MAXIMIZING RECOVERY FROM INSOLVENT CUSTOMERS Presented by: Gordon Plottel, Miller Thomson LLP Craig Mills, Miller Thomson LLP Nicole Taylor-Smith, Miller Thomson LLP

Agenda Life Cycle of Insolvent Customer File National/Provincial aspects Stakeholders in Insolvency Scenarios Interactive

Default under Equipment Leases Demand letter Notice under s. 244 of Bankruptcy and Insolvency Act (BIA) Other prescribed notices (Farm Debt Mediation Act) Commercial reasonableness

Tips for proper registration at the Personal Property Registry Where to register Description of collateral

Forbearance Agreements Purpose Tool to shore up security or to improve position

Seizure of Collateral (outside formal insolvency proceeding) Steps (each jurisdiction different) Seize or Sue (consumer goods) Liquidation Commercial reasonableness Avoiding improvident realization claims

Priorities Purchase Money Security Interest (PMSI) CRA deemed trust Repairer (garage keeper) liens

Guarantors Preserving claims against guarantors Common defences and how to avoid Duress, misrepresentation and undue influence Improvident realization Dealings with principal debtors

Formal Insolvency Proceedings Bankruptcy Receivership Formal Restructuring Companies’ Creditors Arrangement Act (CCAA) BIA Proposals

Bankruptcy and Equipment Leases Basic process Participation for unsecured deficiency claims and unprotected security claims Use of trustee’s investigatory powers Use of trustee to attach real security Reordering of priorities

Receivership and Equipment Leases Dealing with Receivers Understanding Receivership orders Recovering leased equipment for Receiver Participating in a receiver’s sale – assignment of lease Disclaimer of contracts

BIA Proposals Stay of proceedings Process Role of trustee

CCAA Restructuring Stay of proceedings Process Role of monitor

Allocation of Insolvency Costs Responsibility of equipment lessors for costs Types of costs: Receiver / admin cost Receiver borrowing / DIP financing Other charges (D&O, Critical Suppliers, etc.) Methodology of cost allocation

Tips and Takeaways Monitor customers regularly Limit new exposure Develop contingency plan Become involved in formal proceedings: Contact Monitor / Trustee / Receiver (service list) Monitor reports and ask questions Make your views regarding the equipment known

Tips and Takeaways (cont’d) Seek to inspect equipment as soon as possible and consider your position Verify equipment will be maintained/repaired Obtain independent appraisals Do not assume you will continue to be paid Assert priority and demand payment for use of equipment

Questions?

Contacts Gordon Plottel Craig Mills Nicole Taylor-Smith Direct line: 604.643.1245 Email: gplottel@millerthomson.com Craig Mills Direct line: 416.595.8596 Email: cmills@millerthomson.com Nicole Taylor-Smith Direct line: 403.298.2401 Email: ntaylorsmith@millerthomson.com