Current Engagements

Brute Manufacturing Limited

Brute Manufacturing Limited - CCAA Proceedings

On October 18th, 2007, Brute Manufacturing Limited ("Brute") sought relief under the Companies' Creditors Arrangement Act R.S.C. 1985, C-36 as amended ("CCAA"), with an order granted by the Ontario Superior Court of Justice (the " Initial Order"). Pursuant to the Initial Order, A. Farber & Partners Inc. was appointed Monitor.

The Initial Order provided a 30-day stay over all creditor claims, staying all amounts outstanding effective October 17th, 2007 (i.e. all amounts outstanding at October 17, 2007 and prior). The second order dated November 15, 2007 extended the stay period to February 29, 2008.

Brute has recently found itself constrained from a working capital perspective and facing a liquidity problem. The relief under the CCAA provides Brute with the stability and flexibility to allow it to attempt to affect a refinancing for the benefit of all stakeholders. Brute continues to be supported by its primary lenders, who have provided additional Debtor-in-Possession financing to allow operations to continue during the proceedings. Brute remains a fundamentally good business, with high quality products, profitable margins and great customers in strong market sectors. Management, in concert with its advisors and the Monitor, intend to work as expeditiously as possible to affect a refinancing and finalize a Plan of Arrangement under the CCAA, for the benefit of all stakeholders.

In the Monitor's Fourth Report dated April 7, 2008, a material adverse event has been reported. Both Brute and the Monitor have been in discussions with the DIP Lenders and a major customer to negotiate additional funding, to attempt to ensure no undue interruption to the business, while the refinancing recapitalization process is conducted. Those discussions are ongoing. Please review the Fourth Report below.

Effective June 27, 2008, the Court had approved an extension of the CCAA Stay for Brute to August 15, 2008 and the Court approved the Sales Process as set out in the motion materials and Monitor’s 5th Report.

The motion materials below dated June 27, 2008 and Monitor's Fifth Report set out the details of the proposed sales process, on which Brute is seeking the Courts approval. These materials confirm an Asset Purchase Agreement ("APA") has been negotiated with a party, which is in the form of a stalking horse bid. Please review the materials for an explanation of the sales process contemplated.

On July 15, 2008, the Court approved a sale transaction between Brute and 2175033 Ontario Inc. ("217"). The transaction closed effective July 21, 2008 with 217 operating from most of the former Brute facilities. On August 14, 2007, the Court extended the CCAA stay period to September 12, 2008. A further extension to the stay period to September 19, 2008 was endorsed September 12, 2008. On September 18, 2008, the Stay Period was extended to September 22, 2008, and on September 22, 2008 the Stay Period was further extended to September 26, 2008.

On September 25, 2008, the Stay Period was extended to October 22, 2008 and the CCAA proceedings were otherwise terminated, save and except for provisions relating to the Post-Filing Directors’ Charge for outstanding wages, salaries, employee and pension benefits and vacation pay payable on or after the date of the Initial Order. Therefore, funds from the sale of assets totaling $200,000 were directed to Brute for Brute’s payment of any of these liabilities.

No bankruptcy proceeding under the Bankruptcy and Insolvency Act has been initiated. Therefore, there is no mechanism for creditors to file proofs of claim and the Monitor is advised by Brute that there are no proceeds available in excess of the remaining debt owing to the secured lenders. Subject to certain holdbacks for remaining costs to complete activities, the sales proceeds were directed to the lenders and the Monitor has been discharged.

The Monitor can report that the proceeds of sale are significantly less than the secured lenders’ position and that, as a result, there will likely be no recovery for unsecured creditors.

Notice to Creditors dated September 26, 2008

The documents listed below are for any interested party regarding Brute's CCAA proceedings. They are in PDF format and can be viewed and/or downloaded.

Court Orders

Court Motion Material

As there were no competing bids to the Stalking Horse Asset Purchase Agreement, the company will be seeking the court’s approval of the sale of the assets of Brute on July 15. Motion materials follow.

The company sought and received the court’s approval of the sale of the assets of Brute on July 15. Motion materials follow.

Reports