Law Times

Law Times • march 23, 2009 Lawyers seeing a 'surge' in CCAA filings NEWS BY TIM NAUMETZ For Law Times OTTAWA — Business is boom- ing for lawyers who specialize in rescuing failing companies un- der a federal law passed during the worst economic crash of the 20th century. Th e ment of 1933 introduced the Companies' Creditors Arrange- ment Act to give struggling busi- nesses a chance to restructure without declaring bankruptcy during the Great Depression. Now — as mergers and ac- quisitions lawyers scramble to fi nd whatever work they can — specialists in restructuring under the depression-era legislation are booked solid as the current re- cession continues to bite deeper. It's the other side of a coin that Conservative govern- otherwise is spelling hard times for the corporate legal commu- nity, say business lawyers. "Th ere's no doubt about it, stream of motions and fi lings refl ects the depressed state of the economy. Nortel's woes will be aired next month in a Toronto hear- ing room of the Commercial List court. Two fi rms, one of Ottawa's largest and another from Toronto, are scheduled to request representation orders for diff erent classes of Nortel em- ployees and former employees. Th e lawyers would act on behalf of employee and former employee interests as a range of Nortel creditors vie for a share of fi nancial settlements Nor- tel might be able to make as it struggles to stay afl oat. Nelligan O'Brien Payne LLP But his offi ce indicated the I've been extremely busy," says Vern DaRe, an associate at Gar- diner Roberts LLP in Toronto. "I suspect there are other bank- ruptcy, insolvency lawyers that are busy as well." Scott Bomhof, a leading ex- pert in restructuring and partner at Torys LLP, agrees. "We are seeing a surge in he CCAA fi lings," Times, adding the number of corporate receiverships under the same law has also increased. DaRe, who teaches a law- school class on the Companies' Creditors Arrangement Act at the University of Western On- tario, tells Law Times the legisla- tion is designed for large fi rms. Any company seeking protec- tion from creditors must have a minimum $5 million in debt. Th e fi nancial and debt realign- ments under the act in Ontario are supervised and approved ex- clusively within the Commercial List, a team of Superior Court judges expert in complex busi- ness litigation and restructuring. Statistics on the number of tells Law fi lings under the CCAA in the province was not immediately available from the attorney gener- al's department, and a spokesman for the federal superintendent of bankruptcies said the offi ce does not keep track of CCAA cases, even though it is a federal law. Justice Geoff rey Morawetz, a Commercial List judge who is presiding over the insolvency fi l- ings for Ottawa-based high-tech giant Nortel Networks, declined to be interviewed about the court's caseload. in Ottawa, which has already been retained by individual for- mer Nortel employees, wants the court to grant it a represen- tation order for employees who received layoff notices before the company sought protection un- der the CCAA last January. Nelligan resentation order for Nortel also wants a rep- included pension benefi ts, ter- mination settlements that have not been paid, and retiree health benefi ts. Mark Zigler, managing partner 'There's no doubt about it, I've been extremely busy,' says Vern DaRe. employees who lost their jobs after the CCAA fi ling, as well as continuing Nortel workers. Koskie Minsky LLP of To- ronto is requesting a blanket representation order that would cover all former Nortel employ- ees, but not current employees. Th e former employee interests at Koskie Minsky, tells Law Times it would be a confl icting interest for one fi rm to represent both for- mer and continuing employees. "Th ose who have been termi- nated may have a diff erent view on how the company should continue than those who want to preserve their jobs," he says. In eff ect, Nelligan may be competing to represent at least some of the same class of former employees. Zigler says Koskie Minsky already represents 1,900 of that group across the country. "What they all have in com- mon is that none of them work for the company anymore, be- cause they have been let go or retired," he says. "We think they are all part of a bigger umbrella because their claims are all in the same category. Th e Nelligan fi rm may try and convince the court otherwise." Meanwhile, as the CCAA and restructuring specialists line up to fi le motions at the Com- mercial List court on University Ave. in Toronto, corporate law- yers in other areas are watching clients stay away in droves. Lorraine Mastersmith, partner at Perley-Robertson Hill & McDougall LLP in Ot- tawa, specializes in mergers and acquisitions, including com- mercial fi nancings, debt, and private equity infusions. "Th ere's not a whole lot of those happening these days, un- fortunately," she says. "My prac- tice is quite slow right now, but it's given me lots of opportunity to do marketing, which I enjoy." Other business lawyers in a PAGE 5 Ottawa may not be so lucky, particularly if their clients are in the IT sector, Ottawa's biggest source of employment outside the federal bureaucracy. Many of them are friends of Mastersmith in other fi rms. "Th ey've done very well in the high-tech community, but basi- cally billings have just dropped off ," she tells Law Times. 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• Cover
• Competition Act
• Dead Time
• Focus On Corporate Restructuring & Insolvency