Fourth Report to Court of December 22, 2017 KSV Kofman Inc ... · FOURTH REPORT OF KSV KOFMAN INC. AS LIQUIDATOR OF COVENTREE INC. ... to this Report. The Liquidation Plan is appended

Fourth Report to Court ofKSV Kofman Inc. as Liquidator ofCoventree Inc.

December 22, 2017

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Contents Page

1.0 Introduction..........................................................................................................11.1 Purposes of this Report............................................................................2

1.2 Restrictions ..............................................................................................3

2.0 Background .........................................................................................................3

3.0 Inspectors............................................................................................................4

4.0 Claims Process....................................................................................................4

5.0 Interim Distributions .............................................................................................5

6.0 Statutory Requirement Exemptions .....................................................................5

7.0 Activities and Events Since the Third Report .......................................................67.1 Reporting to Shareholders .......................................................................6

7.2 Appeals Against OSC Administrative Penalty Orders...............................6

7.3 Tax Resolutions .......................................................................................7

7.4 Tai Claims................................................................................................8

8.0 Estimated Funds Available to Shareholders.........................................................9

9.0 Matters Outstanding ............................................................................................99.1 Books and Records..................................................................................9

9.2 Resolved Unpaid Claims ........................................................................10

9.3 Tax Matters ............................................................................................10

10.0 Liquidator’s Activities .........................................................................................11

11.0 Inspectors’ Activities ..........................................................................................12

12.0 Fees of the Liquidator and its Counsel...............................................................12

13.0 Shareholders’ Final Distribution and Dissolution of Coventree...........................13

14.0 Recommendation...............................................................................................14

Appendices Tab

Winding-Up Order............................................................................................... A

Claims Procedure Order ..................................................................................... B

Claim Listing ...................................................................................................... C

Liquidator’s reports to Shareholders .................................................................. D

Update ............................................................................................................... E

List of Books and Records ...................................................................................F

Affidavit of fees sworn by Robert Harlang .......................................................... G

Affidavit of fees sworn by Robin Schwill ............................................................. H

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Court File No.: CV-12-9594-00CL

ONTARIOSUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

KSV KOFMAN INC. IN ITS CAPACITY AS LIQUIDATOR OFCOVENTREE INC.

APPLICANT

APPLICATION UNDER SECTION 207 OF THE BUSINESSCORPORATIONS ACT, R.S.O. 1990, C. B.16, AS AMENDED

IN THE MATTER OF THE WINDING-UP OFCOVENTREE INC.

FOURTH REPORT OF KSV KOFMAN INC.AS LIQUIDATOR OF COVENTREE INC.

DECEMBER 22, 2017

1.0 Introduction

1. On June 30, 2010, the shareholders of Coventree Inc. (“Coventree” or the “Company”)passed a special resolution approving, among other things: a) the voluntary winding-up of Coventree pursuant to Section 193 of the Ontario Business Corporations Act,R.S.O. 1990, c. B.16, as amended (the “OBCA”) at a time to be determined by thedirectors of Coventree; and b) a plan of liquidation and distribution substantially in theform attached to such special resolution.

2. On January 23, 2012, the Company’s board of directors adopted a finalized plan ofliquidation and distribution (the “Liquidation Plan”) substantially in the form approvedby the special resolution passed by Coventree’s shareholders (the “Shareholders”).Duff & Phelps Canada Restructuring Inc. (“D&P”) is the liquidator named in theLiquidation Plan.

3. All capitalized terms used in this report (the “Report”) that are not otherwise definedshall have the meanings ascribed to such terms in the Liquidation Plan.

4. By resolution of Coventree’s board of directors, February 15, 2012 was determined tobe the Effective Date of the Liquidation Plan.


5. Pursuant to Section 4.3(k) of the Liquidation Plan, the Liquidator made an applicationto the Ontario Superior Court of Justice (Commercial List) (“Court”) under Section 207of the OBCA for orders:

To have the winding-up of Coventree supervised by the Court (the “Winding-UpOrder”); and

Establishing a process for the identification, resolution and barring of claimsagainst the Company, its subsidiaries and their respective directors and officers,both past and present (the “Claims Procedure Order”).

6. On February 15, 2012, the Court made the Winding-Up Order and the ClaimsProcedure Order. Copies of these orders are provided in Appendices “A” and “B”,respectively, to this Report. The Liquidation Plan is appended to the Winding-UpOrder.

7. Effective June 30, 2015, KSV Kofman Inc. (“KSV”) acquired D&P. Pursuant to anorder of the Court made on July 10, 2015, the name of the firm handling D&P’smandates was changed from D&P to KSV, including acting as Liquidator in theseproceedings.

8. This Report is being filed by KSV in its capacity as the Liquidator.

1.1 Purposes of this Report

1. The purposes of this Report are to:

a) Provide background information about the Company;

b) Provide an update on the Company’s proceedings since the Liquidator’sprevious report to Court dated December 3, 2012 (the “Third Report”);

c) Summarize the matters that remain outstanding;

d) Recommend that the Court make an order (the “Final Distribution andDissolution Order”), among other things:

Authorizing and directing the Liquidator to make a final distribution (the“Final Distribution”) to the Shareholders of the funds remaining after: (i)payment of all Proven Claims, as defined hereafter, and the expenses ofthe Company and the Liquidator (the “Remaining Funds”); and (ii)obtaining clearance certificates from Canada Revenue Agency (“CRA”)with respect to Coventree’s corporate tax and payroll tax accounts (the“Clearance Certificates”);

Dispensing with the requirement under Section 201(2) of the OBCA forthe Liquidator to convene any further Shareholders’ meetings;

Approving the destruction of the Company’s books and records (the“Books and Records”) upon the Dissolution;


Discharging the Liquidator and the Inspectors (as defined in Section 3.0of this Report) upon the Liquidator filing a certificate with the Court thatthe Remaining Funds have been distributed to the Shareholders and allmatters relating to the administration of the Company's liquidation havebeen completed (the “Liquidator’s Certificate”);

Dissolving Coventree upon the filing of the Liquidator’s Certificate with theCourt;

Approving the Liquidator’s fees and disbursements and those of itscounsel, Davies Ward Phillips & Vineberg LLP (“Davies”), for the periodfrom November 1, 2012 to November 30, 2017, as set out in Sections12.0.1, and 12.0.2, respectively, as well as the Fee Accrual (as definedbelow); and

Approving the activities of the Liquidator and the Inspectors as describedin this Report.

1.2 Restrictions

1. In preparing this Report, the Liquidator has relied upon unaudited financial informationprepared by the Company’s representatives, the Company’s books and records anddiscussions with the Company’s representatives and legal counsel. The Liquidatorhas not performed an audit or other verification of such information. The Liquidatorexpresses no opinion or other form of assurance with respect to the accuracy of anyfinancial information presented in this Report, or relied upon by the Liquidator.

2.0 Background

1. The Company was incorporated in 1998 under the OBCA. Immediately prior to theEffective Date, the Company’s shares (the “Common Shares”) were publicly tradedunder the symbol “COF-H” on the NEX, a board of the TSX Venture Exchange. OnFebruary 14, 2012, the Common Shares ceased trading. At the Effective Date, therewere 15,157,138 outstanding Common Shares.

2. As of the Effective Date, the Company had two subsidiaries, Coventree Capital Inc.(“CCI”) and Coventree Holdings Inc. (“CHI”). As discussed further below, CCI andCHI have since been dissolved.

3. Coventree was a financial intermediary specializing in structuring and fundingsolutions for clients using special purpose trusts established by Coventree and fundedby asset-backed commercial paper (“ABCP”). The Company also provided financialand administrative services to conduits sponsored by third parties.


4. The Company’s business was materially impacted on August 13, 2007 when ABCPconduits sponsored by Coventree and other conduit sponsors that were not amongthe five largest Canadian banks, were unable to place sufficient new ABCP to fundthe repayment of previously issued ABCP that matured that day and were unable todraw on market disruption liquidity facilities (the “Market Disruption”). A restructuringplan pursuant to the Companies’ Creditors Arrangement Act for parties impacted bythe Market Disruption was ultimately concluded on January 21, 2009.

5. The Company has effectively been winding down its business since shortly after theMarket Disruption. Since May 2009, the Company’s primary source of revenue hasbeen limited to interest income earned on cash and cash equivalents held by theCompany.

6. More detailed background information on the Company, including its dealing with theOntario Securities Commission (“OSC”), is contained in the Liquidator’s first report toCourt dated February 7, 2012 previously filed in these proceedings. Copies of thematerials filed with the Court as well as the Company’s press releases are posted onthe Liquidator’s website at http://www.ksvadvisory.com/insolvency-cases/filter/0-9.

3.0 Inspectors

1. Pursuant to the Liquidation Plan, the Company’s directors were deemed to haveresigned on the Effective Date and each of Messrs. Brendan Calder, Geoffrey Cornishand Wesley Voorheis were appointed inspectors of the Company's liquidationpursuant to Section 194 of the OBCA. Messrs. Calder and Cornish subsequentlyresigned their positions and were replaced by Messrs. William Aziz and Joseph Wiley(together with Mr. Voorheis, the “Inspectors”) as provided for under Section 6.5 of theLiquidation Plan. None of the Inspectors are shareholders of the Company.

2. The primary role of the Inspectors has been to oversee litigation between Coventreeand third parties.

4.0 Claims Process

1. Pursuant to the Claims Procedure Order, creditors (“Claimants”) wishing to assert aclaim (a “Claim”) were required to deliver a written notice of such (a “Claim Notice”)on or before April 13, 2012 (the “Claim Bar Date”).

2. In accordance with the Claims Procedure Order, the Liquidator reviewed all ClaimNotices filed on or before the Claim Bar Date to determine, with the approval of theInspectors, whether to allow, partially allow, partially disallow or disallow eachparticular Claim and to deliver to each Claimant a written notice of such determination(a “Notice of Determination of Claim”) setting out the reasons for the determination assoon as reasonably practicable.


3. The Liquidator responded to all Claim Notices and issued Notices of Determination ofClaim wherever possible. A list of the Claim Notices and a summary of the status ofsuch Claims, including their estimated balances or applicable reserves established bythe Liquidator (the “Claim Listing”), is provided in Appendix “C”. No Claim Noticeshave been received subsequent to the Claim Bar Date. All Proven Claims, with theexception of a portion of the Claims of Mr. Cornish and Ms. Ani Hotoyan-Joly relatingto their respective termination pay, have been paid since the Claim Bar Date, with theapproval of the Inspectors.

4. All Claims have been resolved with the exception of certain marker Claims filed byCRA. The unresolved Claims filed by CRA consist of six (6) provisional claims relatedto sales, payroll and corporate taxes, in the amount of $1 each. These unresolvedClaims are subject to amendment upon the completion of one or more audits by CRA.

5. The Liquidator is of the view that no amounts are owing by Coventree in respect ofsales, payroll or corporate taxes. As discussed further below, CRA issued a clearancecertificate on July 10, 2013 for Coventree’s sales tax account and no sales taxes havebeen collected or input tax credits (“ITCs”) claimed since that time. Accordingly, theLiquidator will be requesting that CRA withdraw its provisional claim in this regard.Similarly, the Liquidator will be requesting that CRA either amend or withdraw its otherprovisional claims once Clearance Certificates have been issued.

5.0 Interim Distributions

1. Pursuant to a Court order made on April 30, 2012, the Liquidator was authorized tomake an interim distribution to the Shareholders comprised of a return of capital anda taxable dividend.

2. On May 4, 2012, the Liquidator distributed $44.5 million in cash and 2,661,449 sharesof Xceed Mortgage Corporation in-kind on a pro rata basis to the Shareholders (the“First Interim Distribution”), resulting in a total distribution of approximately $3.20 pershare.

3. Pursuant to a Court order dated December 14, 2012, the Liquidator was authorizedto make a second interim distribution to the Shareholders of approximately$8.8 million, or $0.58 per share (the “Second Interim Distribution”). On January 15,2013, the Liquidator distributed $8.8 million to the Shareholders, bringing theaggregate total interim distributions to $3.78 per share.

6.0 Statutory Requirement Exemptions

1. As set out in Section 2.0 of this Report, Coventree is an OBCA corporation, whoseshares had been publicly traded and whose business activities had been wound downin 2009.

2. As an OBCA corporation whose shares were publicly traded, Coventree had variousobligations under applicable corporate law statutes.


3. In the fall of 2012, Coventree obtained an order from the OSC specifying thatCoventree ceased to be a reporting issuer and offering corporation under the OBCA.

4. As a result of the OSC order referenced above, for the purpose of Canadian securitieslegislation, the Company no longer had any continuous disclosure obligations to itsshareholders, which includes the requirement to provide quarterly and annualfinancial statements.

5. On December 14, 2012, the Court issued an order that neither the Company nor theLiquidator was required to comply with Sections 94, 149 or 154 and part XII of theOBCA, including dispensing with the requirement to present financial statements andan auditor’s report thereon to the Shareholders. The basis for seeking this order wasto save unnecessary costs.

7.0 Activities and Events Since the Third Report

7.1 Reporting to Shareholders

1. As required under Section 201(2) of OBCA, the Liquidator has convened meetings ofShareholders annually and presented its report to Shareholders. The most recentmeeting of Shareholders was held on February 1, 2017. Aside from Mr. Tai or hisrepresentatives and Mr. Cornish, few, if any, Shareholders have attended thesemeetings.

2. Copies of the Liquidator’s reports to Shareholders presented at each of theShareholders’ meetings are provided in Appendices “D-1” to “D-5”. The reports toShareholders are also posted on the Liquidator’s website.

3. As discussed further below in Section 13.2, the Liquidator is recommending that theCourt make an order dispensing with the need for any further Shareholders’ meetings.

7.2 Appeals Against OSC Administrative Penalty Orders

1. Pursuant to an order dated November 8, 2011 (the “OSC Administrative PenaltyOrder”), an administrative penalty of $500,000 was issued by the OSC against eachof Messrs. Cornish and Tai, former officers and directors of Coventree. Messrs.Cornish and Tai filed indemnity claims with the Liquidator (the “Indemnity Claims”) forthese amounts in accordance with the Claims Procedure Order.

2. Messrs. Cornish and Tai appealed the OSC Administrative Penalty Order to theOntario Divisional Court, which denied the appeal (the “Divisional Court Decision”).

3. Messrs. Cornish and Tai sought leave to appeal the Divisional Court Decision to theOntario Court of Appeal. Leave to appeal was denied.

4. As required under the terms of the indemnities made by Coventree to each of Messrs.Cornish and Tai, Coventree paid the penalties under the OSC Administrative PenaltyOrder, together with certain of the legal fees associated with the appeal proceedings.


7.3 Tax Resolutions

7.3.1 Corporate Taxes – CCI and CHI

1. CRA filed a $1.1 million claim in respect of expenses deducted in 2007 by one of theCompany’s subsidiaries, CCI. At the time of receiving CRA’s claim, CCI’s recordsreflected a tax receivable of $1.1 million.

2. In order to avoid potential additional interest charges, the Company paid the$1.1 million claim to CRA. CCI also filed an amended and restated tax return for 2009,claiming the expenses that had previously been deducted in the 2007 tax return anda $2.2 million refund, inclusive of the aforementioned $1.1 million payment.

3. On April 2, 2014, CRA denied the deductions claimed in the amended and restated2009 tax return. After consulting with its tax advisors and with the approval of theInspectors, the Company decided not to appeal CRA’s decision.

4. In 2012, CRA issued reassessment notices to Coventree’s other subsidiary, CHI. Thereassessments disallowed certain deductions claimed in CHI’s 2007 and 2008 taxreturns. The reassessments claimed totalled approximately $564,000.

5. The Company paid CHI’s reassessments in the fall of 2012 and early 2013, in orderto avoid any further potential interest charges, while it considered whether to appealthe reassessments. After consulting with its tax advisors and with the approval of theInspectors, the Company decided not to appeal the reassessments.

6. On May 17, 2016, CCI and CHI were dissolved.

7.3.2 Sales Taxes

1. In September, 2012, CRA issued reassessments for goods and services taxes(“GST”) and harmonized sales taxes (“HST”) covering the reporting periods fromMarch 1, 2010 to December 31, 2011. The reassessments were in the approximateamount of $1.6 million. The basis for the reassessments was that the Company hadceased to carry on a commercial activity and was therefore not entitled to claim ITCs.

2. After consulting with its tax advisors and with the approval of the Inspectors,Coventree paid the reassessments and has made no claims for ITCs from 2012onward.

3. As a result of not making any further claims for ITCs, the Liquidator requested aclearance certificate from CRA for the Company’s GST/HST account and those ofCCI and CHI. The clearance certificates were issued by CRA on July 10, 2013 withan effective date of June 30, 2013.


7.4 Tai Claims

1. Mr. Tai, a former officer and director of Coventree, filed Claims in the liquidation,including for termination pay in the amount of $500,000 (the “Termination Pay Claim”)and for the cancellation of the 736,522 Common Shares that had been issued to himunder the Company’s share allocation plan (the “SAP Share Claim”).

2. Mr. Tai, directly or through corporations controlled by him, owned 2,813,897 CommonShares1.

3. The Liquidator admitted the Termination Pay Claim. In accordance with the terms ofthe termination payment arrangement between Mr. Tai and the Company, thepayment of the Termination Payment Claim was to be paid upon the completion ofthe Company’s liquidation.

4. The Liquidator disallowed the SAP Share Claim, which remained an unresolved claimpursuant to the Claims Process, as set out in the Liquidation Plan and the ClaimsProcedure Order.

5. As permitted in Section 4.3 (a) of the Liquidation Plan, the Inspectors resolved toadminister the SAP Share Claim and all litigation related thereto (the “Tai Litigation”)

6. The Inspectors also resolved to have the SAP Share Claim determined in the legalproceedings that had been commenced by Mr. Tai on October 14, 2011.

7. Over a period exceeding five (5) years since the Effective Date, the Tai Litigationproceeded through the normal litigation course, including documentary discoveries,motions arising from discovery examinations, unsuccessful settlement discussionsand mediation attempts.

8. During a Court mandated mediation held in May, 2017, the SAP Share Claim wasresolved, with the settlement being finalized on September 27, 2017, subject to certainescrow conditions (the “Escrow Conditions”). The Escrow Conditions were satisfiedon October 19, 2017.

9. The payment to Mr. Tai, directly or through corporations controlled by him,contemplated in the SAP Share Claim settlement was $4.5 million (the “Settlement”).The Settlement payment covered the SAP Share Claim, the Termination Pay Claimof $500,000 and the purchase for cancellation of the 2,813,897 Common Sharesowned by Mr. Tai or corporations controlled by him.

1 On the Effective Date, Mr. Tai owned an additional 112,500 Common Shares. With the Liquidator’s consent, theseshares were subsequently transferred to his former spouse.


10. The allocation of the Settlement amount , as approved by the Court, was as follows:

Termination Pay Claim $ 500,000Purchase of Common shares for cancellation 3,000,000Damages 1,000,000

Total Settlement Payment $ 4,500,000

11. As a result of the Settlement, the number of Common Shares outstanding has beenreduced to 12,343,241 from 15,157,138.

12. Pursuant to a letter dated October 30, 2017, the Liquidator issued an update to theShareholders regarding the Settlement. A copy of the Update is provided in Appendix“E”.

8.0 Estimated Funds Available to Shareholders

1. As a result of the Settlement, all Claims filed in accordance with the Claims ProcedureOrder, other than those filed by CRA, have been resolved. Distributions required tobe made in respect of Proven Claims have now been issued or, in the case of Mr.Cornish and Ms. Hotoyan-Joly, are to be issued.

2. An estimate of the remaining funds that may be available for Shareholders is providedbelow:

Funds on hand as at November 30, 2017 $ 5,555,000

Less - Unpaid Resolved Claims 340,000

Less - Estimated costs to be incurred to Dissolution 620,000

Estimated funds available for Shareholders $ 4,595,000

Estimated funds available per share $ 0.37

3. Together with the First Interim Dividend and the Second Interim Dividend, theestimated total distribution to Shareholders will be $4.15 per share.

9.0 Matters Outstanding

9.1 Books and Records

1. Coventree has retained various Books and Records, a schedule of which is attachedas Appendix “F”. Most of the Books and Records are kept at a third party storagefacility.

2. The Company has not had any active business operations for more than seven (7)years. Over that period of time, the Company has been involved with litigation andregulatory issues with respect to its activities relating prior to 2010.

3. Since the Effective Date, the Company has had two employees.


4. All litigation and regulatory matters have been fully resolved and all Claims have beeneither paid in full or arrangements have been made with the Liquidator to fully satisfysuch Claims.

5. Upon the Dissolution of the Company, there will be no legal requirement for any of theBooks and Records to be maintained. Section 236(1) of the OBCA provides that,where a company is wound up pursuant to a Court order, the Court may direct that itsdocuments and records may be disposed.

6. Accordingly, the Liquidator recommends that the Court make an order authorizing theCompany to destroy the Books and Records upon Dissolution.

9.2 Resolved Unpaid Claims

1. As of November 30, 2017, the resolved unpaid Claims consist of the termination payClaims of Mr. Cornish and Ms. Hotoyan-Joly. Arrangements have been made to paythese claims in the early part of January, 2018. The amounts owing to Mr. Cornishand Ms. Hotoyan-Joly total $340,000.

9.3 Tax Matters

9.3.1 Corporate Taxes

1. The tax return for the year ended September 30, 2017 was filed on December 19,2017. The tax return reflected no taxes owing and had non-capital losses carriedforward of $20.6 million.

2. The Company is making arrangements to file a final tax return upon all Claims andliabilities having been paid, which is expected to occur in the early part of 2018.

3. Upon the filing of the final tax return, the Liquidator will request a clearance certificatefrom CRA for the Company’s corporate tax account.

9.3.2 Payroll tax account

1. The Company has had two employees since 2012.

2. All payroll deductions have been remitted to the Receiver General for Canada by theapplicable due dates.

3. The employees shall be terminated on the payment of the balance of their respectivetermination pay Claims, net of the required tax deductions at source. The payment tothe employees is expected to occur in early January, 2018. The deductions at sourcewill be remitted to CRA shortly thereafter.

4. Upon the payment of the deductions at source to the Receiver General for Canada,the Liquidator will request a clearance certificate from CRA for the Company’s payrollaccount.


10.0Liquidator’s Activities

1. Since the date of the Third Report, the Liquidator’s activities, other than thosedescribed in this Report, have included:

Communicating with and attending meetings with the Inspectors;

Reviewing and approving the Company’s disbursements;

Reviewing correspondence and communications regarding the OSCadministrative penalties assessed against the Company and Messrs. Cornishand Tai;

Reviewing and providing input regarding the reassessments of the Company’scorporate and sales tax filings;

Responding to inquiries from Shareholders related to the interim distribution andupdates related to these proceedings;

Obtaining updates on the SAP Share Claim and the Tai Litigation;

Obtaining the clearance certificate from CRA regarding the Company’s salestax account;

Reviewing the Company’s unaudited quarterly financial statements and year-end financial statements and commenting thereon when required;

Preparing reports to Shareholders annually and the update to Shareholders onOctober 31, 2017;

Convening annual Shareholders’ meeting from 2013 through 2017;

Facilitating the Second Interim Distribution;

Dealing with the Company’s share transfer agent;

Reviewing the Company’s insurance requirements;

Considering approaches to realize or dispose of the Company’s remainingassets;

Corresponding and communicating with Davies on all aspects of this mandate;

Reviewing the Company’s bank balances;

Reviewing the Company’s tax returns for the years 2012 through 2017; and

Drafting this Report.


2. These activities on the part of the Liquidator have, in each case, been reasonablyundertaken in accordance with the Winding-Up Order and the other Orders issued bythe Court in these proceedings.

11.0Inspectors’ Activities

1. As set out above, the primary activity of the Inspectors has been to deal with allmatters related to the Tai Litigation. In addition, the Inspectors’ activities haveincluded:

Overseeing all aspects of the liquidation;

Attending the annual Shareholders’ meetings;

Corresponding with the Liquidator and representatives of the Companyregarding the Claims Process;

Overseeing and handling the claim and recovery of approximately $5 millionunder the Company’s Directors’ and Officers’ insurance policy;

Reviewing the Company’s annual financial statements;

Corresponding with the Liquidator and the Company regarding tax matters; and

Responding to inquiries from Shareholders concerning the liquidation process.

2. These actions were reasonably undertaken by the Inspectors as required by and infurtherance of the Orders issued by the Court in these proceedings.

12.0Fees of the Liquidator and its Counsel

1. Attached as Appendix “G” is an affidavit of fees sworn by Robert Harlang, arepresentative of the Liquidator. The Liquidator’s fee affidavit includes copies of theLiquidator’s statements of account from November 1, 2012 to November 30, 2017(the “Period”). The Liquidator’s fees in the Period totalled $260,481, excludingdisbursements and taxes.

2. Attached as Appendix “H” is an affidavit of fees sworn by Robin Schwill, arepresentative of Davies. Davies’ fee affidavit includes statements of account for thePeriod. Davies’ fees in the Period totalled $119,454, excluding disbursements andtaxes.

3. In accordance with Section 4.7 of the Liquidation Plan, the Inspectors have approvedthe fees of the Liquidator for the Period.


4. The Liquidator considers the fees and disbursements to be fair and reasonable underthe circumstances and reflective of appropriate actions and tasks related to theliquidation. Accordingly, the Liquidator respectfully requests that this Court approveits fees and the fees and disbursements of Davies, as detailed in Appendices “G”, and“H”, respectively.

5. The matters remaining to be completed during the period subsequent to December 1,2017 until the Dissolution of Coventree (the “Completion Period”) include:

Satisfying the Company’s remaining liabilities, including office andadministrative costs, inspector fees and professional fees;

Corresponding with the Company’s tax advisors regarding the 2017 tax returnand the final tax return;

Satisfying the resolved unpaid Claims;

Attending at Court with respect to this motion;

Dealing with CRA in connection with obtaining the Clearance Certificates; and

Dealing with all matters related to the Final Distribution.

6. The amount of time required to address and resolve each of the matters describedabove is uncertain, in part because it will depend on the depth of CRA’s review of thetax and payroll accounts. Accordingly, the Liquidator and Davies prepared a feeestimate to account for known contingencies. On that basis, the upper range of theircombined estimated fees for the Completion Period, excluding disbursements andtaxes, is $300,000 (“Fee Accrual”).

7. The Liquidator respectfully requests that Court approve the Fee Accrual, which is alsosubject to approval of the Inspectors. In order to avoid the costs of a further motion,the Liquidator also requests that the Court authorize the Inspectors to approve anyfees above the Fee Accrual.

13.0Shareholders’ Final Distribution and Dissolution of Coventree

1. Upon the receipt of the Clearance Certificates, the Liquidator will pay the RemainingFunds, which are estimated to be approximately $4.5 million to the Company’s transferagent, TSX Trust Company, for distribution to the Shareholders.

2. As all litigation issues have been settled and there will be no information available toShareholders other than what is contained in this Report, there will no longer be anyreason for the Liquidator to conduct annual Shareholder meetings, as it has inaccordance with Section 215(1) of the OBCA. Accordingly, the Liquidatorrecommends and requests that the Court make an order dispensing with therequirement for any future Shareholders’ meetings.


3. After payment of the Final Distribution, the Liquidator will file the Liquidator’sCertificate with the Court. The Liquidator will also file the Liquidator’s Certificate,together with a certified copy of the Final Distribution and Dissolution Order, with theOBCA Director and publish a notice of the Dissolution in the Ontario Gazette incompliance with Section 218 of the OBCA.

14.0Recommendation

1. Based on the foregoing, the Liquidator respectfully recommends that this Court makean order granting the relief detailed in Section 1.1 (d) of this Report.

* * *

All of which is respectfully submitted,

KSV KOFMAN INC.IN ITS CAPACITY AS LIQUIDATOR OF COVENTREE INC.AND NOT IN ITS PERSONAL CAPACITY

Appendix “A”

Appendix “B”

Appendix “C”

KSV Kofman Inc.

Liquidator of Coventree Inc.

Status of Filed Claims

As at December 1, 2017

Creditor Debtor Claim Nature of Claim Status(1)

Remaining Claim

or Reserve by

Liquidator

Ani Hotoyan-Joly Coventree Inc. $175,000 plus other benefits

and indemnity

Balances pursuant to employment

agreement

Allowed - partial payment

made, balance to be paid in

January 2018

$90,000

Canada Revenue Agency Coventree

Capital Inc.

$1,098,054 Income tax - 2008 Allowed - paid $0


Capital Inc.

$1 Provisional claim for GST/HST -

subject to auditCompany dissolved

(2) $0


Holdings Inc.



(2) $0


Holdings Inc.

$1 Provisional claim for income tax -


(2) $0

Canada Revenue Agency Coventree Inc. $1 Provisional claim for source

deductions - subject to audit

Clearance certificate to be

requested(2)

$0

Canada Revenue Agency Coventree Inc. $1 Provisional claim for GST/HST -

subject to audit

Clearance certificate issued $0

Canada Revenue Agency Coventree Inc. $1 Provisional claim for income tax -

subject to audit

Clearance certificate to be

requested(2)

$0

CNW Group Ltd. Coventree Inc. $127 Filing materials on SEDAR Allowed - paid $0

Dean Tai Coventree Inc. $500,000 Balance pursuant to employment

agreement

Allowed - paid as part of

settlement agreement

$0

Dean Tai Coventree Inc. $500,000(3) Indemnification in connection with

OSC penalty award

Allowed - paid $0

Dean Tai Coventree Inc. $890,180 Estimate of legal fees in connection

with OSC appeal

Allowed - paid $0

Dean Tai Coventree Inc. Indemnity Indemnification in connection with

Notice of Action by Coventree

Disallowed - claim by

Coventree withdrawn

$0

Dean Tai Coventree Inc. $5,000,000 Statement of Claim against Coventree Allowed - partially paid as

part of settlement agreement

$0

Dean Tai Coventree Inc. $110,556 plus interest and costs Costs in connection with Coventree's

sale of security pledged under

promissory note

Disallowed $0

KSV Kofman Inc.



As at December 1, 2017

Creditor Debtor Claim Nature of Claim Status(1)

Remaining Claim

or Reserve by

Liquidator

Equity Financial Trust

Company

Coventree Inc. Indemnity Indemnification by Coventree in

connection with litigation commenced

by Mr. Tai

Allowed - paid $0

Geoff Cornish Coventree Inc. $500,000 plus benefits and

indemnity


agreement

Allowed - partial payment

made, balance to be paid in

January 2018

$250,000

Geoff Cornish Coventree Inc. $725,000 Estimate of legal fees in connection

with OSC appeal

Allowed - paid $0

Geoff Cornish Coventree Inc. $500,000(3) Indemnification in connection with

OSC penalty award

Allowed - paid $0

Navigators Management

Company

Coventree Inc. $100,000 Estimated cost award if successful in

litigation with Coventree

Disallowed $0

Ontario Securities

Commission

Dean Tai and

Geoff Cornish

$500,000 plus interest and costs,

if applicable, against each of

them

Penalty against Cornish and Tai

pursuant to OSC order

Duplicate of claims made by

Messrs. Cornish and Tai

$0

Ontario Securities

Commission

Coventree Inc. $500,000 plus interest and costs,

if applicable

Penalty against Coventree pursuant to

OSC order

Disallowed $0

Stockwoods LLP Coventree Inc. Up to $50,000 Estimated cost award if successful in


Partially allowed $13,000 -

paid

$0

$340,000

Notes:

1. Refer to applicable letter or notice for complete details.

2. Coventree Inc. is not aware of any balances owing with respect to these accounts. Consequently, there is no basis to establish a reserve.

3. These are duplicates of the claim made by the OSC against Messrs. Cornish and Tai.

Appendix “D-1”

First Report to the Shareholders ofCoventree Inc. by Duff & PhelpsCanada Restructuring Inc. asLiquidator of Coventree Inc.

February 6, 2013

Duff & Phelps Canada Restructuring Inc. Page i of i

Contents Page

1.0 Executive Summary.............................................................................................1

1.1 Distributions to Shareholders ...................................................................1

1.2 Creditor Claims Process...........................................................................2

1.3 Recoveries ...............................................................................................2

1.4 Funds on Hand ........................................................................................2

1.5 Outstanding Matters.................................................................................2

2.0 Background .........................................................................................................2

2.1 Definitions ................................................................................................3

2.2 Restrictions ..............................................................................................3

3.0 Inspectors............................................................................................................3

4.0 Claims Process....................................................................................................4

4.1 Unresolved Claims ...................................................................................4

5.0 Interim Distributions .............................................................................................6

6.0 Statement of Receipts and Disbursements ..........................................................6

7.0 Remaining Assets and Liabilities .........................................................................7

8.0 Other Matters.......................................................................................................7

8.1 Reporting Exemption................................................................................7

8.2 OBCA Exemption .....................................................................................8

9.0 Next Steps...........................................................................................................9

Appendices Tab

Claim Listing ....................................................................................................... A

Statement of Receipts and Disbursements ......................................................... B

Duff & Phelps Page 1 of 9


FIRST REPORT TO THE SHAREHOLDERS OF COVENTREE INC.BY DUFF & PHELPS CANADA RESTRUCTURING INC.

AS LIQUIDATOR OF COVENTREE INC.

FEBRUARY 6, 2013

1.0 Executive Summary

The voluntary winding-up of Coventree Inc. (“Coventree” or the “Company”)commenced on February 15, 2012 (“Effective Date”), at which time Duff & PhelpsCanada Restructuring Inc. (“D&P”) was appointed liquidator (“Liquidator”) ofCoventree. The following summarizes the Liquidator’s acts and dealings and themanner in which the winding-up has been conducted to date.

1.1 Distributions to Shareholders

To date, the Liquidator has made two distributions to shareholders, both approved bythe Ontario Superior Court of Justice – Commercial List (“Court”), as follows:

1.1.1 First Interim Distribution

The first interim distribution was made on May 4, 2012, totalling approximately $3.20per share, consisting of:

Return of capital – cash $ .46Taxable dividend – cash 2.48Taxable dividend – in-kind shares of Xceed Mortgage Corporation .26

$ 3.20

1.1.2 Second Interim Distribution

The second interim distribution was a taxable cash dividend made on January 15,2013, of $0.58 per share.


1.2 Creditor Claims Process

A creditor claims process was established requiring a creditor to assert its claim byApril 13, 2012. Pursuant to the claims process, various claims were submitted to theLiquidator. As of the date of this report, there are three groups of claims that remainunresolved.

1.3 Recoveries

Since February 15, 2012, the major recoveries have been collection of the loanreceivable (approximately $1.6 million) and of the claim against the Company’sDirectors’ and Officers’ insurer ($5.3 million).

1.4 Funds on Hand

As at January 15, 2013, the Company had approximately $13.7 million in cash orcash equivalents. These funds are being reserved to cover claims that have beenasserted, potential tax liabilities and anticipated future costs.

1.5 Outstanding Matters

The matters that currently remain outstanding are:

The unresolved claims in the amount of $7.9 million; and

Completion of tax returns and resolution of tax claims.

2.0 Background

On June 30, 2010, Coventree’s shareholders passed a special resolution approving,among other things: a) the voluntary winding-up of Coventree pursuant to Section 193of the Ontario Business Corporations Act (“OBCA”) at a time to be determined by thedirectors of Coventree; and b) a plan of liquidation and distribution substantially in theform attached to such special resolution.

On January 23, 2012, the Company’s board of directors adopted a finalized plan ofliquidation and distribution (the “Liquidation Plan”) substantially in the form approvedby the special resolution passed by the shareholders. D&P is the liquidator named inthe Liquidation Plan (“Liquidator”).

By resolution of Coventree’s board of directors, February 15, 2012, was determined tobe the Effective Date of the Liquidation Plan.


Pursuant to Section 4.3(k) of the Liquidation Plan, the Liquidator made an applicationto the Court under Section 207 of the OBCA for orders:

To have the winding-up of Coventree supervised by the Court (the “Winding-Up Order”); and

Establishing a Claims Process (the “Claims Procedure Order”).

On February 15, 2012, the Court made the Winding-Up Order and the ClaimsProcedure Order.

The Company’s shares (the “Common Shares”), of which 15,157,138 are outstanding,had been listed on the NEX. On February 14, 2012, the Common Shares ceasedtrading as the NEX would not consent to their continued trading after the EffectiveDate.

This is the first report of the Liquidator pursuant to Section 201(2) of the OBCA.

More detailed background information on the Company, including its dealing with theOntario Securities Commission (“OSC”), is contained in the Liquidator’s reports toCourt filed in the winding-up proceedings. Copies of the materials filed with the Courtas well as the Company’s press releases are posted on the Liquidator’s website atwww.duffandphelps.com/restructuringcases.

2.1 Definitions

All capitalized terms used in this report (“Report”) that are not otherwise defined shallhave the meanings ascribed to such terms in the Liquidation Plan.

2.2 Restrictions

In preparing this Report, the Liquidator has relied upon unaudited financial informationprepared by the Company’s representatives, the Company’s books and records anddiscussions with the Company’s representatives and legal counsel. The Liquidatorhas not performed an audit of such information. The Liquidator expresses no opinionor other form of assurance with respect to the accuracy of any financial informationrelied upon by the Liquidator.

3.0 Inspectors

Pursuant to the Liquidation Plan, the Company’s directors were deemed to haveresigned on the Effective Date and Messrs. Brendan Calder, Geoffrey Cornish andWesley Voorheis were appointed inspectors of the Company's liquidation pursuant toSection 194 of the OBCA. Messrs. Calder and Cornish subsequently resigned theirpositions and were replaced by Messrs. William Aziz and Joseph Wiley (together withMr. Voorheis, the “Inspectors”) as provided for under Section 6.5 of the LiquidationPlan. None of the Inspectors are shareholders of the Company.


4.0 Claims Process

Pursuant to the Claims Procedure Order, creditors (“Claimants”) wishing to assert aclaim (“Claim”) were required to deliver a written notice (“Claim Notice”) of such on orbefore April 13, 2012 (the “Claim Bar Date”).

In accordance with the Claims Procedure Order, the Liquidator reviewed all ClaimNotices filed on or before the Claim Bar Date, to determine, with the approval of theInspectors, whether to allow, partially allow, partially disallow or disallow eachparticular Claim and to deliver to each Claimant a written notice of such determination(“Notice of Determination of Claim”) setting out the reasons for the determination assoon as reasonably practicable.

The Liquidator responded to all Claim Notices and issued Notices of Determination ofClaim wherever possible. A list of the Claim Notices and a summary of the status ofsuch Claims, including their balances (estimated for certain Claims) or the applicablereserves established by the Liquidator (“Claim Listing”), is provided in Appendix “A”.No Claim Notices have been received subsequent to the Claim Bar Date. CertainClaims, or portions thereof, have been paid since the Claim Bar Date, with theapproval of the Inspectors.

4.1 Unresolved Claims

As referenced in the Claim Listing, there are three categories of Claims to beresolved, as summarized below:

1. The claims of the OSC against Messrs. Cornish and Dean Tai, both formerChief Executive Officers and directors of the Company, and the correspondingindemnity claims of Messrs. Cornish and Tai against the Company. Theclaims arise out of the OSC’s decision released on September 28, 2011 andthe OSC’s sanction order released on November 8, 2011, requiring, amongother things, that each of Messrs. Cornish and Tai pay an administrativepenalty of $500,000 to the OSC (“OSC Penalty”). Messrs. Cornish and Taiappealed the OSC decision (“Appeal”). Pursuant to certain agreements,Messrs. Cornish and Tai are being indemnified by Coventree for their costsassociated with the appeal, subject to certain conditions, and, to the extent theappeals are unsuccessful, for the penalties payable by them arising from theOSC’s decision.

The Appeal was heard by the Ontario Divisional Court on October 23 and 24,2012; a decision is pending. More information with respect to these claimswas provided in Section 2.3 of the Liquidator’s First Report to Court datedFebruary 7, 2012 (“First Report”).


2. A claim in the amount of $5 million by Mr. Tai and certain corporationsaffiliated with him related to Court proceedings against Coventree andCoventree’s transfer agent, Equity Financial Trust Company, commenced onOctober 14, 2011. The claim relates to the Company’s decision in April, 2009,to cancel 736,522 Common Shares (“SAP Shares”) that were issued to Mr.Tai under Coventree’s 2005 Share Allocation Plan. More information withrespect to this claim was provided in Section 6.1 of the First Report andSection 6.1 of the Liquidator’s Second Report to Court dated April 20, 2012(“Second Report”).

Pursuant to Section 4.3(a) of the Liquidation Plan, the Inspectors resolved tooversee and manage the administration of Mr. Tai’s claim in connection withthe SAP Shares and all related litigation. On February 27, 2012, theInspectors also resolved to have Mr. Tai's claim in connection with the SAPShares determined in the context of the proceedings already commenced byMr. Tai against the Company, as permitted by the Claims Procedure Order.

The Company is awaiting Mr. Tai’s reply to the Company’s statement ofdefence, which would close the pleadings stage of the litigation. TheCompany and Mr. Tai will then attend to discoveries.

3. Claims of Canada Revenue Agency (“CRA”) against the Company and two ofits subsidiaries, being Coventree Capital Inc. (“CCI”) and Coventree HoldingsInc. (“CHI”), related to sales, payroll and income taxes. CRA filed sixprovisional claims of $1 each, subject to amendment upon completion of oneor more audits. CRA also filed a claim of approximately $1.1 million againstCCI (“CCI Claim”) for expenses deducted by CCI in fiscal 2007 and disallowedby CRA.

With respect to the CCI Claim, the Company paid $1.1 million to CRA in orderto avoid further interest accruing on it. Coventree reviewed the nature of thedeductions and, reflecting what it believes to be the appropriate period to takethe deductions, subsequently amended and re-filed CCI’s income tax returnfor fiscal 2009 with such deductions (“CCI Return”). The Company is awaitingCRA’s response to the CCI Return.

With respect to CHI, CRA has not accepted certain deductions in CHI’s 2007and 2008 tax returns. CRA issued reassessment notices to CHI datedDecember 12, 2012. The reassessments seek payment from CHI ofapproximately $564,000 in taxes and interest. In order to stop interest fromaccruing, and prior to receipt of the reassessment notices, the Company paid$250,000 to CRA in August, 2012 and approximately $67,000 to CRA inDecember, 2012. Following receipt of the reassessment notices, theCompany paid the balance ($247,000) in late January, 2013. The Company isconsidering with its legal and tax advisors whether to appeal thereassessments.


On September 27, 2012, the Company also received a reassessment fromCRA regarding the Company’s GST and HST accounts for the period March 1,2010 to December 31, 2011 in the amount of $1.6 million. The basis for thereassessment was that Coventree did not conduct commercial activities andtherefore was not entitled to claim input tax credits in that period. Following areview with its legal and tax advisors, the Company paid the reassessment.

5.0 Interim Distributions

Pursuant to a Court order made on April 30, 2012, the Liquidator was authorized to makean interim distribution to Coventree’s shareholders comprised of a return of capital and ataxable dividend. On May 4, 2012, the Liquidator distributed $44.5 million in cash and2,661,449 shares of Xceed Mortgage Corporation in-kind on a pro rata basis to theCompany’s shareholders, resulting in a total distribution of approximately $3.20 pershare.

Pursuant to a Court order made on December 17, 2012, the Liquidator was authorized tomake a second interim distribution to Coventree’s shareholders as a taxable dividend.On January 15, 2013, the Liquidator distributed approximately $8.8 million in cash on apro rata basis to the Company’s shareholders, resulting in a total distribution of $0.58 pershare (“Second Distribution”).

Withholding taxes were applied to the taxable dividend to non-residents pursuant to theprovisions of the Income Tax Act.

Coventree will be issuing tax forms to its shareholders in connection with thedistributions.

6.0 Statement of Receipts and Disbursements

Upon the Effective Date, Coventree had cash and cash equivalents totallingapproximately $65.6 million. A schedule summarizing the Company’s receipts anddisbursements from the Effective Date to January 15, 2013 (“R&D”), the date of theSecond Distribution, is provided in Appendix “B”. The R&D reflects, among other things,the following:

A receipt of $5.3 million, inclusive of interest and costs, from Navigators Pro,on behalf of Lloyds Syndicate 1221 (Millenium Syndicate) (collectively,“Navigators”), the Company’s former directors’ and officers’ insurer. Thepayment was in respect of the Company’s claim under its directors’ andofficers’ insurance policy with Navigators, which was subject to litigation;

A receipt of $1.6 million representing the repayment of the balance of a loanmade in December, 2004, to a holding company owned by Mr. Cornish(described further in Section 5.3 of the Second Report);


Interest of approximately $480,000;

Cash distributions of $53.3 million to the Company’s shareholders;

Payment of operating costs totaling approximately $412,000; and

Payment of professional and Inspector fees totaling approximately$2.45 million.

7.0 Remaining Assets and Liabilities

As at January 15, 2013, the Company had cash and cash equivalents on hand totalingapproximately $13.7 million. In addition, there is a possibility of additional recoveries ofup to $2.7 million in the aggregate from the Company’s re-filing of the CCI Return anddeductions CHI is pursuing related to fiscal 2007 and 2008.

The following summarizes the reserves applicable to that balance:

($million)

Cash on hand 13.7

Less:Total Claims 7.9Provision for professional fees, expenses and cost awards 1.6Provision for operating and other costs .7Contingency 3.5

13.7Net amount currently available for distribution -

Depending on the resolution of the Unresolved Claims, the Liquidator and the Inspectorswill consider making further interim distributions.

8.0 Other Matters

The Company and the Liquidator have taken steps to reduce future costs, as set outbelow.

8.1 Reporting Exemption

Coventree applied to the OSC, as principal regulator on behalf of the securitiesregulatory authorities in each of the provinces in Canada, to cease being a reportingissuer (“Application”). The purpose of seeking an exemption from reportingrequirements of a public company was to, among other things, reduce costs as the


Company winds up its affairs. On October 10, 2012, Coventree also made anapplication to the OSC to cease being an “offering corporation” under the OBCA.

On November 13, 2012, the Application was granted pursuant to an order made bythe OSC on its own behalf and on behalf of other provincial securities regulators. Inaddition, also on November 13, 2012, the OSC issued an order deeming Coventree tohave ceased being an “offering corporation” under the OBCA (together, the“Exemptions”).

As a result of the Exemptions, Coventree has discontinued its website; however, theLiquidator will post all reports, press releases and notices on its website. One of theconsequences of the Exemptions is that, for the purpose of Canadian securitieslegislation, the Company no longer has any continuous disclosure obligations to itsshareholders, which includes the requirement to provide quarterly and annualfinancial statements.

Section 4.2(k) of the Liquidation Plan requires the Liquidator to maintain thecontinuous disclosure requirements applicable to Coventree under all applicablesecurities laws. In this regard, financial statements and management discussions &analyses for the quarters ended December 31, 2011, March 31, 2012 and June 30,2012, were filed, with the Liquidator approving and signing same given that Coventreehad no directors as of February 15, 2012. Such filings have now been discontinued.

8.2 OBCA Exemption

Absent exemptions, the OBCA requires the directors of a corporation subject to theOBCA to, among other things, call meetings of its shareholders and provide copies ofits financial statements, including an auditor’s report thereon, at such meetings. PartXII of the OBCA requires the shareholders of a corporation to, among other things,appoint an auditor to report on a corporation’s financial statements.

On December 14, 2012, the Liquidator applied to the Court for an Order confirmingthat neither the Company nor the Liquidator is required to comply, or otherwise effectcompliance, with Sections 94 and 154 of the OBCA and Part XII of the OBCA. TheLiquidator’s rationale for the requested relief was described in Section 7.1 of its ThirdReport to Court dated December 3, 2012 and included, among other things,eliminating the cost to engage the Company’s auditor to review Coventree’s financialstatements and issue a report thereon.

The Court granted the relief sought by the Liquidator.


9.0 Next Steps

Completion of the Company’s winding-up and the making of a final distribution toshareholders is subject to the following:

A final determination or resolution of the Unresolved Claims;

The filing of all tax returns;

Receipt of clearance certificates regarding the Company’s tax accounts; and

Court approval of a final distribution, the Liquidator’s discharge and theultimate dissolution of the Company.

* * *


DUFF & PHELPS CANADA RESTRUCTURING INC.IN ITS CAPACITY AS LIQUIDATOR OF COVENTREE INC.AND NOT IN ITS PERSONAL CAPACITY

Appendix “A”

Duff & Phelps Canada Restructuring Inc.



As at February 1, 2013

Creditor Debtor Claim Nature of Claim Letter

Notice of

Determination Status(1)

Remaining Claim

or Reserve by

Liquidator(2)

Ani Hotoyan-Joly Coventree Inc. $175,000 plus other benefits

and indemnity


agreement

√ Allowed - to be paid on

termination

$175,000


Capital Inc.

$1,098,054 Income tax - 2008 √ Unable to determine - paid

without prejudice(3)

$0


Capital Inc.


subject to audit

√ Unable to determine(4) $0


Holdings Inc.


subject to audit



Holdings Inc.

$1 Provisional claim for income tax -

subject to audit

√ Unable to determine $240,000

Canada Revenue Agency Coventree Inc. $1 Provisional claim for source

deductions - subject to audit


Canada Revenue Agency Coventree Inc. $1 Provisional claim for GST/HST -

subject to audit


Canada Revenue Agency Coventree Inc. $1 Provisional claim for income tax -

subject to audit


CNW Group Ltd. Coventree Inc. $127 Filing materials on SEDAR √ Allowed - paid $0

Dean Tai Coventree Inc. $500,000 Balance pursuant to employment

agreement


completion of winding-up

$500,000

Dean Tai Coventree Inc. $500,000(5) Indemnification in connection with

OSC penalty award - subject to appeal

√ Allowed - to be paid if

appeal dismissed

$500,000

Dean Tai Coventree Inc. $890,180 Estimate of legal fees in connection

with OSC appeal

√ Allowed $226,000

Dean Tai Coventree Inc. Indemnity Indemnification in connection with

Notice of Action by Coventree

√ Disallowed - claim by

Coventree withdrawn

$0

Dean Tai Coventree Inc. $5,000,000 Statement of Claim against Coventree √ Being defended by

Coventree in proceedings

commenced by Mr. Tai

$5,000,000

Dean Tai Coventree Inc. $110,556 plus interest and costs Costs in connection with Coventree's

sale of security pledged under

promissory note

√ Disallowed $0

Equity Financial Trust

Company

Coventree Inc. Indemnity Indemnification by Coventree in

connection with litigation commenced

by Mr. Tai

√ Allowed - being paid in

ordinary course

$0

Duff & Phelps Canada Restructuring Inc.



As at February 1, 2013

Creditor Debtor Claim Nature of Claim Letter

Notice of

Determination Status(1)

Remaining Claim

or Reserve by

Liquidator(2)

Geoff Cornish Coventree Inc. $500,000 plus benefits and

indemnity


agreement


completion of winding-up

$500,000

Geoff Cornish Coventree Inc. $725,000 Estimate of legal fees in connection

with OSC appeal

√ Allowed - being paid in

ordinary course

$226,000

Geoff Cornish Coventree Inc. $500,000(5) Indemnification in connection with

OSC penalty award - subject to appeal

√ Allowed - to be paid if

appeal dismissed

$500,000

Navigators Management

Company

Coventree Inc. $100,000 Estimated cost award if successful in


√ Disallowed $0

Ontario Securities

Commission

Dean Tai and

Geoff Cornish

$500,000 plus interest and costs,

if applicable, against each of

them

Penalty against Cornish and Tai

pursuant to OSC order - subject to

appeal

√ Unable to determine $0

Ontario Securities

Commission

Coventree Inc. $500,000 plus interest and costs,

if applicable

Penalty against Coventree pursuant to

OSC order - subject to appeal

√ Disallowed $0

Stockwoods LLP Coventree Inc. Up to $50,000 Estimated cost award if successful in


√ Partially allowed $13,000 -

paid

$0

$7,867,000

Notes:

1. Refer to applicable letter or notice for complete details.

2. Estimated for certain claims.

3. Coventree Inc. paid this claim in full - refer to Section 4.1 of the Report for more details.

4. Coventree Inc. is not aware of any balances owing with respect to these accounts. Consequently, there is no basis to establish a reserve. A reserve of $3.5 million for contingencies is in place.

5. These are duplicates of the claim made by the OSC against Messrs. Cornish and Tai.

Appendix “B”

Coventree Inc.

Statement of Receipts & Disbursements

For the Period February 15, 2012 to January 15, 2013

($; unaudited)

Opening Bank Balance - February 15, 2012 65,592,182

Receipts:

D&O insurance recovery - Navigators (inclusive of interest and costs) 5,322,846

Promissory note repayment by Geoff Cornish's holding company (including

interest) 1,589,023

Interest income 483,649

HST refunds 299,986

Income tax recovery 165,225

Miscellaneous receipts 12,658

Total Receipts 7,873,388

Disbursements:

Shareholder distributions and return of capital 53,291,260

Income taxes and HST payments 3,001,630

Legal fees(1)

1,703,698

Operating expenses 412,783

Inspector fees 381,966

Liquidator fees 368,378

Compensation expenses 336,918

Consulting expenses 233,328

Total Disbursements 59,729,962

Bank Balance - January 15, 2013 13,735,608

(1) Legal fees includes:

Bennett Jones LLP (Tai litigation) 263,460

Davies Ward Phillips & Vineberg LLP (counsel to Coventree and Liquidator) 364,908

Adair Morse LLP (insurance litigation) 102,977

Thornton Grout LLP (Tai litigation) 75,857

Goodmans LLP/Lenczner Slaght LLP (Cornish OSC appeal) 601,060

Stockwoods LLP (Tai OSC appeal) 236,906

Other legal fees 58,530

1,703,698

Appendix “D-2”

Second Report to theShareholders of Coventree Inc. byDuff & Phelps CanadaRestructuring Inc. as Liquidator ofCoventree Inc.

January 17, 2014


Contents Page


1.1 Creditor Claims Process...........................................................................1

1.2 Funds on Hand ........................................................................................1


2.0 Background .........................................................................................................2

2.1 Definitions ................................................................................................3

2.2 Restrictions ..............................................................................................3

3.0 Inspectors............................................................................................................3

4.0 Claims Process....................................................................................................4

4.1 Resolved Unpaid Claims ..........................................................................4


There are two Claims to be resolved, as summarized below: ..............................4



7.0 Next Steps...........................................................................................................6

Appendices Tab

Statement of Receipts and Disbursements ......................................................... A

Duff & Phelps Canada Restructuring Inc. Page 1 of 6


SECOND REPORT TO THE SHAREHOLDERS OF COVENTREE INC.BY DUFF & PHELPS CANADA RESTRUCTURING INC.


JANUARY 17, 2014


The voluntary winding-up of Coventree Inc. (“Coventree” or the “Company”)commenced on February 15, 2012 (“Effective Date”), at which time Duff & PhelpsCanada Restructuring Inc. (“D&P”) was appointed liquidator (“Liquidator”) ofCoventree.

On February 6, 2013, the Liquidator issued its first report to the shareholders ofCoventree (“First Report”), with information up to January 15, 2013. This report(“Report”) summarizes the activities of Coventree’s wind-up from January 16, 2013 toNovember 30, 2013 (“Reporting Period”).

1.1 Creditor Claims Process

A claims process was established for creditors to assert claims against Coventree byApril 13, 2012. Pursuant to the claims process, various claims were submitted to theLiquidator. During the Reporting Period, one group of claims was resolved. As of thedate of this Report, there are two groups of claims that remain unresolved.

1.2 Funds on Hand

As at November 30, 2013, the Company had approximately $11.6 million in cash orcash equivalents. These funds are being reserved to cover resolved unpaid claims,unresolved claims and estimated future costs.

All amounts in this Report are stated in Canadian dollars.




Discharging resolved unpaid claims;

The unresolved claim in the amount of $5 million; and

Completion of final tax returns and resolution of the Company’s tax refundclaim.

2.0 Background

On June 30, 2010, Coventree’s shareholders passed a special resolution approving,among other things: a) the voluntary winding-up of Coventree pursuant to Section 193of the Ontario Business Corporations Act (“OBCA”) at a time to be determined by thedirectors of Coventree; and b) a plan of liquidation and distribution substantially in theform attached to such special resolution.

On January 23, 2012, the Company’s board of directors adopted a finalized plan ofliquidation and distribution (the “Liquidation Plan”) substantially in the form approvedby the special resolution passed by the shareholders. D&P is the liquidator named inthe Liquidation Plan.

By resolution of Coventree’s board of directors, February 15, 2012 was determined tobe the Effective Date of the Liquidation Plan.

Pursuant to Section 4.3(k) of the Liquidation Plan, the Liquidator made an applicationto the Court under Section 207 of the OBCA for orders:

To have the winding-up of Coventree supervised by the Court (the “Winding-Up Order”); and



The Company’s shares (the “Common Shares”), of which 15,157,138 are outstanding,had been listed on the NEX. On February 14, 2012, the Common Shares ceasedtrading as the NEX would not consent to their continued trading after the EffectiveDate.

This is the second report of the Liquidator pursuant to Section 201(2) of the OBCA.


During the first year of Coventree’s winding up, the Liquidator made two distributionsto shareholders, which, in total, amounted to $3.78 per share, as follows:

Return of capital – cash $ .46

Taxable dividend – cash 3.06

Taxable dividends – in-kind shares of Xceed Mortgage Corporation .26$ 3.78

More detailed background information on the Company, including its dealing with theOntario Securities Commission (“OSC”), is contained in the Liquidator’s reports toCourt filed in the winding-up proceedings. Copies of the materials filed with the Courtas well as the Company’s press releases are posted on the Liquidator’s website athttp://www.duffandphelps.com/intl/en-ca/Pages/RestructuringCases.aspx.

2.1 Definitions

All capitalized terms used in this Report that are not otherwise defined shall have themeanings ascribed to such terms in the Liquidation Plan.

2.2 Restrictions

In preparing this Report, the Liquidator has relied upon unaudited financial informationprepared by the Company’s representatives, the Company’s books and records anddiscussions with the Company’s representatives and legal counsel. The Liquidatorhas not performed an audit of such information. The Liquidator expresses no opinionor other form of assurance with respect to the accuracy of any financial informationrelied upon by the Liquidator.

3.0 Inspectors

Pursuant to the Liquidation Plan, the Company’s directors were deemed to haveresigned on the Effective Date and each of Messrs. Brendan Calder, GeoffreyCornish and Wesley Voorheis were appointed inspectors of the Company's liquidationpursuant to Section 194 of the OBCA. Messrs. Calder and Cornish subsequentlyresigned their position and were replaced by Messrs. William Aziz and Joseph Wiley.Accordingly, the inspectors currently consist of Messrs. Voorheis, Aziz and Wiley (the“Inspectors”) as provided for under Section 6.5 of the Liquidation Plan. The mainfunction of the Inspectors is to manage and administer the claim and litigation inconnection with the SAP Shares (as defined in Section 4.2).


4.0 Claims Process

Pursuant to the Claims Procedure Order, creditors (“Claimants”) wishing to assert aclaim (“Claim”) were required to deliver a written notice of such on or before April 13,2012.

The First Report outlined the claims procedure and summarized the three categoriesof unresolved claims that then existed. No additional claims have been filed. Set outbelow is a summary of the remaining unpaid and unresolved claims.


Pursuant to employment agreements with the Company, Messrs. Dean Tai andGeoffrey Cornish and Ms. Ani Hotoyan-Joly are to receive termination payments uponthe completion of Coventree’s winding up. The total owing in respect of thesetermination payments is $1,175,000.


There are two Claims to be resolved, as summarized below:

1. A Claim in the amount of $5 million by Mr. Tai and certain corporationsaffiliated with him related to Court proceedings against Coventree andCoventree’s transfer agent, Equity Financial Trust Company, commenced onOctober 14, 2011. The claim relates to the Company’s decision in April, 2009,to cancel 736,522 Common Shares (“SAP Shares”) that were issued to Mr.Tai under Coventree’s 2005 Share Allocation Plan. More information withrespect to this claim was provided in Section 6.1 of the Liquidator’s FirstReport to Court dated February 7, 2012 and Section 6.1 of the Liquidator’sSecond Report to Court dated April 20, 2012 (“Second Report”).

Pursuant to Section 4.3(a) of the Liquidation Plan, the Inspectors resolved tooversee and manage the administration of Mr. Tai’s claim in connection withthe SAP Shares and all related litigation. On February 27, 2012, theInspectors also resolved to have Mr. Tai's claim in connection with the SAPShares determined in the context of the proceedings already commenced byMr. Tai against the Company, as permitted by the Claims Procedure Order.

The litigation is in the documentary discovery stage. A trial date has yet to bescheduled, and is not likely to occur prior to mid-2014.

2. Claims of Canada Revenue Agency (“CRA”) against the Company and two ofits subsidiaries, being Coventree Capital Inc. (“CCI”) and Coventree HoldingsInc. (“CHI”), related to sales, payroll and income taxes. Since the EffectiveDate, the Company has paid assessed sales and income taxes and interestthereon, totalling approximately $3.25 million in respect of Coventree, CHI andCCI.


With respect to CCI, the Company paid $1.1 million to CRA in order to avoidfurther interest accruing on such claimed amount. Coventree reviewed thenature of the deductions and, reflecting what it believes to be the appropriateperiod to take the deductions, subsequently amended and refiled CCI’sincome tax return for fiscal 2009 with such deductions (“CCI Return”) and isclaiming a refund of approximately $2.2 million.

On December 30, 2013, CRA advised that it would be denying the Company’sdeductions claim as refiled, but would allow the deductions as a capital loss;this has the effect of CCI not being entitled to the refund. The Company isconsidering whether it will continue to pursue its claim for this refund.

The Liquidator has received clearance certificates in respect of the Company’sGST and HST accounts. The Liquidator does not anticipate there will be anyfurther amounts owing to CRA with respect to either income taxes or payrolltaxes; however, there can be no certainty that there will be no further payrollor income tax amounts owing until CRA issues clearance certificates.Clearance certificates for the Company’s income tax accounts and payrolldeductions accounts will be sought upon the resolution of the SAP Sharesclaim.


As set out in the First Report, Coventree had approximately $13.7 million in cash orcash equivalents as at January 15, 2013. Set out as Appendix “A” is a statement ofreceipts and disbursements (“R&D”) for the period from January 16, 2013 toNovember 30, 2013. As at November 30, 2013, the Company had cash and cashequivalents of approximately $11.6 million.

The R&D reflects, among other things, the following:

Receipts of $232,000 including interest income of $120,000;

Payment of the $1 million penalty assessed against Messrs. Cornish and Taiby the OSC. In the First Report, this was one of the unresolved claims. Alllegal proceedings with respect to the penalties imposed by the OSC havebeen completed;

Payment of professional fees in respect of litigation totalling approximately$367,000; and

Payment of professional and Inspector fees totalling approximately $266,000.



In addition to the $11.6 million of cash on hand, there is a possibility of recoveries ofup to $2.2 million in the aggregate from the Company’s refiling of the CCI Return.

The following summarizes the Company’s reserves:

($million)

Cash on hand 11.6

Less:Resolved and Unresolved Claims 6.2Provision for professional fees, expenses and cost awards 1.5Provision for operating and other costs .8Contingency 3.1


Until the SAP Shares litigation is resolved, the Inspectors and the Liquidator do notanticipate making any further distributions to shareholders.

7.0 Next Steps

Completion of the Company’s winding-up and the making of a final distribution toshareholders is subject to the following:

A final determination or resolution of the SAP Shares claim;

The filing of all final tax returns;

Receipt of clearance certificates regarding the Company’s tax accounts (otherthan its sales tax accounts which have been cleared by CRA); and

Court approval of a final distribution, the Liquidator’s discharge and theultimate dissolution of the Company.

* * *



Appendix “A”

Coventree Inc.


For the Period January 16, 2013 to November 30, 2013

($; unaudited)

Opening Bank Balance - January 16, 2013 13,735,608

Receipts:

Interest income 147,514

Note repayment 86,714

Total Receipts 234,228

Disbursements:

Indemnification of officers for OSC penalties, including interest 1,033,538

Legal fees(1)

474,305

Operating expenses 290,616

Income taxes 247,842

Compensation expenses 107,907

Liquidator fees 95,798

Inspector fees 62,958

Consulting expenses 13,690

Total Disbursements 2,326,654

Bank Balance - November 30, 2013 11,643,182

(1) Legal fees includes:

Bennett Jones LLP (litigation) 6,703

Davies Ward Phillips & Vineberg LLP (counsel to Coventree and Liquidator) 107,014

Adair Morse LLP (litigation) 5,073

Thornton Grout LLP (litigation) 41,348

Goodmans LLP/Lenczner Slaght LLP (OSC appeal) 98,466

Stockwoods LLP (Litigation/OSC appeal) 214,581

Other (litigation) 1,120

474,305

Appendix “D-3”

Third Report to the Shareholdersof Coventree Inc. by Duff & PhelpsCanada Restructuring Inc. asLiquidator of Coventree Inc.

January 20, 2015


Contents Page


1.1 Activities during the Reporting Period.......................................................1

2.0 Background .........................................................................................................3

2.1 Definitions ................................................................................................4

2.2 Restrictions ..............................................................................................4

3.0 Inspectors............................................................................................................4

4.0 Claims Process....................................................................................................4

4.1 Resolved Unpaid Claims ..........................................................................4




7.0 Next Steps...........................................................................................................7

Appendices Tab




THIRD REPORT TO THE SHAREHOLDERS OF COVENTREE INC.BY DUFF & PHELPS CANADA RESTRUCTURING INC.


JANUARY 20, 2015


The voluntary winding-up of Coventree Inc. (“Coventree” or the “Company”)commenced on February 15, 2012 (“Effective Date”), at which time Duff &Phelps Canada Restructuring Inc. (“D&P”) was appointed liquidator(“Liquidator”).

On February 6, 2013, the Liquidator issued its first report to the shareholdersof Coventree (“First Report”), with information up to January 15, 2013. OnJanuary 17, 2014, the Liquidator issued its second report to the shareholdersof Coventree (“Second Report”), with information up to November 30, 2013.

This report (“Report”) summarizes the activities of Coventree’s wind-up fromDecember 1, 2013 to December 31, 2014 (“Reporting Period”) and the statusof claims against Coventree.


1.1 Activities during the Reporting Period

1.1.1 Litigation

The litigation stemming from the Company’s cancellation of 736,522 commonshares issued to Mr. Dean Tai (“Litigation”) pursuant to Coventree’s ShareAllocation Plan (“SAP Shares”) completed the documentary discovery stageduring the Reporting Period. Issues in connection with examinations fordiscoveries have arisen and are ongoing. Mediation to address the Litigationis scheduled for March 17, 2015.


The trial of the Litigation has not been scheduled and is unlikely to occur in2015.

1.1.2 Income Tax Refund Claim

Prior to the Reporting Period, Coventree Capital Inc. (“CCI”), a wholly-ownedsubsidiary of the Company, amended and restated its fiscal 2009 income taxreturn (“Amended Return”) and claimed a refund of $2.2 million. On April 2,2014, Canada Revenue Agency (“CRA”) denied the deductions claimed inthe Amended Return. Coventree reviewed CRA’s denial with its tax advisorsand decided not to appeal CRA's decision.

1.1.3 Claims

There has been no change in the claims against Coventree. Currently thereare three resolved, unpaid claims totalling $1,175,000 and two unresolvedclaims, the quantum of which is to be determined.

1.1.4 Funds on Hand

As at December 31, 2014, the Company had approximately $11.4 million incash or cash equivalents. These funds are being reserved to cover resolvedunpaid claims, unresolved claims and estimated future costs.

1.1.5 Outstanding Matters


Discharging the resolved, unpaid claims.

Completing the Litigation.

Completing final tax returns and obtaining tax clearance certificatesfrom CRA.


2.0 Background

On June 30, 2010, Coventree’s shareholders (“Shareholders”) passed aspecial resolution approving, among other things: a) the voluntary winding-upof Coventree pursuant to Section 193 of the Ontario Business CorporationsAct (“OBCA”) at a time to be determined by the directors of Coventree; and b)a plan of liquidation and distribution substantially in the form attached to suchspecial resolution.

On January 23, 2012, the Company’s board of directors adopted a finalizedplan of liquidation and distribution (the “Liquidation Plan”) substantially in theform approved by the special resolution passed by the shareholders. D&P isthe liquidator named in the Liquidation Plan.

By resolution of Coventree’s board of directors, February 15, 2012 wasdetermined to be the Effective Date of the Liquidation Plan.

Pursuant to Section 4.3(k) of the Liquidation Plan, the Liquidator made anapplication to the Court under Section 207 of the OBCA for orders:

To have the winding-up of Coventree supervised by the Court (the“Winding-Up Order”); and



The Company’s shares (the “Common Shares”), of which 15,157,138 areoutstanding, had been listed on the NEX. On February 14, 2012, theCommon Shares ceased trading as the NEX would not consent to theircontinued trading after the Effective Date.

Since the Effective Date, the Liquidator has made two distributions toShareholders, which, in total, amounted to $3.78 per share, as follows:

Return of capital - cash $ .46Taxable dividend – cash 3.06Taxable dividends – in-kind shares of Xceed Mortgage Corporation .26

$ 3.78

More detailed background information on the Company, including its dealingwith the Ontario Securities Commission, is contained in the Liquidator’sreports to Court filed in the winding-up proceedings. Copies of the materialsfiled with the Court as well as the Company’s press releases are posted on theLiquidator’s website at http://www.duffandphelps.com/intl/en-ca/Pages/RestructuringCases.aspx.


2.1 Definitions

All capitalized terms used in this Report that are not otherwise defined shallhave the meanings ascribed to such terms in the Liquidation Plan.

2.2 Restrictions

In preparing this Report, the Liquidator has relied upon unaudited financialinformation prepared by the Company’s representatives, the Company’sbooks and records and discussions with the Company’s representatives andlegal counsel. The Liquidator has not performed an audit of suchinformation. The Liquidator expresses no opinion or other form of assurancewith respect to the accuracy of any financial information relied upon by theLiquidator.

3.0 Inspectors

Messrs. Wesley Voorheis, William Aziz and Joseph Wiley are the inspectors(the “Inspectors”) as provided for under Section 6.5 of the Liquidation Plan.The main function of the Inspectors is to manage and administer the claimand Litigation in connection with the SAP Shares (as described in Sections1.1.1 and 4.2).

4.0 Claims Process

Pursuant to the Claims Procedure Order, creditors (“Claimants”) wishing toassert a claim (“Claim”) were required to deliver a written notice of such on orbefore April 13, 2012.

The First Report outlined the claims procedure and summarized the threecategories of unresolved claims that then existed. No additional claims havebeen filed. Set out below is a summary of the remaining unpaid andunresolved claims.


Pursuant to employment agreements with the Company, Messrs. Dean Taiand Geoffrey Cornish and Ms. Ani Hotoyan-Joly are to receive terminationpayments upon the completion of Coventree’s winding up. The total owing inrespect of these termination payments is $1,175,000.




(a) A Claim by Mr. Tai and certain corporations affiliated with him relatedto Court proceedings against Coventree and Coventree’s transferagent, Equity Financial Trust Company, commenced pursuant to aNotice of Action dated April 14, 2011. The claim relates to theCompany’s decision in April, 2009, to cancel “SAP Shares” that wereissued to Mr. Tai under Coventree’s 2005 Share Allocation Plan.More information with respect to this claim was provided in Section6.1 of the Liquidator’s First Report to Court dated February 7, 2012and Section 6.1 of the Liquidator’s Second Report to Court dated April20, 2012 (“Second Report”).

Pursuant to Section 4.3(a) of the Liquidation Plan, the Inspectorsresolved to oversee and manage the administration of Mr. Tai’s claimin connection with the SAP Shares and all related litigation. OnFebruary 27, 2012, the Inspectors also resolved to have Mr. Tai'sclaim in connection with the SAP Shares determined in the context ofthe proceedings already commenced by Mr. Tai against theCompany, as permitted by the Claims Procedure Order.

The Litigation completed the documentary discovery stage during theReporting Period. Issues in connection with examinations fordiscoveries have arisen and are ongoing. Mediation to address theLitigation is scheduled for March 17, 2015.

(b) CRA filed nominal placeholder claims of $1 in respect of Coventree’svarious tax accounts. The Company has paid all taxes owing sincethe Effective Date and no further tax claims are expected to beassessed. However, until final tax returns have been filed andassessed, there can be no certainty that CRA will not seek toestablish a claim.

Set out below is a status of the Company’s various tax accounts:

Income tax accounts - Upon completion of the Litigation anddetermination of the unresolved claim of Mr. Tai, final incometax returns will be filed and clearance certificates will besought from CRA.


Goods and Service Tax (“GST”) and Harmonized Sales Tax(“HST”) accounts – Coventree ceased carrying on commercialactivities prior to the Effective Date. As a result, it has neitherbeen generating any revenues on which GST/HST has beenexigible, nor been claiming input tax credits. The Liquidatorsought and received clearance certificates from CRA inrespect of the GST and HST accounts.

Payroll deduction accounts – Coventree has two employees,and as a result, its payroll deductions account remains active.Upon the completion of the Litigation, determination of theunresolved claim and payment of the unsolved claims,clearance certificates will be sought from CRA.


As set out in the Second Report, Coventree had approximately $11.6 millionin cash or cash equivalents as at November 30, 2013. Set out as Appendix“A” is a statement of receipts and disbursements (“R&D”) for the period fromDecember 1, 2013 to December 31, 2014. As at December 31, 2014, theCompany had cash and cash equivalents of approximately $11.4 million.



($millions)Cash on hand 11.4

Less:Resolved and Unresolved Claims1 6.2Provision for professional fees, expenses and cost awards 1.5Provision for operating and other costs .6Contingency 3.1


Until the SAP Shares Litigation is resolved, the Inspectors and the Liquidatordo not anticipate making any further distributions to shareholders.

1Includes a reserve of $5 million with respect to the Litigation.


7.0 Next Steps

Completion of the Company’s winding-up and the making of a finaldistribution to shareholders is subject to the following:



Receipt of clearance certificates regarding the Company’s taxaccounts (other than its sales tax accounts which have been clearedby CRA); and

Court approval of a final distribution, the Liquidator’s discharge andthe ultimate dissolution of the Company.

* * *



Appendix “A”

Appendix "A"

Coventree Inc.


For the Period December 1, 2013 to December 31, 2014

($; unaudited)

Receipts:

Investment recoveries 275,599

Interest 153,167

Foreign exchange and sundry 44,920


Disbursements:

Legal fees - litigation 233,161

Insurance 88,749

Rent 77,430

Inspectors' fees 69,227

Wages and benefits 66,661

Consulting fees - litigation 54,240

Office and general 56,872

Liquidator's fees 38,816

Legal fees - corporate 14,279

Consulting fees - tax 9,306

Total Disbursements 708,741

Excess (deficiency) of receipts over disbursements (235,055)

Balance - December 1, 2013 11,642,302


Appendix “D-4”

Fourth Report to the Shareholdersof Coventree Inc. by KSV Kofman Inc.as Liquidator of Coventree Inc.

February 1, 2016


Contents Page

1.0 Executive Summary.............................................................................................11.1 Activities during the Reporting Period.......................................................1

2.0 Background .........................................................................................................2

3.0 Inspectors............................................................................................................4

4.0 Claims Process....................................................................................................4



7.0 Next Steps...........................................................................................................6

Appendices

Appendix Tab




FOURTH REPORT TO THE SHAREHOLDERS OF COVENTREE INC.BY KSV KOFMAN INC.


FEBRUARY 1, 2016


The voluntary winding-up of Coventree Inc. (the “Company”) commenced on February15, 2012 (“Effective Date”). KSV Kofman Inc.1 (“KSV”, formerly Duff & Phelps CanadaRestructuring Inc. or (“D&P”)) is the liquidator (“Liquidator”).

The Liquidator has issued three prior reports to the Company’s shareholders. The reportsprovide information on, among other things, the Company’s activities since its winding-upcommenced and calculations supporting the two distributions that have been made to theshareholders.

This report (“Report”) summarizes the Company’s activities from January 1, 2015 toDecember 31, 2015 (“Reporting Period”) and the status of claims against the Company.


1.1 Activities during the Reporting Period

1.1.1 Litigation

The litigation stemming from the Company’s cancellation of 736,522 common shares issuedto Mr. Dean Tai (“Litigation”) pursuant to the Company’s Share Allocation Plan (“SAPShares”) continued during the Reporting Period. In March, 2015, a mediation was held butthe parties were unable to reach an agreement to resolve the Litigation. In April, 2015,motions to determine the representative to be examined on behalf of the Company wereheard by the Ontario Superior Court of Justice (“Court”), and the Court issued its decisionin June, 2015. Examinations for discovery were completed in August, 2015. Currently, theparties are in the process of addressing various issues arising from the examinations fordiscovery.

1 On June 30, 2015, D&P was acquired by KSV. Pursuant to an Order of the Court made on July 10, 2015, the nameof the firm handling D&P’s mandates was changed from D&P to KSV, including acting as Liquidator in theseproceedings. The restructuring professionals overseeing this mandate prior to June 30, 2015 remain unchanged.


If necessary, motions to address issues arising from the discoveries that the parties areunable to resolve may be heard during spring 2016. If the Litigation proceeds to trial, thattrial may be scheduled for early 2017.

1.1.2 Investment Recovery

In July, 2015, the Company received a payment of US $282,000 in respect of a note heldby the Company. The note was issued by a securitization structure that was established bythe Company and that owned a pool of commercial mortgages originated in the UnitedStates by Sun Life Assurance Company (“Sun Life”). The payment was the final amount tobe received by the Company in respect of such note.

1.1.3 Claims

There has been no change in the claims against the Company. Currently there are threeresolved, unpaid claims totaling $1,175,000 and two unresolved claims, the quantum ofwhich is to be determined.

1.1.4 Funds on Hand

As at December 31, 2015, the Company had approximately $11.1 million in cash or cashequivalents. These funds are being reserved to cover resolved unpaid claims, unresolvedclaims and estimated future costs.

1.1.5 Outstanding Matters


Discharging the resolved, unpaid claims. Completing the Litigation. Completing final tax returns and obtaining tax clearance certificates from CRA.

2.0 Background

On June 30, 2010, the Company’s shareholders (“Shareholders”) passed a specialresolution approving, among other things: a) the Company’s voluntary winding-up pursuantto Section 193 of the Ontario Business Corporations Act (“OBCA”) at a time to bedetermined by the Company’s directors; and b) a plan of liquidation and distributionsubstantially in the form attached to such special resolution.

On January 23, 2012, the Company’s board of directors adopted a finalized plan ofliquidation and distribution (the “Liquidation Plan”) substantially in the form approved by thespecial resolution passed by the shareholders. D&P is the liquidator named in theLiquidation Plan.

By resolution of the Company’s board of directors, February 15, 2012 was determined tobe the Effective Date of the Liquidation Plan.


Pursuant to Section 4.3(k) of the Liquidation Plan, the Liquidator made an application to theCourt under Section 207 of the OBCA for orders:

To have the Company’s winding-up supervised by the Court (the “Winding-Up Order”);and


On February 15, 2012, the Court made the Winding-Up Order and the Claims ProcedureOrder.

The Company’s shares (the “Common Shares”), of which 15,157,138 are outstanding, hadbeen listed on the NEX. On February 14, 2012, the Common Shares ceased trading as theNEX would not consent to their continued trading after the Effective Date.

Since the Effective Date, the Liquidator has made two distributions to Shareholders, which,in total, amounted to $3.78 per share, as follows:


$ 3.78

More detailed background information on the Company, including its dealing with theOntario Securities Commission, is contained in the Liquidator’s reports to Court filed in thewinding-up proceedings. Copies of the materials filed with the Court as well as theCompany’s press releases are posted on the Liquidator’s website athttp://www.ksvadvisory.com.

2.1 Definitions


2.2 Restrictions

In preparing this Report, the Liquidator has relied upon unaudited financial informationprepared by the Company’s representatives, the Company’s books and records anddiscussions with the Company’s representatives and legal counsel. The Liquidator has notperformed an audit of such information. The Liquidator expresses no opinion or other formof assurance with respect to the accuracy of any financial information relied upon by theLiquidator.


3.0 Inspectors

Messrs. Wesley Voorheis, William Aziz and Joseph Wiley are the inspectors (the“Inspectors”) as provided for under Section 6.5 of the Liquidation Plan. The main functionof the Inspectors is to manage and administer the claim and Litigation in connection withthe SAP Shares (as described in Sections 1.1.1 and 4.2).

4.0 Claims Process

Pursuant to the Claims Procedure Order, creditors (“Claimants”) wishing to assert a claim(“Claim”) were required to deliver a written notice of such on or before April 13, 2012.

The Liquidator’s First Report to Shareholders dated February 6, 2013 summarized theclaims procedure and the three categories of unresolved claims that then existed. Noadditional claims have been filed. Set out below is a summary of the remaining unpaid andunresolved claims.


Pursuant to employment agreements with the Company, Messrs. Dean Tai and GeoffreyCornish and Ms. Ani Hotoyan-Joly are to receive termination payments upon the completionof the Company’s winding up. The total owing in respect of these termination payments is$1,175,000.



(a) A Claim by Mr. Tai and certain corporations affiliated with him related to Courtproceedings against the Company and the Company’s transfer agent, EquityFinancial Trust Company, commenced pursuant to a Notice of Action dated April 14,2011. The claim relates to the Company’s decision in April, 2009, to cancel “SAPShares” that were issued to Mr. Tai under the Company’s 2005 Share Allocation Plan.More information with respect to this claim was provided in the Liquidator’s previousreports.

Pursuant to Section 4.3(a) of the Liquidation Plan, the Inspectors resolved to overseeand manage the administration of Mr. Tai’s claim in connection with the SAP Sharesand all related litigation. On February 27, 2012, the Inspectors also resolved to haveMr. Tai's claim in connection with the SAP Shares determined in the context of theproceedings already commenced by Mr. Tai against the Company, as permitted bythe Claims Procedure Order.


In March, 2015, a mediation was held but the parties were unable to reach anagreement to resolve the Litigation. In April, 2015, motions to determine therepresentative to be examined on behalf of the Company were heard by the Court,and the Court issued its decision in June, 2015. Examinations for discovery werecompleted in August, 2015. Currently, the parties are in the process of addressingvarious issues arising from the examinations for discovery.

If necessary, motions to address issues arising from the discoveries that the partiesare unable to resolve may be heard during spring 2016. If the Litigation proceeds totrial, that trial may be scheduled for early 2017.

(b) CRA filed nominal placeholder claims of $1 in respect of the Company’s various taxaccounts. The Company has paid all taxes owing since the Effective Date and nofurther tax claims are expected to be assessed. However, until final tax returns havebeen filed and assessed, there can be no certainty that CRA will not seek to establisha claim.


Income tax accounts - Upon completion of the Litigation and determination ofthe unresolved claim of Mr. Tai, final income tax returns will be filed andclearance certificates will be sought from CRA.

Goods and Services Tax (“GST”) and Harmonized Sales Tax (“HST”) accounts– the Company ceased carrying on commercial activities prior to the EffectiveDate. As a result, it has neither been generating any revenues on whichGST/HST has been exigible, nor been claiming input tax credits. The Liquidatorsought and received clearance certificates from CRA in respect of the GST andHST accounts.

Payroll deduction accounts – the Company has two employees. As a result, itspayroll deductions account remains active. Upon the completion of theLitigation, determination of the unresolved claims and payment of the claims,clearance certificates will be sought from CRA.


The Company’s Statement of Receipts and Disbursements (“R&D”) for the period fromJanuary 1, 2015 to December 31, 2015 is provided in Appendix “A”. The receipts includerecovery in full of the Company’s investment with Sun Life whereas the disbursementsprincipally relate to the Litigation (legal and Inspectors’ fees) and the Company’s ongoingoperating costs.

As at December 31, 2015, the Company had cash and cash equivalents of approximately$11.1 million.





Less:Resolved and Unresolved Claims2 6.2Provision for professional fees and expenses .6Provision for operating and other costs .4Contingency 3.9


Until the SAP Shares Litigation is resolved, the Inspectors and the Liquidator do notanticipate making any further distributions to shareholders.

7.0 Next Steps

Completion of the Company’s winding-up and the making of a final distribution toshareholders continues to be subject to the following:



Receipt of clearance certificates regarding the Company’s tax accounts (other thanits sales tax accounts which have been cleared by CRA); and

Court approval of a final distribution, the Liquidator’s discharge and the ultimatedissolution of the Company.

* * *



2 Includes a reserve of $5 million with respect to the Litigation.

Appendix “A”

Appendix "A"

Coventree Inc.


For the Period January 1, 2015 to December 31, 2015

($; unaudited)

Receipts:

Investment recoveries 367,826

Interest 145,806



Disbursements:






Rent 36,315

Insurance 18,576

Consulting fees - litigation 16,882

Legal fees - corporate 3,130



Balance - January 1, 2015 11,407,247


Appendix “D-5”

Fifth Report to the Shareholdersof Coventree Inc. by KSV Kofman Inc.as Liquidator of Coventree Inc.

January 30, 2017


Contents Page

1.0 Executive Summary.............................................................................................11.1 Litigation ..................................................................................................1

1.2 Claims......................................................................................................2

1.3 Funds on Hand ........................................................................................2


2.0 Background .........................................................................................................2

3.0 Inspectors............................................................................................................3

4.0 Claims Process....................................................................................................3



7.0 Next Steps...........................................................................................................6

Appendices

Appendix Tab




FIFTH REPORT TO THE SHAREHOLDERS OF COVENTREE INC.BY KSV KOFMAN INC.


JANUARY 30, 2017


The voluntary winding-up of Coventree Inc. (the “Company”) commenced onFebruary 15, 2012 (“Effective Date”). KSV Kofman Inc.1 (“KSV”, formerly Duff & PhelpsCanada Restructuring Inc. or (“D&P”)) is the liquidator (“Liquidator”).

The Liquidator has issued four prior reports to the Company’s shareholders. The reportsprovide information on, among other things, the Company’s activities since its winding-upcommenced and calculations supporting the two distributions that have been made to theshareholders.

This report (“Report”) summarizes the Company’s activities from January 1, 2016 toDecember 31, 2016 (“Reporting Period”) and the status of claims against the Company.


1.1 Litigation

The litigation stemming from the Company’s cancellation of 736,522 common shares issuedto Mr. Dean Tai (“Litigation”) pursuant to the Company’s Share Allocation Plan (“SAPShares”) continued during the Reporting Period.

A hearing was held in May, 2016 relating to certain issues that arose during examinationsfor discovery that were completed in August, 2015. The Ontario Superior Court of Justice(“Court”) advised the parties which questions, which they had previously refused, requiredresponses. In September, 2016, Mr. Tai’s counsel completed a re-examination of Mr.Geoffrey Cornish, the Company’s Chief Executive Officer, on behalf of the Company. TheCompany provided responses to the undertakings given at that re-examination in the fall of2016.

1 On June 30, 2015, D&P was acquired by KSV. Pursuant to an Order of the Court made on July 10, 2015, the nameof the firm handling D&P’s mandates was changed from D&P to KSV, including acting as Liquidator in theseproceedings. The restructuring professionals overseeing this mandate prior to June 30, 2015 remain unchanged.


The parties are ready to proceed to trial. The trial has been scheduled for November 27 toDecember 8, 2017, the earliest available dates.

1.2 Claims

There has been no change in the claims against the Company. Currently there are threeresolved, unpaid claims totaling $1,160,000 and two unresolved claims, the quantum ofwhich is to be determined.

1.3 Funds on Hand

As at December 31, 2016, the Company had approximately $10.7 million in cash or cashequivalents. These funds are being reserved to cover resolved unpaid claims, unresolvedclaims and estimated future costs.



Discharging the resolved, unpaid claims; Completing the Litigation; and Completing final tax returns and obtaining tax clearance certificates from Canada

Revenue Agency (“CRA”).

2.0 Background

On June 30, 2010, the Company’s shareholders (“Shareholders”) passed a specialresolution approving, among other things: a) the Company’s voluntary winding-up pursuantto Section 193 of the Ontario Business Corporations Act (“OBCA”) at a time to bedetermined by the Company’s directors; and b) a plan of liquidation and distributionsubstantially in the form attached to such special resolution.

On January 23, 2012, the Company’s board of directors adopted a finalized plan ofliquidation and distribution (the “Liquidation Plan”) substantially in the form approved by thespecial resolution passed by the shareholders. D&P is the liquidator named in theLiquidation Plan.

By resolution of the Company’s board of directors, February 15, 2012 was determined tobe the Effective Date of the Liquidation Plan.

Pursuant to Section 4.3(k) of the Liquidation Plan, the Liquidator made an application to theCourt under Section 207 of the OBCA for orders:

To have the Company’s winding-up supervised by the Court (the “Winding-Up Order”);and



On February 15, 2012, the Court made the Winding-Up Order and the Claims ProcedureOrder.

The Company’s shares (the “Common Shares”), of which 15,157,138 are outstanding, hadbeen listed on the NEX. On February 14, 2012, the Common Shares ceased trading as theNEX would not consent to their continued trading after the Effective Date.

Since the Effective Date, the Liquidator has made two distributions to Shareholders, which,in total, amounted to $3.78 per share, as follows:


$ 3.78

More detailed background information on the Company, including its dealing with theOntario Securities Commission, is contained in the Liquidator’s reports to Court filed in thewinding-up proceedings. Copies of the materials filed with the Court as well as theCompany’s press releases are posted on the Liquidator’s website athttp://www.ksvadvisory.com.

2.1 Definitions


2.2 Restrictions

In preparing this Report, the Liquidator has relied upon unaudited financial informationprepared by the Company’s representatives, the Company’s books and records anddiscussions with the Company’s representatives and legal counsel. The Liquidator has notperformed an audit of such information. The Liquidator expresses no opinion or other formof assurance with respect to the accuracy of any financial information relied upon by theLiquidator.

3.0 Inspectors

Messrs. Wesley Voorheis, William Aziz and Joseph Wiley are the inspectors (the“Inspectors”) as provided for under Section 6.5 of the Liquidation Plan. The main functionof the Inspectors is to manage and administer the claim and Litigation in connection withthe SAP Shares (as described in Sections 1.1 and 4.2).

4.0 Claims Process

Pursuant to the Claims Procedure Order, creditors (“Claimants”) wishing to assert a claim(“Claim”) were required to deliver a written notice of such on or before April 13, 2012.


The Liquidator’s First Report to Shareholders dated February 6, 2013 summarized theclaims procedure and the three categories of unresolved claims that then existed. Noadditional claims have been filed. Set out below is a summary of the remaining unpaid andunresolved claims.


Pursuant to employment agreements with the Company, Messrs. Tai and Cornish and Ms.Ani Hotoyan-Joly are to receive termination payments upon the completion of theCompany’s winding up. The total owing in respect of these termination payments is$1,160,000.



(a) A Claim by Mr. Tai and certain corporations affiliated with him related to Courtproceedings against the Company and the Company’s transfer agent, EquityFinancial Trust Company, commenced pursuant to a Notice of Action dated April 14,2011. The claim relates to the Company’s decision in April, 2009, to cancel “SAPShares” that were issued to Mr. Tai under the Company’s 2005 Share Allocation Plan.More information with respect to this claim was provided in the Liquidator’s previousreports.

Pursuant to Section 4.3(a) of the Liquidation Plan, the Inspectors resolved to overseeand manage the administration of Mr. Tai’s claim in connection with the SAP Sharesand all related litigation. On February 27, 2012, the Inspectors also resolved to haveMr. Tai's claim in connection with the SAP Shares determined in the context of theproceedings already commenced by Mr. Tai against the Company, as permitted bythe Claims Procedure Order.

A hearing was held in May, 2016 relating to certain issues that arose duringexaminations for discovery that were completed in August, 2015. The Court advisedthe parties which questions, which they had previously refused, required responses.In September, 2016, Mr. Tai’s counsel completed a re-examination of Mr. Cornish onbehalf of the Company. The Company provided responses to the undertakings givenat that re-examination in the fall of 2016.

The trial has been scheduled for November 27 to December 8, 2017, the earliestavailable dates.

(b) CRA filed nominal placeholder claims of $1 in respect of the Company’s various taxaccounts. The Company has paid all taxes owing since the Effective Date and nofurther tax claims are expected to be assessed. However, until final tax returns havebeen filed and assessed, there can be no certainty that CRA will not seek to establisha claim.



Income tax accounts - Upon completion of the Litigation and determination ofthe unresolved claim of Mr. Tai, final income tax returns will be filed andclearance certificates will be sought from CRA.

Goods and Services Tax (“GST”) and Harmonized Sales Tax (“HST”) accounts– the Company ceased carrying on commercial activities prior to the EffectiveDate. As a result, it has neither been generating any revenues on whichGST/HST has been exigible, nor been claiming input tax credits. The Liquidatorsought and received clearance certificates from CRA in respect of the GST andHST accounts.

Payroll deduction accounts – the Company has two employees. As a result, itspayroll deductions account remains active. Upon the completion of theLitigation, determination of the unresolved claims and payment of the claims,clearance certificates will be sought from CRA.


The Company’s Statement of Receipts and Disbursements (“R&D”) for the period fromJanuary 1, 2016 to December 31, 2016 is provided in Appendix “A”. The disbursementsprincipally relate to the Litigation (legal fees) and the Company’s ongoing operating costs.

As at December 31, 2016, the Company had cash and cash equivalents of approximately$10.7 million.




Less:Resolved and Unresolved Claims2 6.2Provision for professional fees and expenses .7Provision for operating and other costs .4Contingency 3.4


Until the SAP Shares Litigation is resolved, the Inspectors and the Liquidator do notanticipate making any further distributions to shareholders.

2 Includes a reserve of $5 million with respect to the Litigation.


7.0 Next Steps

Completion of the Company’s winding-up and the making of a final distribution toshareholders continues to be subject to the following:



Receipt of clearance certificates regarding the Company’s tax accounts (other thanits sales tax accounts which have been cleared by CRA); and

Court approval of a final distribution, the Liquidator’s discharge and the ultimatedissolution of the Company.

* * *



Appendix “A”

Coventree Inc.


For the Period January 1, 2016 to December 31, 2016

($; unaudited)

Receipts:

Interest 97,550



Disbursements:





Rent 26,819

Insurance 18,652




Balance - January 1, 2016 11,057,946


Appendix “E”


UPDATE TO THE SHAREHOLDERS OF COVENTREE INC.BY KSV KOFMAN INC.

AS LIQUIDATOR OF COVENTREE INC.October 30, 2017

1.0 Settlement of Tai Litigation

This is an update to the shareholders of Coventree Inc. (“Coventree”) since the Fifth Report toShareholders dated January 30, 2017 (“Fifth Report”).

As set out in the Fifth Report, the major outstanding matter has been the litigation betweenCoventree and Mr. Dean Tai stemming from Coventree’s cancellation of 736,522 common sharesissued to Mr. Tai pursuant to Coventree’s Share Allocation Plan (“SAP Shares”).

On September 27, 2017, Coventree and Mr. Tai finalized a settlement of the litigation (the“Settlement”). The Settlement provided for payment of $4.5 million to Mr. Tai and his companiesin satisfaction of Mr. Tai’s severance pay entitlement ($500,000), the litigation in respect of theSAP Shares and cancellation of Mr. Tai’s direct and indirect shareholdings (“Tai Shares”) inCoventree. The cancellation of the Tai Shares reduced the number of outstanding Coventreeshares to 12,343,241.

Attached as Schedule “A” is an announcement by Coventree regarding the Settlement.

2.0 Updated Estimated Funds Available to Shareholders

An estimate of the funds that may be available for a final distribution is provided below:

($000’s)Funds on hand at January 30, 2017 10,700Less: Net disbursements from January 31, 2017 to September 30, 2017 268

Settlement payment 4,500Funds on hand at September 30, 2017 5,932Less: Estimated accounts payable, future operating expenses and contingencies 1,500Estimated funds available for distribution – shareholders 4,432Estimated funds available for distribution – per share .359

Page 2

3.0 Future Steps in Liquidation

The final distribution to shareholders will be made upon:

Discharging all existing liabilities;

Filing final tax returns;

Obtaining tax clearance certificates from Canada Revenue Agency (“CRA”) in respectof Coventree’s corporation tax and payroll accounts; and

Obtaining a court order authorizing the payment of the final distribution, providing forthe discharge of the Liquidator and the ultimate dissolution of Coventree.

The timing of the final distribution is uncertain and will depend, to a large extent, on CRA’sresponse to the clearance certificate requests.

Yours truly,

KSV Kofman Inc.Liquidator of Coventree Inc.And not in its personal or corporate capacity

Schedule “A”

Coventree is pleased to announce that it has settled all outstanding issues with its co-founder Dean Tai,and his holding companies. The settlement involves a payment by Coventree in the amount of $4,500,000,in global settlement of all claimed or actual entitlements by Mr. Tai and his holding companies. Werecognize and thank Mr. Tai for his many contributions to Coventree and wish him all the best.

Appendix “F”

Appendix “G”

Appendix “H”

Documents

Fourth Report to Court of December 22, 2017 KSV Kofman Inc ... · FOURTH REPORT OF KSV KOFMAN INC. AS LIQUIDATOR OF COVENTREE INC. ... to this Report. The Liquidation Plan is appended