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
