Court File No. 31-OR-364921

August 23, 1999

There has been a request for adjournment regarding the appointment of the interim receiver because various of the interested persons have only received the material for the quasi-exparte motion just moments before court commenced. I have a great deal of sympathy for that position but I am of the view that their concerns may be dealt with under the comeback clause that is, in these circumstances the comeback clause should be interpreted as allowing any interest person to open up any of the issues involved in this interim receivership motion.

Insolvency matters are never very tidy especially when matters which have previously appeared to be progressing in a reasonably progressive and orderly fashion take a radical deviation from that path as happened in this case on Friday, August 13, 1999. Given the publicity which this company and its problems have had – both in the general media and the financial media as well as word of mouth amongst consumers and the business community, it is obvious that the inventory Eaton’s has in its stores and warehouses are "perishable" commodities in the way that that sense is associated with all interim receiverships under the BIAct. Further I understand, the company is now out of cash for operating costs and payments.

On the material it would appear important to implement the arrangements as to the realization of the value of the inventory at the earliest opportunity. It would be undesirable for all, including the unsecured creditors who have the potential for participating in a (expected) surplus if the mechanics of the process were to be delayed – or worse still to be perceived as stalled. But how that disposition continues in a procedural way will be subject to interest parties making submissions on amending or variation motions they may wish to bring. Of course over and above that are the other remedies which interested persons may wish to bring, either sheltered under the comeback clause or with leave independent of the comeback clause – an example being any injunctive relief which certain landlords may wish to bring as to leases protecting liquidation sales.

On the material it appears that there still exists a reasonable potential for negotiating a stores sale, perhaps inclusive of utilizing the significant tax loss of $390 million. Thus it would not be appropriate to conclude that the notice on intention to file a proposal was not bona fide.

It would seem to me that aside form the perishable goods feature of the interim receivership, the appointment of the interim receiver Richters would be of assistance in stabilizing a rather fluid chaotic situation and maintain the interim integrity of the workforce.

I would therefore grant an order (the terms of which are to be finalized) to appoint Richter & Partners Inc. as interim receiver of the Eaton’s inventory, to enter into the agency agreement and to make the payment contemplated with everyone recognizing the power of the comeback clause. I will deal with any mutual comeback matters at the end of this week or next week as is desired.

Order to issue (as modified and initialed). Each and every provision of it, including para. 7 is subject to the comeback clause.

Initial comeback motions to be dealt with this Friday, August 27, 1999 commencing at 10 a.m. (with the proviso that counsel assemble at the courthouse by 9 a.m., to see what elements may be consentually sorted out).

Justice Farley