtures, inventory, prepaidexpenses and cash float (“Purchased Assets”). Olympus will also acquirecertain equipment related to the four locations in Québec, which it does notintend to operate;

The purchase price includes the assumption by Olympus of 50% of theaccrued vacation pay owing at closing related to the Québec employeesbeing hired by Olympus, to a maximum of $250,000 (“Vacation Pay”);

The purchase price is subject to adjustment for post-closing adjustmentsrelated to the current assets, including inventory, accounts receivable(except for the excluded receivables), restaurant cash float and anyprepaid expenses (“Current Assets”);

Approximately 118 employees at eight stores are part of the Syndicat desMétallos, Locale 9400 (“Union”). The Union has been served with thesemotion materials.

For any lease where landlord consent, if required, has not been obtainedprior to closing, Olympus is to occupy the location pursuant to anoccupation agreement to be entered into between Olympus and theReceiver (“Occupation Agreement”). The terms of the OccupationAgreement are set out in Section 5.3 below;

Should leases not be assigned to Olympus within six months of closing(subject to extension upon agreement by Olympus and the Receiver, eachacting reasonably), the parties to the APA would consider whether aninsolvency process should be undertaken pursuant to which an order ofthe Court assigning the leases may be sought;

Upon execution of the APA, Olympus will pay a deposit of 10% of the priceset out in the APA. The deposit is only refundable to Olympus if thetransaction does not close because the Court does not issue the approvaland vesting order substantially in the form attached to the APA;

The closing date of the transaction is scheduled to be September 17, 2012(“Closing Date”);


The offer is only conditional upon Court approval;

If the Court approves the APA, Olympus and the Receiver intend to enterinto the Occupation Agreement substantially in the form attached asSchedule ”H” to the APA;

The Franchisor has consented to the Transaction;

Prudential has consented to the Transaction; and

The Purchased Assets are being purchased on an “as is, where is” basis.

A redacted copy of the APA is attached as Appendix “D”.

5.2 Recommendation

a) For the following reasons, the Receiver recommends that the Court issue an orderapproving the Transaction and vesting in Olympus all right, title and interest in andto the Purchased Assets:

The Purchased Assets were actively marketed for sale by the Companyand the Receiver for an extended period of time;

The offer from Olympus is the best received;

The sale process was approved by the Court and was carried out by theReceiver in accordance with the orders issued by the Court;

Olympus will continue to operate the purchased locations as a goingconcern, which will preserve employment for the majority of theCompany’s approximately 1030 employees in Québec; and

The Franchisor and Prudential have consented to the Transaction.


5.3 Occupation Agreement7

a) Subject to Court approval of the Transaction, the Receiver and Olympus intend toenter into the Occupation Agreement, pursuant to which Olympus is to occupyand operate the stores for which leases are not assigned on or prior to the ClosingDate.

b) There are 65 leases subject to assignment pursuant to the Transaction, five arenotice only leases and the remaining 60 leases require landlord consent in orderto be assigned8.

c) The key terms of the Occupation Agreement are as follows.

The Receiver grants to Olympus a licence to occupy each of the LeasedPremises from the Closing Date to the earlier of:

o The date that is six months from the Closing Date (unless suchtime period is extended on terms acceptable to the Receiver andOlympus, acting reasonably);

o The time the relevant Landlord’s consent to the assignment of theapplicable lease is obtained or such assignment has been orderedby the Court and such Lease has been assigned to Olympus;

o The time the applicable lease is lawfully terminated or expires; and

o The time the license is terminated in respect of any given Lease inaccordance with the terms of the Occupation Agreement.

Olympus is required to pay to the Receiver any and all rent, expenses,occupation costs and other amounts relating to the Leased Premiseswhich the Receiver and/or the Company are obligated to pay inaccordance with the Leases.

7Capitalized terms not otherwise defined in this section of the Report have the meaning provided to them in the

Occupation Agreement.8

Notice only leases require that notice of a lease assignment be given to the respective landlord in order to effectthe assignment of the lease to a third party. Consent leases require that the landlord provide its consent to thelease being assigned to a third party.


A statement of estimated Occupation Costs shall be provided by theReceiver to Olympus in respect of each Lease for each calendar monthafter Closing, at least fourteen days in advance of the first day of suchcalendar month. Olympus will then have five Business Days to wire to theReceiver the amount set out in the statement of estimated OccupationCosts. Estimated Occupation Costs will be reconciled against actualOccupation Costs within forty-five days after the end of the applicableLicense Period for each Lease.

The Receiver can terminate this agreement at any time if Olympus in anymaterial respect is in default or fails to comply with the agreement and thedefault or failure to comply remains unremedied until the earlier of (i)seven Business Days following notice of such default or failure beingprovided by the Receiver to Olympus, or (ii) the first day of the calendarmonth that follows the month within which such notice was provided by theReceiver to Olympus.

5.4 Consent Agreement and Assignment of Franchise Agreements

a) As a condition of its consent to the assignment of the franchise agreement, theFranchisor requires that certain payments be made to it. The Receiver believesthese amounts total approximately $2.6 million.9 They are to be paid from theTransaction proceeds as follows:

Approximately $1.8 million in respect of all pre-filing monetary obligationsowed under the franchise agreement;

Approximately $97,000 in respect of all pre-filing advertising contributionsrequired to be paid under the franchise agreement; and

Approximately $725,000 in respect of all unpaid post-filing continuingroyalty fees and other monetary accruals (excluding interest and net ofcredits) accrued for the period up to and including May 20, 2011.

b) The Franchisor also requires that any unpaid amounts accruing to the Franchisorafter May 20, 2011 to the Closing Date for unpaid post-filing continuing fees andother monetary accruals (excluding interest and net of credits), not to exceed$850,000 be paid to the Franchisor within three days of the amount beingcalculated by the Receiver and agreed upon by the Franchisor.

9The Receiver and the Franchisor were reconciling these amounts as of the date of this Report. The Receiver

will advise the Court of the outcome of the reconciliation process on the return of this motion.


c) In connection with granting its consent to the Transaction, the Franchisor requiresthat a consent agreement (“Consent Agreement”) be executed by the Franchisor,Olympus and the Receiver. It is contemplated that the Consent Agreement will beexecuted by the Franchisor and Olympus prior to the return date of this motion.The Receiver has reviewed the form of Consent Agreement and is in the processof reviewing with the Franchisor the payments required to be made thereunder.Accordingly, upon agreement between the Receiver and the Franchisor of theamounts payable to the Franchisor and upon the issuance by the Court of anorder approving the APA and the Transaction, the Receiver will execute theConsent Agreement. A copy of the draft Consent Agreement (withoutappendices) is attached as Appendix “E”.

d) In order to effect the assignment of the franchise agreements, the Receiver andOlympus have agreed to a form of assignment of franchise agreements(“Assignment of Franchise Agreements”). A copy of the Assignment of FranchiseAgreements is attached as Appendix “F”.

e) Timing of the payments referred to in 5.4(a) above is an outstanding issue that isstill being negotiated as of the date of this Report.

5.5 Need for Confidentiality

a) The APA, attached to this Agreement as Appendix “D”, has been redacted toexclude the purchase price and the amount of the deposits paid. The Receiverrequests that this document be filed with the Court on a confidential basis untilsuch time that the Transaction closes, as it is the Receiver’s view that theavailability of this information may negatively impact future realizations on the saleof the Assets in the event that the Transaction does not close. A copy of the un-redacted APA is attached as Confidential Appendix “1”.

b) The Receiver believes that no stakeholder will be prejudiced if the information issealed until the Transaction has closed.

5.6 Overview of the Receiver’s Activities

a) In addition to the activities detailed above and related to the above, since the dateof the First Supplement to the Third Report, the Receiver’s activities haveincluded:

Attending at the Company’s premises on a daily basis in order to carry outits activities in accordance with the Receivership Order;

Monitoring and reviewing all receipts and disbursements and signing allcheques and wire transfers;


Performing daily cash monitoring procedures including reviewing bankstatements and maintaining a cash flow reconciliation;

Reviewing on a daily basis various reports provided by the Company,including sales and efficiency reports, and corresponding with theCompany regarding same;

Reviewing post-filing accounts payable listings on a weekly basis;

Tracking post-filing obligations;

Preparing weekly cash flow projections and providing copies of same toPrudential;

Preparing weekly variance analyses from the cash flow projections andproviding a copy to Prudential;

Corresponding with the Company’s various banks in the context of cashmanagement;

Dealing with insurance matters raised by SREIT in its capacity as thelandlord of various store locations, including matters related to thereimbursement to SREIT of an insurance deductible paid by SREIT inrespect of a location in Alberta that burned down during the CCAAproceedings (“Alberta Deductible”);

Corresponding extensively with SREIT’s counsel and the Receiver’scounsel regarding matters pertaining to the Alberta Deductible;

Corresponding with the Company’s insurance broker and insuranceadjuster regarding various insurance matters, including the claim inrespect of the Alberta location and a claim in respect of a location thatburned down in Québec prior to the commencement of the CCAAproceedings;

Corresponding with the landlord of the Company’s storage facility locatedin Toronto, Ontario (“Storage Facility”) on a periodic basis regardingvarious issues related to that facility;

Attending at the Storage Facility on a periodic basis to provide access tothe landlord and prospective tenants;

Coordinating the removal and transfer of significant volumes of books andrecords stored at the Storage Facility to an outside storage facility;

Duff & Phelps

Responding to creditor and employee inquiries;

Dealing with Service Canada aEarner Protection Program

Corresponding with prospective purchasersnegotiating various sale documents, including draft asset purchaseagreements;

Providing prospective purchdocumentation to facilitate diligence;

Making a distribution to Prudential pursuant to an order of the Court madeon July 30, 2012

Corresponding with the Receiver’s counserespect of this mandate;

Attending at Court on July 30, 2012 in respect of the distribution motion;

Drafting this Report; and

Other matters pertaining to the administration of this mandate.

6.0 Conclusion and Recommendation

Based on the foregoing, the Receiver respectfully recommends that this HonourableCourt make an order granting the relief detailed in

All of which is respectfully submitted,

DUFF & PHELPS CANADA RESTRUCTURING INC.IN ITS CAPACITY AS COURTPRISZM INCOME FUND, PRISZM CANADIAN OPERATING TRUST,PRISZM INC., KIT FINANCE INC. AND PRISZM LPAND NOT IN ITS PERSONAL CAPACITY

Responding to creditor and employee inquiries;

Dealing with Service Canada and former employees regarding theEarner Protection Program Act (Canada);

Corresponding with prospective purchasers for the Qunegotiating various sale documents, including draft asset purchaseagreements;

Providing prospective purchasers of the Quédocumentation to facilitate diligence;

Making a distribution to Prudential pursuant to an order of the Court madeon July 30, 2012 and dealing extensively with distribution issues

Corresponding with the Receiver’s counsel to deal with various matters inrespect of this mandate;


Drafting this Report; and


Conclusion and Recommendation

sed on the foregoing, the Receiver respectfully recommends that this HonourableCourt make an order granting the relief detailed in Section 1.1 (d).

* * *

All of which is respectfully submitted,

DUFF & PHELPS CANADA RESTRUCTURING INC.CAPACITY AS COURT-APPOINTED RECEIVER OF

PRISZM INCOME FUND, PRISZM CANADIAN OPERATING TRUST,PRISZM INC., KIT FINANCE INC. AND PRISZM LPAND NOT IN ITS PERSONAL CAPACITY

Page 14 of 14

nd former employees regarding the Wage

for the Québec locations andnegotiating various sale documents, including draft asset purchase

ébec locations with

Making a distribution to Prudential pursuant to an order of the Court madeand dealing extensively with distribution issues;

l to deal with various matters in



sed on the foregoing, the Receiver respectfully recommends that this Honourable

Appendix “A”

Appendix “B”

Appendix “C”

Appendix “D”

Appendix “E”

Appendix “F”

canada restructuring inc. as court- appointed receiver of … · richter as receiver1 as a result...

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