Transfer on National Post to the other lenders syndicate, away from the Ad Hoc vendor financing debt group: inter alia issues, as unsecured creditors of the National Post are ahead in the credit line, before the vendor financing agreement debt, sale between lenders does not supercede this.
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67. Until recently, the CCAA did not expressly address dispositions or sales of assets. On September 18, 2009, certain amendments to the CCAA were proclaimed intoforce, including Section 36 of the CCAA which sets out the criteria for the sale and/ordisposition of assets in the context of CCAA proceedings and is reproduced in full inSchedule "C" hereto.E F T I"-24-68.
The Monitor has reviewed Section 36 of the CCAA and, after consultation with itscounsel, has formed the view that Section 36 does not apply to the CanwestIntercompany Reorganization for the following reasons:
(a) the purpose of Section 36 is to prevent restructuring debtors from disposing ofvaluable assets outside of the ordinary course of business to the detriment oftheir creditors;
(b) the National Post Company has failed to generate any profits since itsinception and has operated at a loss since;
(c) the transition of some of the assets and liabilities of the National PostCompany is only one aspect of a larger reorganization of the relationshipbetween the LP Entities and the CMI Entities contemplated under the CMI/LPReorganization Agreement;
(d) the business of the National Post Company was always intended to operatefunctionally as a part of the LP Entities;
(e) the business and operations of the National Post Company are not alignedwith that of the CMI Entities, yet are intertwined with the operations of the LPEntities;
(f) the CMI Entities' secured creditors support the Canwest IntercompanyReorganization as a whole, but not in part, and both the Ad Hoc Committeeand the Administrative Agent have indicated that they will only consent to these transactions on the grounds that the NP Transition Agreement and theE F T I'- 25 -Shared Services Transition Agreement will be implementedcontemporaneously pursuant to the CMI/LP Reorganization Agreement; and(g)there is no ability to proceed with either the NP Transition Agreement or theShared Services Agreement alone.RECOMMENDATIONS
