Plan of arrangement to reduce existing secured and unsecured debt approved

Applicant was parent Canadian based international pharmaceutical company whose share price lost more than 99 per cent of its value over two years, faced regulatory problems and various other business problems, including $3.7 billion worth of long-term debt. Applicant and its advisors commenced discussions respecting transactions to improve its corporate structure with certain stakeholders collectively known as Debtholder Committees and Debtholder Committee Advisors. Proposed Recapitalization Transaction that applicant intended to implement through plan of arrangement under Canada Business Corporations Act (Act) would seek reduction of existing secured and unsecured debt obligations involving collectively known Affected Debt and related Affected Debt Instruments by more than $2 billion. Applicant failed to make recent payment pursuant to seven per cent unsecured note and had no intention of making monthly unsecured loan payments as foregoing payments formed part of collected Affected Debt that they expected to be affected under Recapitalization Transaction. Applicant intended to continue to make scheduled, ordinary course interest and amortization payments under its secured debt instruments, as applicable. Applicant brought motion for preliminary interim order to facilitate capital restructuring including order staying creditors from taking any enforcement proceedings under s. 192 of Act. Motion granted. Applicant complied with statutory requirements and proposed arrangement fell within category of arrangement contemplated by s. 192 of Act. Affected Debt fell within definition of security and as applicable debt obligation as other evidence of indebtedness or guarantee of corporation and thus each constituted security for purposes of Act. Draft preliminary order was appropriate and would assist applicant in working to advance and finalize terms of Recapitulation Structure and to return to court for interim order and to ultimately seek approval of proposed arrangement.

Concordia (Re) (2017), 2017 CarswellOnt 17120, 2017 ONSC 6357, G.B. Morawetz R.S.J. (Ont. S.C.J.).