Proposal

First Report of the Trustee

Court officer report · 1 September 2010

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statutory basisPart III, Division I of the Bankruptcy and Insolvency Act
appointeeErnst & Young Inc.
appointee roleproposal trustee
commencement date31 August 2010
secured creditorsnote: Related party (parent/affiliated supplier group). After closing of sale transactions, Palliser expected to have a shortfall of approximately $10.5 million, representing approximately 78% of known Claims of EQ3 World. Palliser is an Unaffected Creditor under the Proposal and will not participate in dividend distribution. · page: 2 · as of: First Report of the Receiver · amount: 17000000 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Palliser Furniture Upholstery Ltd. / Palliser Furniture Holdings Ltd. (Palliser) · currency: CAD · security: Secured claim arising from initial vendor note from roll-out of EQ3's assets from Palliser ($12.1 million, as adjusted), advances under lines of credit ($1.6 million), direct cash advances ($1.8 million), goods and services provided ($2.5 million), interest ($0.2 million), less repayments and other Palliser entity offsets ($1.1 million)
secured creditorsnote: Related party (parent company); to be acquired by EQ3 World Subco for a nominal amount as part of the Share Purchase and Share Subscription Agreement. Unaffected Creditor under the Proposal, not participating in dividend distribution. · page: 3 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: 7020058 Canada Ltd. (formerly EQ3 International Ltd.) · currency: CAD · security: Inter-corporate indebtedness in the approximate amount of $11,693,000 owed by EQ3 World to 7020058 Canada Ltd.
unsecured creditorsnote: Aggregate pool of Affected (unsecured/preferred) creditors including the taxation authority amounts listed separately; document does not itemise all individual creditors within this pool · page: 5 · basis: Proposal Trustee's Report states the Affected Creditor pool of approximately $3.9 million · amount: 3900000 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Affected Creditors (aggregate as reported) · currency: CAD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 25132 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Florida Department of Revenue · currency: USD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 15946 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Virginia Department of Taxation · currency: USD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 2899 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Internal Revenue Service · currency: USD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 8423 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Texas State Comptroller · currency: USD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool; table total stated as $841,514 across mixed CAD/USD currencies without conversion basis specified · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 10422 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Arizona Department of Revenue · currency: USD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 14357 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Manitoba Finance - Taxation Division · currency: CAD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 410724 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Ontario Ministry of Finance · currency: CAD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 226894 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: State Board of Equalization - State of California · currency: USD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 40674 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Receiver General · currency: CAD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 33300 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Ministre Du Revenu · currency: CAD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 27736 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: British Columbia Minister of Finance · currency: CAD
unsecured creditorsnote: Unremitted sales taxes; part of Affected Creditor pool · page: 6 · basis: Table of amounts owing to taxation authorities as reported in Proposal Trustee's Report · amount: 25007 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Nevada Department of Taxation · currency: USD
unsecured creditorsnote: Related party; goods provided on credit to EQ3 on an unsecured basis; aggregate balance owing approximately $2.4 million · page: 7 · basis: Related party transaction review by Proposal Trustee · amount: 2400000 · debtor: EQ3 World (6862420 Canada Ltd.) · creditor: Palliser Furniture group of companies (other entities) · currency: CAD
closing confirmedscope: substantially all of the EQ3 Group's assets · outcome: completed · effective: 2010-02-09 · purchaser: EQ3 Ltd. · date basis: stated · approval order date: 2010-02-09; scope: the inventory and moveable leasehold improvements of EQ3 World located at leased premises in Dallas, Texas and Las Vegas, Nevada and the sale of the inventory and all leasehold improvements of EQ3 World located at leased premises in Miami, Florida · outcome: completed · effective: 2010-02-17 · date basis: stated · approval order date: 2010-02-17
purchaserEQ3 Ltd.; Palliser Furniture Upholstery Ltd
recovery outcomeentries: basis: estimated · quote: After closing the sale transactions described above, Palliser is expected to have a shortfall of approximately $10.5 million, which represents approximately 78% of the known Claims of EQ3 World. · pct of: unstated · outcome: shortfall · pct low: 78 · pct high: 78 · class key: secured · stated by: receiver · class label: Palliser · creditor name: Palliser · interim final: unstated · claims qualifier: unstated · shortfall amount: 10500000; basis: plan · quote: Crown Claims as defined in section 60(1.1) of the BIA that are Proven Claims as of the Proposal Date, shall be paid in full; · pct of: proven_claims · outcome: paid_in_full · pct low: 100 · pct high: 100 · class key: preferred · stated by: proposal_trustee · class label: Crown Claims · interim final: unstated · claims qualifier: unstated; basis: plan · quote: Under the terms of the Proposal, should it be accepted, the Preferred Creditors are expected to receive complete payment of their claims, and the dividend to ordinary unsecured Creditors is anticipated to provide for the payment of between 7% and 100% of their claims. · pct of: unstated · outcome: paid_in_full · pct low: 100 · pct high: 100 · class key: preferred · stated by: proposal_trustee · class label: Preferred Creditors · interim final: unstated · claims qualifier: unstated; basis: plan · quote: The Proposal Trustee estimates that approximately $300,000 will be available to distribute to the Afe s i L os d ts si sut in an estimated range of recoveries to Affected Creditors (depending on the value of their claim) of 7% to 100%. · pct of: unstated · outcome: distribution · pct low: 7 · pct high: 100 · class key: unsecured · stated by: proposal_trustee · class label: Affected Creditors · interim final: unstated · claims qualifier: unstated · stated on: 2010-09-02 · table missing: