SHS Services Management Inc./Gestion Des Services SHS Inc. and SHS Services Limited Partnership

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Receivership

Page last updated: August 13, 2014

This page is for information purposes only and you should consult your professional adviser if you have any questions or are uncertain as to your rights or obligations.

On January 9, 2014, pursuant to an order (the “Receivership Order”) of the Ontario Superior Court of Justice (Commercial List) (the “Court”), PricewaterhouseCoopers Inc. (“PwC”) was appointed as receiver (the “Receiver”), without security, of all of the assets, undertakings and properties (the “Property”) of SHS Services Management Inc./Gestion Des Services SHS Inc. and SHS Services Limited Partnership (collectively “SHS” or the “Companies”) acquired for, or used in relation to a business carried on by the Companies, pursuant to section 243 (1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (the “BIA”). These proceedings are referred to as the “Receivership Proceedings”.

Earlier, on December 13, 2013, pursuant to an order (the “Appointment Order”) of the Court, PwC was appointed as interim receiver and receiver (the “Interim Receiver”), without security, of all of the Property of SHS acquired for, or used in relation to a business carried on by the Companies, pursuant to section 47 of the BIA) and section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended. These proceedings are referred to as the “Interim Receivership Proceedings". Pursuant to the Receivership Order, the Interim Receivership Proceedings were continued as Receivership Proceedings.

The Receivership Order was granted pursuant to the application made by Sears Canada Inc. The Appointment Order was granted pursuant to an application made by SHS.

In accordance with the provisions of the BIA, a Notice and Statement of the Interim Receiver was mailed to all known creditors of the SHS on December 20, 2013.Please refer to the question and answer section of this website (the “Q&A”) for further information, which may assist you at this time with any questions you have with respect to the receivership proceedings.

If you are a customer of SHS, please be advised that the Receiver is not calling customers and asking for credit card information. Please be vigilant when giving your personal information over the phone and do not provide your credit card information to anyone who claims to represent SHS or the Receiver. If you have been defrauded, contact the authorities, your bank and the local police to report the incident.

Notice and Statement of the Receiver

Notice to Customers

The Receiver has taken possession of all the assets, property and undertakings of SHS. The Receiver is no longer carrying on operations of SHS.

The Receiver is not completing further customer orders placed before December 13, 2013 and it is not refunding customers for deposits or other amounts paid to SHS prior to the Receivership Proceedings. If you have an outstanding order which you have paid a deposit for, please call Sears at 1-866-506-7779.

Certain orders for windows and doors have been assigned to third parties. The Receiver may assign certain other customer orders placed before December 13, 2013 to third parties. Affected customers will be notified by mail.

The Receiver is not performing any service or warranty work for pre-Receivership orders. Please call Sears at 1-800-4MY-HOME (1-800-469-4663) for all repair and warranty related issues.

Reliance Home Services purchased the rental water heater, furnace and air conditioning business of SHS outside of Quebec on March 20, 2014. For billing or service inquiries on your rental equipment please call Reliance Home Comfort at 1-866-977-1669.

If you are calling regarding an outstanding rebate under the Ontario Power Authority incentive program, please call the Ontario Power Authority at 1-877-797-9473 and select option 3.

Some customers are receiving phone calls allegedly from SHS or the Receiver offering to refund customers, and seeking personal information from the customer. These calls are not being made by SHS or the Receiver. You are asked to email the Receiver at shs.questions@ca.pwc.com with details of such calls should you receive them. Please be vigilant when giving your personal information over the phone and do not provide your credit card information to anyone who claims to represent SHS or the Receiver. If you have been defrauded, contact the authorities, your bank and the local police to report the incident.


Status of File as of August 13, 2014

On August 12, 2014, the Receiver filed its Eighth Report to Court to inform the Court of:

  1. The Receiver’s activities since the Receiver’s Fifth Report dated June 19,m 2014, inclusive of the activities set out in the Receiver’s Sixth Report dated July 14, 2014 and the Receiver’s Seventh Report dated July 28, 2014;
  2. The Receiver’s statement of cash receipts and disbursements for the period of the Interim receivership Proceedings and the Receivership Proceedings to July 31, 2014;

and to seek an order of the Court:

  1. Approving the Settlement Agreement and the Proposed Claims Resolution Process as defined in the Receiver’s Eighth Report; and
  2. Approving the activities of the Receiver as set out in the Sixth, Seventh and Eighth Reports.

Status of File as of August 7, 2014

On July 30, 2014, the Court issued an order lifting the stay of proceedings granted pursuant to the Receivership Order for the sole purpose for Alaris to make an application for a bankruptcy order against SHS and SHS LP.

Thereafter, on July 31, 2014, bankruptcy orders were issued against each of SHS and SHS LP, with the provision that they were suspended for a period of 10 days to ensure proper service on the Office of the Superintendent of Bankruptcy.

Status of File as of July 28, 2014

On July 28, 2014, the Receiver filed its Seventh Report to inform the Court of:

  1. The Settlement Agreement with Sears in regards to the Pre-Filing Customer Payments: and
  2. The application for bankruptcy orders in respect of each of SHS and SHS LP made by Alaris Income Growth Fund Partnership (“Alaris”), and the implications of same in the Receivership Proceedings.

Status of File as of July 17, 2014

On July 15, 2014, the timetable for a motion to be heard to resolve the issue of entitlement to the Pre-Filling Customers Payments has been revised to October 3, 2014. A copy of the revised timetable can be found under the Court Orders tab.

Status of File as of July 14, 2014

On July 14, 2014, the Receiver filed its Sixth Report with the Court to inform the Court of:

  1. the review performed by the Receiver’s legal counsel, McMillan LLP, of certain obligations of SHS owed to Sears and subject to the security held by Sears;
  2. the application for a bankruptcy order expected to be made imminently by Alaris, and the implications of same in the Receivership Proceedings; and
  3. the potential settlement with Sears in regards to the Pre-Filing Customer Payments.

Status of File as of June 27, 2014

On June 26, 2014, the Court issued an order:

  1. approving the Fifth Report and the Receiver’s activities;
  2. approving the transaction for the sale of SHS’s Quebec Rental Portfolio (“QRP”) entered into between the Receiver and Hydrosolution and vesting in Hydrosolution the QRP; and
  3. sealing confidential Appendix “E” to the Receiver’s Fifth Report for a period of 120 days from the date of the Order.

The Court has set a timetable for a motion to resolve the issue of entitlement to the Pre-Filing Customer Payments (as defined in the Receiver’s Fifth Report) for the motion to be heard on September 8, 2014, a copy of such timetable is annexed to the endorsement of the Court dated June 26, 2014.

Status of File as of June 20, 2014

On June 19, 2014, the Receiver filed its Fifth Report to the Court to inform the Court of:

  1. The Receiver’s activities since the date of the Fourth Report;
  2. The statement of receipts and disbursements for the period of the Interim Receivership Proceedings and the Receivership Proceedings to June 15, 2014;
  3. The review of the security held by Sears and Alaris by the Receiver’s legal counsel, McMillan LLP;

    and to seek orders of the Court:

  4. Authorizing the Receiver to enter into a purchase and sale agreement with Hydrosolution LP (“Hydrosolution”) and a transaction to sell SHS’s assets located in Quebec used in its water heating and HVAC rental business (the “Quebec Rental Portfolio”), and vesting in Hydrosolution, the Quebec Rental Portfolio free and clear of all encumbrances; and
  5. If necessary, setting a timetable for a motion to resolve the issue of entitlement to the Pre-Filing Customer Payments; and
  6. Seeking the direction of the Court concerning the Lien and Trust Claims Resolution Process (as defined in the Fifth Report).

Status of File as of March 12, 2014

On March 11, 2014 the Court approved orders for:

  1. a purchase and sale agreement with Reliance and a transaction to sell the Rental Portfolio excluding the Quebec Rental Portfolio and vesting in Reliance the Rental Portfolio free and clear of all encumbrances;
  2. an order approving the Lien and Trust Claims Identification Process. Information on the claim process is described under the Lien & Trust Claims Process tab.

The request to approve the Receiver’s and its counsel’s activities and fees has been adjourned until Monday, March 24, 2014.

Status of File as of March 5, 2014

On March 4, 2014, the Receiver filed the Receiver’s Fourth Report to the Court the purpose of which was to inform the Court of:

  1. the Receiver’s activities since the date of the Third Report;
  2. the statement of receipts and disbursements for the period of the Interim Receivership Proceedings and the Receivership Proceedings to February 21, 2014, and the forecast cash flows to March 28, 2014;
  3. The relief sought in the hearing scheduled for March 11, 2014 including for:
    1. an order authorizing the Receiver to enter into a purchase and sale agreement with Reliance Comfort Limited Partnership (“Reliance”) and a transaction to sell the Renal Portfolio excluding the Quebec Rental Portfolio and vesting in Reliance the Rental Portfolio free and clear of all encumbrances;
    2. an order approving the Lien and Trust Claims Identification Process (as defined in the Fourth Report); and
    3. an order approving the activities of the Receiver as set out in this Fourth Report and approving the fees and disbursements of the Interim Receiver and its counsel arising from the performance of their duties in the period to January 8, 2014, and approving the fees and disbursements of the Receiver and its counsel for the period from January 9 to February 21, 2014.

A motion will be heard on March 11, 2014.

Status of File as of February 4, 2014

On February 4, 2014, the Court granted an order, among other things:

  1. approving the activities of the Receiver as set out in the Third Report, the Supplementary Report and the 2nd Supplementary Report of the Receiver;
  2. approving the Liquidator Offer;
  3. authorizing the Receiver to enter into an auction services agreement and a transaction to sell the Auction Assets;
  4. sealing the confidential appendices A and B to the Supplementary Third Report for a period of 120 days;
  5. vesting SHS’s rights, title and interest in and to the Auction Assets in the purchasers thereof free and clear of all claims; and
  6. authorizing the release of the Prepaid Custom Inventory to customers;

    (all as defined in the Receiver’s Third Report, the Supplementary Report and the 2nd Supplementary Report)

Also on February 4, 2014, the Court granted an order lifting the stay of proceedings, found in the Receivership Order, against certain licensees of SHS for the limited purpose of permitting the licensees to terminate any of their respective license agreements with SHS.

Status of File as of January 31, 2014

On January 31, 2014, the Receiver filed its supplementary report to its third report (the “Supplementary Report”) with the Court the purpose of which was to update the Court on:

  1. the Receiver’s request for an order approving the Liquidator Offer and authorizing the Receiver to enter into an auction services agreement generally in the form attached to the Supplementary Report and approving the transaction to sell the Auction Assets and vesting in the purchaser the Auction Assets free and clear of all encumbrances; and
  2. the Receiver’s request for information from Sears concerning the Pre-Filing Customer Payments.
    (all as defined in the Supplementary Report)

Status of File as of January 29, 2014

Also on January 28, 2014, the Receiver filed its third report (the “Third Report”) with the Court the purpose of which was to inform the Court on:

  1. the Receiver’s activities since its second report to the Court;
  2. the Receiver’s statement of receipts and disbursements from the period from its appointment to January 24, 2014, the forecast cash flows to March 28, 2014, and the potential funding requirements;
  3. the Receiver’s view on the application by certain licensees of the Company to lift the stay of proceedings in the Receivership Order; and
  4. the relief sought in the hearing scheduled for February 4, 2014 seeking an order to:
    1. authorize the Receiver to enter into an auction services agreement and a transaction to sell the Auction Assets (as defined in the Third Report);
    2. authorize the release of the Prepaid Custom Inventory (as defined in the Third Report) to customers; and
    3. approve the activities of the Receiver as set out in the Third Report.

Status of File as of January 9, 2014

On January 9, 2014, the Court granted an order, which among other things:

  1. authorized the continuance of the Interim Receivership Proceedings as Receivership Proceedings and appointed PwC as Receiver, without security, of all of the Properties of SHS pursuant to section 243 (1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended;
  2. approved the activities of the Interim Receiver as set out in its First and Second Reports;
  3. discharged PwC as Interim Receiver of SHS; and
  4. approved a sale process for the SHS’s rental portfolio assets.

Status of File as of January 8, 2014

On January 8, 2014 Sears Canada Inc. filed a motion with the Court to be heard on January 9, 2014 for an order (the “Receivership Order”) continuing the receivership of SHS pursuant to section 243 (1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended and section 101 of the Courts of Justice Act, R.S.O.1990, c. C.43 , as amended and appointing PricewaterhouseCoopers Inc. as receiver of all of the assets, undertakings and properties of SHS acquired for, or used in relation to the business carried on by SHS.

Also on January 7, 2014, the Interim Receiver filed its second report with the Court the purpose of which was to provide an update to the Court on:

  1. the Interim Receiver’s activities since its first report to the Court; and
  2. the relief sought in the hearing scheduled for January 9, 2014 seeking the Receivership Order to:
    1. continue the interim receivership proceedings as receivership proceedings;
    2. approve the activities of the Interim Receiver as set out in its First and Second Reports; and
    3. approve a sale process for the SHS’s rental portfolio assets.

Status of File as of December 23, 2013

On December 23, 2013, the Court issued an order (the “Amended and Restated Order”) amending and replacing the Appointment Order with the form of order attached as schedule A to the Amended and Restated Order.

Status of File as of December 20, 2013

On December 20, 2013, the Interim Receiver filed its First Report with the Court to update the Court on the activities of the Interim Receiver since its appointment and the relief sought in the comeback hearing scheduled for December 23, 2013.


This Web site will be updated as information becomes available.

For more information, please contact: PwC Hotline, Telephone: +1 855 376 8474, Fax: +1 416 814 3219, or via Email.