Canadian debtors’ plan of compromise and arrangement was sanctioned

Companies’ Creditors Arrangement Act

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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]).