Coventree Announces Date for Commencement of Winding Up

/THIS PRESS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY./

NEX Symbol: COF.H 

TORONTO, Jan. 25, 2012 /CNW/ - Coventree Inc. (NEX: COF.H) ("Coventree" or the "Company") today announced that the Board of Directors of the Company has determined that the winding up of the Company will commence on or about February 15, 2012.

At the annual and special meeting of shareholders of Coventree held on June 30, 2010, the shareholders approved a special resolution authorizing the winding up of the Company and the distribution of its remaining assets, if any, to shareholders pursuant to the plan of liquidation and distribution (the "Liquidation Plan") attached as Schedule A to the Company's management information circular dated May 25, 2010.  The Liquidation Plan provides that it will become effective on a date to be determined by the Company's Board of Directors.  The Board has determined that the effective date, being the date on which the winding up will commence in accordance with the Liquidation Plan, will be on or about February 15, 2012 (the "Effective Date").

On the Effective Date, the Board of Directors of the Company will be deemed to have resigned, and Duff & Phelps Canada Restructuring Inc. (being the successor of RSM Richter Inc.) will be appointed the liquidator of the Company (the "Liquidator") for the purpose of winding up its affairs.  In addition, Geoffrey Cornish and Wesley Voorheis will be inspectors of the Company's liquidation.

The Company expects that, as soon as reasonably practicable following the Effective Date, the Liquidator will apply to the Superior Court of Justice (Ontario) (the "Court") to have the winding up supervised by the Court and to seek the Court's approval to establish a process for the identification, resolution and barring of claims against the Company and its directors and officers, both past and present.  The Company expects that, if approved by the Court, the date by which all claims must be filed will be in March or April, 2012 (the "Claim Bar Date").  Shortly after the Claim Bar Date, the Company intends to make an initial interim distribution to shareholders in an amount equal to the remaining assets of the Company, less the sum of (a) an amount required to pay claims against the Company that were filed on or before the Claim Bar Date, (b) an amount set aside or reserved to pay claims against the Company that remain outstanding following completion of the claims process, (c) an amount required to pay costs to be incurred during the winding up process, and (d) an appropriate contingency.  Claims that may be filed on or before the Claim Bar Date may include: the claim made by Dean Tai and certain corporations affiliated with him relating to the cancellation in April 2009 of certain Coventree shares that were issued to him under Coventree's 2005 Share Allocation Plan; claims made by Canada Revenue Agency relating to taxes including claims relating to tax filings made by one of Coventree's subsidiaries for 2007; and other claims currently not known to the Company.  Additional distributions to shareholders may be made as the winding up process evolves.

There can be no assurances as to the number of claims that may be filed on or before the Claim Bar Date and the monetary amount of such claims.  Accordingly, there can be no assurances regarding (a) the time required to complete the claims process including to resolve any claims that may be filed in accordance with that process; (b) the amount that will be required to pay or make provisions for claims against and the obligations of the Company; and (c) the timing, amount or form of distributions to be made to shareholders of the Company in connection with the winding up.  A number of factors, some of which are beyond the control of the Company, will affect the timing of, or the amount of funds available for distribution upon, the winding up of the Company, including the fact that such matters are subject to the approval of the Liquidator and the Court.

The Liquidation Plan contemplates that Coventree's common shares will continue to be listed and traded on NEX after the Effective Date.  However, the continuation of the listing after the Effective Date is subject to the approval of NEX.  In that regard, the Company has had discussions with NEX and intends to make a formal application to NEX to maintain the listing of its common shares until the completion of the claims process.  However, there can be no assurance that NEX will approve that application and, as a result, there is a risk that Coventree's common shares will be delisted and cease traded on NEX on the Effective Date.  Even if NEX approves the application to continue the listing beyond the Effective Date, the Company expects that its shares will be delisted and cease traded on NEX shortly after the completion of the claims process.

The foregoing description of aspects of the Liquidation Plan is qualified in its entirety by the more detailed information set out in the Company's management information circular dated May 25, 2010, including, without limitation, the text of the Liquidation Plan which is attached thereto as Schedule A.

Other Updates 

Coventree also announced that Geoffrey Cornish and Dean Tai, who were also parties to the proceeding commenced against the Company by the Ontario Securities Commission (the "OSC"), have decided personally to appeal the OSC's ruling that they violated Ontario's securities laws. Coventree previously announced that it will not appeal the OSC's decision.  Coventree has entered into an agreement with Mr. Cornish to limit the amount of legal fees and other costs related to such appeal for which Coventree is responsible under its indemnity agreement with him and to otherwise ensure that the interests of Coventree are not prejudiced by such appeal.  Mr. Cornish has agreed that Coventree's liability to indemnify him for legal expenses and other costs or awards arising from the appeal will be limited to $725,000.  The Company has agreed to support Mr. Cornish in his appeal but will not participate in it.  There is no similar agreement with Mr. Tai.

In another matter, Coventree announced that the Board of Directors authorized the Company to take appropriate steps to recover the amounts owing to the Company by certain companies owned by Mr. Tai.  Previously, the Company disclosed that loans totaling approximately $1.62 million as at December 31, 2011 that are owed by Mr. Tai's companies to Coventree are now in default.  Mr. Tai's companies have pledged 500,000 shares of Coventree as security for those loans.  In order to recover the amounts owing, the Board of Directors authorized the sale in the market of the 500,000 Coventree shares pledged by those companies and authorized Coventree to enter into such agreements or other arrangements with third parties as may be necessary or appropriate to facilitate such sale.

Forward-Looking Statements 

This press release includes certain forward-looking statements relating to the Company's expectations that the Liquidator will apply to the Court to, among other things, supervise the winding up and establish a claims process; the timing of the completion of the claims process; the amount that the Company will be required to pay or make provision for claims against and the obligations of the Company following the claims process; the timing, amount and form of any distributions to be made by the Company to shareholders as part of the winding up; and the Company's intention to apply for the continued listing of its common shares on NEX after the Effective Date.  These statements can be identified by the expressions "will", "expects" and "intends". These forward-looking statements are not historical facts but reflect Coventree's current expectations regarding future events based on information currently available to Coventree.

These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions which may be substantial. Many factors could cause actual results or events to differ materially from current expectations that may be expressed or implied by such forward-looking statements, including, without limitation, the various matters discussed under "Risks and Uncertainties" contained on pages 10 to 12 of the Company's Management Discussion and Analysis for the year ended September 30, 2011 which is available under the Company's profile on SEDAR at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, the Company may not be able to wind down its operations or implement a formal winding up of the Company in the near future or at all; and the amount of funds available to be distributed to shareholders pursuant to such a winding up could be significantly reduced and/or the timing of the distribution of such funds could be significantly delayed. These factors should be considered carefully and prospective investors should not place undue reliance on the forward-looking statements. These forward-looking statements are made as of the date of this press release and Coventree does not intend, and does not assume any obligation, to update or revise these forward-looking statements, except as required by law.

This press release is intended for distribution in Canada only.

Neither TSX Venture Exchange nor it Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Craig Armitage, The Equicom Group Inc.
Tel: [phone] x278
Email: [email protected] 
-or-
Ani Hotoyan-Joly, Coventree Inc.
Tel: [phone]
Email:  [email protected]