Canadian debtors’ plan of compromise and arrangement was sanctioned

Ontario civil | Bankruptcy and Insolvency

Companies’ Creditors Arrangement Act

Arrangements

Canadian debtors’ plan of compromise and arrangement was sanctioned

Global telecommunications company with corporate entities in many jurisdictions (debtors) became insolvent. Canadian debtors were granted Companies’ Creditors Arrangement Act protection. Dispute arose regarding $7.3 billion held in escrow after sale of debtors’ assets (allocation dispute), which involved protracted litigation in Canada and U.S. with various parties from multiple jurisdictions. Parties executed settlement and support agreement (Agreement). Monitor brought motion to sanction Canadian debtors’ plan of compromise and arrangement (Plan) and to release escrowed sale proceeds in accordance with Agreement. Motion granted. Plan sanctioned. Release of sale proceeds authorized in manner set out in Agreement. Plan was fair and reasonable. Plan received approval from 99.7 percent of creditors and called for payment to creditors on pari passu basis, which was bedrock of Canadian insolvency law. Objections to approval of Plan by long-term disability (LTD) beneficiaries were dismissed. LTD claimants were bound to prior agreement that their claims were to rank as unsecured claims that shared pari passu with other unsecured claims against Canadian debtors and that any claim for priority treatment had been released. Plan was not contrary to ss. 7 and 15 of Charter of Rights and Freedoms with respect to LTD claimants.
Nortel Networks Corp., Re (2017), 2017 CarswellOnt 1120, 2017 ONSC 700, Newbould J. (Ont. S.C.J. [Commercial List]).

Free newsletter

Our newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please enter your email address below to subscribe.

Recent articles & video

Divided convocation, AI, climate, and mental health among Bencher election issues for independents

Ontario Ministry of Finance launches consultations on framework for pension plan target benefits

Superior Court limits claims in motor vehicle accident due to an enforceable representation

Conditional sentence for man who killed 'racist' sets model for dealing with systemic racism: lawyer

Ontario proposes highest maximum fines in Canada for withholding foreign workers' passports

uOttawa law prof Carissima Mathen awarded David Walter Mundell Medal for excellence in legal writing

Most Read Articles

Conditional sentence for man who killed 'racist' sets model for dealing with systemic racism: lawyer

Divided convocation, AI, climate, and mental health among Bencher election issues for independents

Ontario Superior Court of Justice affirms no absolute right to amend pleadings

Superior Court limits claims in motor vehicle accident due to an enforceable representation