Lexpert Magazine

Nov/Dec 2017

Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.

Issue link: http://digital.carswellmedia.com/i/894157

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18 LEXPERT MAGAZINE | NOVEMBER/DECEMBER 2017 BIG DEALS DEALS ANALYSIS 19 19 Total Deals Published 10 Corporate Finance 21 9 Mergers & Acquisitions 21 8 Cross-border Transactions 21 BIG DEALS TRANSACTION VITALS ANNOUNCED: 1/14/2009 CLOSED: 5/8/2017 DEAL TYPE: RESTRUCTURING UNDER THE CCAA JAY CARFAGNINI GOODMANS LLP (FOR THE MONITOR) DERRICK TAY GOWLING WLG (CANADA) LLP (FOR NORTEL CANADA) TONY REYES NORTON ROSE FULBRIGHT CANADA LLP (FOR NORTEL CANADA) TONY DEMARINIS TORYS LLP (FOR NORTEL NETWORKS INC.) Nortel Networks Corporation (Nortel Canada) is the Canadian parent company of what was one of the largest telecommunications businesses in the world. In early 2009, formal insolvency proceedings were commenced in Canada, the United States and England, among other places. Nortel's worldwide business was liquidated through a number of Court-approved sales of its business units and a US$4.5- billion sale of its residual patents, resulting in US$7.3 billion of global sale proceeds to be allocated amongst the Nortel debtor companies in Canada, the United States and Europe. Ernst & Young Inc. was appointed as CCAA Monitor (the Moni- tor) in respect of Nortel Canada and, aer the resignation of Nortel Canada's board of directors, its powers and responsibilities were ex- panded to protect the interests of Nortel Canada's stakeholders. Following the failure of several mediations, an unprecedented "joint" trial to determine the allocation of these sale proceeds among the Nortel debtors (the Allocation Dispute) was held before the On- tario Court and Delaware Bankruptcy Court. is trial took place in the spring of 2014. e lead-up discovery and litigation process involved approximately 150 fact and expert de- positions in various cities worldwide, the production and review of millions of documents and the exchange of dozens of expert reports. In May 2015, the Ontario and Delaware courts released separate decisions in the Allocation Dispute, each of which provided for a modified pro-rata allocation of the proceeds amongst the Nortel debtors based on the amount of creditor claims against each debtor. ose decisions were appealed by the US interests. In Canada, leave to appeal was denied by the Ontario Court of Appeal in an unprec- edented 42-page decision, with Lexpert magazine citing this as one of its "Top 10 Business Decisions of 2016" and calling it "undoubtedly a major catalyst to the global settlement that followed." Leave to appeal to the Supreme Court of Canada was sought by the US interests. In an effort to avoid further protracted litigation and following months of further mediation and negotiations, in October 2016 the Nortel debtors and certain of their significant creditors from Canada, the United States and Europe reached a global settlement of the Al- location Dispute and various other matters. e global settlement entitled Nortel Canada to 57.1 per cent of the global sale proceeds of US$7.3 billion, Nortel's US debtors to 24.35 per cent and Nortel's European debtors to 18.55 per cent. Stem- ming from and in order to implement the global settlement, coordi- nated plans of arrangement were also negotiated amongst the Nortel Canada and US debtors and their key stakeholders and these plans were filed in Canada and the US Creditors and the courts approved the plans in January 2017, with in excess of 99 per cent of voting creditors (both by number and value) voting to approve the Canadian plan. Two individual unrepresented opposing creditors sought leave to appeal the Canadian sanction order. e leave application was dis- missed by the Ontario Court of Appeal in March 2017. COMPILED BY GENA SMITH Telecommunications NORTEL NETWORKS REACHES GLOBAL SETTLEMENT

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