ACE Aviation reports second quarter results and provides an update with respect to its liquidation process

ACE Aviation reports second quarter results and provides an update with 
respect to its liquidation process 
MONTREAL, Aug. 28, 2013 /CNW Telbec/ - ACE Aviation Holdings Inc. (ACE) 
announced today its results for the second quarter of 2013 and provided an 
update with respect to its liquidation process. 
Second Quarter 2013 Results 
In the second quarter of 2013, ACE recorded an increase in net assets in 
liquidation of $0.1 million due to interest income earned during the quarter 
offset by administrative and other expenses. 
As at August 27, 2013, ACE's only remaining assets consist of cash and 
short-term investments in an aggregate amount of $132 million. 
Liquidation Process Update 
On June 28, 2012, further to the approval by ACE shareholders on April 25, 
2012 of a special resolution providing for the voluntary liquidation of ACE, 
the Superior Court of Québec (Commercial Division) (the "Court") issued an 
order appointing Ernst & Young Inc. as liquidator of ACE (the "Liquidator"). 
Effective as of June 28, 2012, all of the directors and officers of ACE have 
resigned from their positions and the Liquidator was vested with the powers of 
the directors of ACE. 
Pursuant to an order issued by the Court on February 25, 2013, the Liquidator 
established a process for the identification, resolution and barring of claims 
and other contingent liabilities against ACE. Creditors had until May 13, 2013 
to file their proof of claims, failing which their claims would be barred and 
extinguished. 
As previously disclosed, in connection with the process leading to the 
issuance of tax clearance certificates in favour of ACE for all taxation years 
ended on or prior to December 31, 2010, Revenu Québec conducted a sales tax 
audit of ACE and its subsidiaries in 2010 and 2011. Revenu Québec issued 
notices of reassessment in the amount of $37.7 million primarily with respect 
to certain importations of aircraft parts on the basis that it was Air Canada, 
and not ACE's subsidiary ACTS LP, which should have paid GST and should have 
been allowed to claim the related refund. Revenu Québec also issued 
additional notices of reassessment in the amount of $7.4 million relating, 
inter alia, to certain intercompany transactions on which Revenu Québec 
considers that ACE or ACTS LP should have charged Air Canada sales tax in the 
amount of $6.8 million. All such reassessments were paid by ACE and ACTS LP, 
and Air Canada paid an aggregate amount of approximately $40.1 million to ACE 
and ACTS LP and then claimed additional GST/QST refunds for the same amount. 
ACE agreed to indemnify and hold harmless Air Canada should such refund claims 
be reassessed in the future. 
A substantially similar process occurred with respect to GST payable on 
importation on behalf of Aveos and Aveos agreed to claim additional GST 
refunds in the amount of $1.1 million and to pay such amount to ACE to 
reimburse it for GST paid in connection with the importations. ACE agreed to 
indemnify and hold harmless Aveos should such refund claims be reassessed in 
the future. 
In response to ACE's claims process, Air Canada filed a contingent claim 
related to the tax indemnity referred to above. The contingent claim, in the 
amount of $50.1 million, covers any eventual reassessment of Air Canada's 
input tax credit refund claims plus any related interest and ancillary legal 
costs. The reassessment periods for the large majority of the input tax credit 
claims covered by the indemnity in favour of Air Canada will expire by the end 
of 2014, with the remaining reassessment periods gradually expiring by 2016. 
Aveos filed a similar contingent claim in the amount of $1.6 million with 
respect to any eventual reassessment of input tax credit refund claims and any 
related interest and ancillary costs. ACE will maintain a reserve in the 
amount of the Air Canada and Aveos claims which will not be available for 
distribution to the shareholders pending the expiration of the related 
reassessment periods or settlement of such contingencies. 
ACE also received a claim from Teri Prince relating to a proposed class action 
initiated by Ms. Prince against Air Canada and ACE Aviation Holdings Inc., 
which alleges that Air Canada improperly charged Ms. Prince and other class 
members for certain United States taxes in connection with the sale of 
airfare. The plaintiff alleges (improperly in ACE's view) that as the former 
parent or shareholder of Air Canada, ACE is liable for the acts of Air Canada. 
Ms. Prince therefore filed a proof of claim against ACE in the liquidation 
claims process in the amount of $200 million, pending determination of the 
allegedly overcharged amounts. No breakdown or calculation was provided in 
relation to the amount claimed. ACE is of the view that this claim against 
ACE has no merit given that ACE is a separate entity from Air Canada and that 
ACE never sold airfare. Accordingly, the Liquidator has delivered a notice of 
disallowance to Ms. Prince and it will take appropriate measures to cause this 
claim to be disallowed and to have ACE removed as a defendant in this class 
action. The Liquidator will not proceed with any further distributions to 
shareholders pending satisfactory resolution of this matter. 
Future distributions of ACE's remaining net cash to its shareholders are 
subject to the expiration or settlement of any contingencies and there is no 
certainty as to the timing or amount of such distributions. The final 
distribution to shareholders and the cancellation of the shares of ACE will 
not occur until all remaining contingent liabilities are settled or otherwise 
provided for. 
For additional information with respect to the liquidation of ACE, refer to 
the management proxy circular dated March 9, 2012 and the other public filings 
of ACE which are available at www.sedar.com and www.aceaviation.com. 
CAUTION REGARDING FORWARD-LOOKING INFORMATION 
Certain statements in this news release may contain forward-looking 
statements. Forward-looking statements may relate to analyses and other 
information that are based on forecasts of future results and estimates of 
amounts not yet determinable. These statements may involve, but are not 
limited to, comments relating to strategies, expectations, planned operations, 
future actions, the timing of the liquidation and distributions to 
shareholders, the potential amount of ACE's contingencies and liability under 
claims filed, the final distribution to shareholders and the cancellation of 
the shares of ACE. These forward-looking statements are identified by the use 
of terms and phrases such as "anticipate", "believe", "could", "estimate", 
"expect", "intend", "may", "plan", "predict", "project", "will", "would", and 
similar terms and phrases, including references to assumptions. 
Forward-looking statements, by their nature, are based on assumptions and are 
subject to important risks and uncertainties. Any forecasts or forward-looking 
predictions or statements cannot be relied upon due to, amongst other things, 
changing external events and general uncertainties of the business. Actual 
results may differ materially from results indicated in forward-looking 
statements due to a number of factors, including without limitation, market, 
regulatory developments or proceedings, and litigation and actions by third 
parties as well as the factors identified throughout ACE's filings with 
securities regulators in Canada and, in particular, those identified in the 
Risk Factors section of ACE's 2012 Annual MD&A and Second Quarter 2013 MD&A. 
If ACE does not proceed with the winding-up in a timely manner, ACE will 
continue to incur operating costs and fees. The forward-looking statements 
contained in this news release represent ACE's expectations as of the date 
they are made, and are subject to change after such date. However, ACE 
disclaims any intention or obligation to update or revise any forward-looking 
statements whether as a result of new information, future events or otherwise, 
except as required under applicable securities regulations. 
Contact:David Saldanha, Ernst & Young Inc. (416) 943-4444 
Internet:www.aceaviation.com 
SOURCE: ACE AVIATION HOLDINGS INC. 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/August2013/28/c8658.html 
CO: ACE AVIATION HOLDINGS INC.
ST: Quebec
NI: AIR LEI ERN  
-0- Aug/28/2013 10:00 GMT
 
 
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