ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST BETWEEN ...

Court File No. CV-19-614593-00CL

BETWEEN:

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

CORNER FLAG LLC APPLICANT

- and ERWIN HYMER GROUP NORTH AMERICA, INC.

RESPONDENT

FIRST REPORT TO COURT OF ALVAREZ & MARSAL CANADA INC. IN ITS CAPACITY AS COURT-APPOINTED RECEIVER AND MANAGER OF ERWIN HYMER GROUP NORTH AMERICA, INC.

MARCH 20, 2019

TABLE OF CONTENTS

1.0 INTRODUCTION ........................................................................................................................ 2 2.0 TERMS OF REFERENCE AND DISCLAIMER ....................................................................... 3 3.0 BACKGROUND............................................................................................................................ 5 4.0 CREDITORS ................................................................................................................................. 9 5.0 KEY ASPECTS OF THE RECEIVERSHIP PROCEEDINGS TO DATE.............................18 6.0 RECEIVER'S INTERIM STATEMENT OF RECEIPTS AND DISBURSEMENTS ..........35 7.0 SALES PROCESS ....................................................................................................................... 38 8.0 RECEIVER'S ACTIVITIES .......................................................................................................43 9.0 CONCLUSIONS AND RECOMMENDATIONS ..................................................................... 45

Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F

INDEX TO APPENDICES Appointment Order dated February 15, 2019 Pre-Carve Out Transaction Organizational Structure Chart Post-Carve Out Transaction Organizational Structure Chart Notice and Statement of the Receiver Sales Process Sales Process Letter

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1.0 INTRODUCTION

1.1 This report (the "First Report") is filed by Alvarez & Marsal Canada Inc. ("A&M") in its capacity as Court-appointed receiver and manager (in such capacity, the "Receiver") without security, of all of the assets, undertakings and properties of Erwin Hymer Group North America, Inc. ("EHGNA" or the "Company").

1.2 Pursuant to an order (the "Appointment Order") of the Ontario Superior Court of Justice (the "Court") made on February 15, 2019 (the "Receivership Date"), A&M was appointed as Receiver of EHGNA. A copy of the Appointment Order is attached hereto as Appendix "A".

1.3 Since the granting of the Appointment Order, the Receiver has been evaluating realization strategies and options in respect of EHGNA's business and assets. It has determined, in accordance with the powers granted to it under the Appointment Order, that it would be beneficial to the stakeholders to proceed with an expedited process (on substantially the terms of the Sales Process, as such term is defined below) and to solicit offers from potential purchasers, including those who may be willing to restart certain aspects of EHGNA's manufacturing operations and potentially rehire a portion of EHGNA's former employees. The Receiver seeks to have its process approved by the Court, nunc pro tunc, in advance of the bid deadline of April 3, 2019.

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1.4 Accordingly, the purpose of this First Report is to: (a) provide background information regarding EHGNA; (b) provide an overview of key aspects of the receivership proceedings ("Receivership Proceedings") to date; (c) provide an overview of the issues relating to security granted by EHGNA and certain affiliates and competing claims to title to the RV Inventory (as defined below); (d) describe the Receiver's activities since the making of the Appointment Order; and (e) support the Receiver's motion for an order (the "Sales Process Order"), among other things: (i) authorizing and directing the Receiver to further conduct the Sales Process (as defined below) for the property, assets and undertaking of EHGNA; and (ii) approving this First Report and the activities of the Receiver described herein.

2.0 TERMS OF REFERENCE AND DISCLAIMER

2.1 In preparing this First Report, the Receiver has relied upon unaudited financial information, books and records and other documents provided by, and discussions with, certain former management of EHGNA (collectively, the "Information").

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