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Law TiMes • March 21, 2011 All eyes still on Nortel case Continued from page 9 most of the assets have been sold, although the allocation of the money to the company's credi- tors has yet to be determined. "It's a very signifi cant liquidating CCAA and, for the most part, the majority of the assets have been sold. With all of the proceeds being put into escrow, the cur- rent and yet-to-be-determined issue is how those proceeds will be allocated across the various Nortel, to me, is a case that helps us understand better the positions of employee claimants in a liquidating situation, and more importantly, it helps us better understand how cross-border proceedings can be facilitated, especially between Canada and the U.S. estates around the world. Absent of a consensual resolution, it will be an interesting process to see how those proceeds will be allocated and it could involve mandatory arbitration or some multilateral court hearings to re- solve it," he says. Th e TerreStar restructuring is one of the fi rst under the new cross-border provisions imple- mented in 2009, Kukulowicz notes. Another controversial issue in recent restructurings has been the role of credit bid- ding by secured lenders through which they seek to acquire a business using their debt posi- tion. Th e main issue is the need to construct a level playing fi eld that doesn't discourage third par- ties from bidding and therefore maximizes creditor recoveries. "Our experience is if the bidding rules are carefully and properly constructed at the out- set, it creates a fair process for value maximization where bid- ders can try to beat a stalking- horse credit bid," Kukulowicz says. "At the same time, secured creditors should be allowed to bid their debt as part of an acquisition in order to protect their debt position against an undervalue sale." Kukulowicz expects there will be more restructurings ini- tiated this year, particularly in sectors that are capital intensive in which enterprises remain over-leveraged. As well, he be- lieves that should interest rates increase, there could be a rise in real estate restructurings as well. As Michael MacNaughton, a partner with Borden Ladner Gervais LLP's insolvency and restructuring group, points out, one of the largest restructur- ings involved the asset-backed commercial paper proceedings Looseleaf • $145 Subscription updates invoiced as issued (1/yr) • P/C 099303000 ISSN 1923-2128 Prices subject to change without notice, to applicable taxes and shipping & handling. that were essentially resolved in 2009 when the Superior Court approved an agreement and un- froze investments valued at $32 billion. "I think that's interesting in the sense that the court addressed the restructuring in the context of the market rather than a com- pany," says MacNaughton, who notes all lawyers who practise in the restructuring fi eld are closely watching the Nortel matter due to its scope. "Nortel, to me, is a case that helps us understand better the positions of employee claimants in a liquidating situ- ation, and more importantly, it helps us better understand how cross-border proceedings can be facilitated, especially between Canada and the U.S." As well, he says many cross- border matters have assisted law- yers in leveraging means such as the U.S.-style stalking-horse bid- ding process that has gained ac- ceptability in Canada. "Some of the decisions by the courts have been very good guides. Th is all comes from a signifi cant reces- sion, and there are so many busi- nesses involved in restructurings, and matters then need to be co- ordinated in both countries. "I think practitioners and judges on both sides of the bor- der have become very good at co-ordinating cross-border cases and agreeing on where the cen- tre of main interest should be and sorting out ancillary pro- ceedings to get them done effi - ciently. It has really streamlined the system to the benefi t of all parties." FOCUS PAGE 13 CANADIAN LAW LIST 2011 YOUR INSTANT CONNECTION TO CANADA'S LEGAL NETWORK Inside you will find: an up-to-date alphabetical listing • • • of more than 58,000 barristers, solicitors and Quebec notaries, corporate counsel, law firms and judges in Canada; contact information for the Supreme Court of Canada, the Federal Court of Canada, Federal Cabinet Ministers, departments, boards, commissions and Crown corporations; legal and government contact information related to each province for the Courts of Appeal, Supreme Courts, County and District Courts, Provincial Courts, law societies, law schools, Legal Aid, and other law- related offices of importance. 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