sap db02 not updating - Liquidating ccaa

They asserted that denying the Bondholders the right to post-filing interest would amount to confiscating a property right and that absent express statutory authority, the Ontario Court had no ability to interfere with the Bondholders’ contractual entitlement to interest.The Bondholders also cited appellate level decisions which, they submitted, supported the contention that the interest stops rule is inapplicable in CCAA proceedings. Debtors) filed petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (Delaware Court). K.), the Middle East and Africa (collectively, the EMEA Debtors) also filed for administration in the U. Allocation Dispute The sale of Nortel’s assets, including a large patent portfolio, generated approximately US.3 billion in realizations, which are currently the subject of a larger dispute over their proper allocation (Allocation Dispute) among the Canadian Debtors, the U. Post-Filing Interest As the CCAA does not expressly prohibit asserting a claim for post-filing interest, the Bondholders took the position that contractual interest continues to accrue from and after the CCAA filing date and that a claim for such interest can be asserted against the Canadian Debtors. The Bondholders’ claims as at the filing date totalled approximately US.092 billion in principal and pre-filing interest; the post-filing interest claim added an additional US

They asserted that denying the Bondholders the right to post-filing interest would amount to confiscating a property right and that absent express statutory authority, the Ontario Court had no ability to interfere with the Bondholders’ contractual entitlement to interest.The Bondholders also cited appellate level decisions which, they submitted, supported the contention that the interest stops rule is inapplicable in CCAA proceedings. Debtors) filed petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (Delaware Court). K.), the Middle East and Africa (collectively, the EMEA Debtors) also filed for administration in the U. Allocation Dispute The sale of Nortel’s assets, including a large patent portfolio, generated approximately US$7.3 billion in realizations, which are currently the subject of a larger dispute over their proper allocation (Allocation Dispute) among the Canadian Debtors, the U. Post-Filing Interest As the CCAA does not expressly prohibit asserting a claim for post-filing interest, the Bondholders took the position that contractual interest continues to accrue from and after the CCAA filing date and that a claim for such interest can be asserted against the Canadian Debtors. The Bondholders’ claims as at the filing date totalled approximately US$4.092 billion in principal and pre-filing interest; the post-filing interest claim added an additional US$1.6 billion to their claims.

||

They asserted that denying the Bondholders the right to post-filing interest would amount to confiscating a property right and that absent express statutory authority, the Ontario Court had no ability to interfere with the Bondholders’ contractual entitlement to interest.

.6 billion to their claims.

liquidating ccaa-63

Debtors and the EMEA Debtors are collectively referred to as Nortel). The validity and quantum any disputed claims asserted by creditors against each estate must also be determined.

The determination of each estate’s entitlement to the aggregate proceeds of liquidation is, however, only one step towards finally determining creditor distributions.

Citing the Supreme Court of Canada’s decisions in , Justice Newbould favoured an interpretation of the CCAA that would avoid incentivizing debtors and other stakeholders to pursue a liquidation proceeding under the BIA over a potential restructuring proceeding under the CCAA in order to achieve a different treatment of post-filing interest.

Accordingly, Justice Newbould favoured a more uniform treatment across insolvency regimes and concluded that as the common law interest stops rule applies to liquidation proceedings under the BIA, there was “no reason not to apply the interest stops rule” to a liquidating CCAA proceeding.

If contractual interest were to accrue to the benefit of one unsecured creditor constituency while other unsecured creditor constituencies that are not entitled to contractual interest are stayed, the filing datewould be altered, which would be fundamentally unfair to creditors in the same unsecured class.

The Bondholders, supported by the UCC and the indenture trustee for the Crossover Bonds, argued that unlike the BIA, which contains express statutory provisions that have the effect of stopping interest as at the date of bankruptcy, there is no such interest stops rule under the CCAA.

In determining the quantum of claims of unsecured bondholders to the proceeds of the liquidation of the Canadian Debtors’ assets, Justice Frank Newbould held that the “interest stops” rule applies in CCAA proceedings and, accordingly, unsecured bondholders were not entitled to assert claims for post-filing interest. and Canadian Nortel entities issued and/or guaranteed unsecured notes (Crossover Bonds). Under the terms of the relevant indentures, the holders of the Crossover Bonds (collectively, the Bondholders) are entitled to interest on their principal debt until such time as the debt owing to them is paid in full. To the extent that the Bondholders are entitled to submit claims for post-filing interest in Canada, the recoveries of the Employee Creditors and other creditors (who do not have contracts entitling them to interest) will be diluted.

The interest stops rule requires that, for the purposes of claim quantification, contractual interest stops accruing on unsecured debt as of the date the insolvency proceeding is filed. Consequently, the Monitor, the Canadian Debtors, the Employee Creditors and other parties of aligned interest took the position that the Bondholders could not make a claim for post-filing interest under the CCAA. unsecured creditors’ committee (UCC), of which the Bondholders are by far the largest constituency. No such settlement was reached in Canada and the hearing proceeded in the Ontario Court before Justice Newbould.

In ruling against the Bondholders, Justice Newbould held that the with respect to unsecured creditors should be maintained as at the date of filing and accepted the argument that to permit some creditor claims to grow disproportionately to others during the CCAA stay period would not maintain the .

Tags: , ,