On January 14, 2009, Nortel Networks Corporation obtained protection from its creditors under the Companies' Creditors Arrangement Act. From a historical perspective, it represents a Canadian icon's fall from grace. It was once an industry heavyweight - at its height its market cap was $250 billion and accounted for two thirds of the total value of the Toronto Stock Exchange. As North America's largest maker of telephone equipment (and now into its 113th year), its problems were compounded by the global financial crisis and North American recession as well as by global competition. Notwithstanding that Nortel's cash reserves at December 31, 2008 was over US$2 billion, it had not secured debtor-in-possession (DIP) financing in the current economic landscape - its consolidated indebtedness and liabilities was over US$11 billion (which includes US$575 million in notes due in 2012). Nortel filed in Ontario one day before it was to make a US$107 million interest payment.
Nortel Networks Inc. and certain of Nortel’s other U.S. subsidiaries filed in Delaware under Chapter 11 of the U.S. Bankruptcy Code and the Nortel CCAA entities also filed under Chapter 15 of the U.S. Bankruptcy Code for recognition of the Ontario proceedings as "foreign main proceedings." Likewise, a filing was made in Ontario to recognize the U.S. filings as "foreign proceedings" in Canada. Also, Nortel Networks UK Limited and other subsidiaries obtained an administration order from the English High Court of Justice under the Insolvency Act 1986.
For copies of the filings in the Nortel CCAA please contact Alex Tarantino at email@example.com
On February 4, 2009, Railpower Technologies Corp. and its U.S. subsidiary Railpower Hybrid Technologies Corp. filed under the CCAA in Quebec and later filed under Chapter 15 in the United States to recognize the CCAA proceedings. Railpower is involved in the development, construction and sale of locomotives and power plants for the transportation and related industries.
Guidelines and Protocols
The Nortel filing continued a pattern of cross-border judicial co-operation in cases involving Canada and the United States. Both the Ontario Court and the Delaware Court adopted and approved the American Law Institute / International Insolvency InstituteGuidelines for Court-to-Court Communications in Cross-Border Cases and approved a Cross-Border Insolvency Protocol to co-ordinate the Canadian and U.S. proceedings. Our lawyers, in particular, helped pioneer and develop this cross-border insolvency system and the Guidelines. The Guidelines are used to enhance co-ordination and co-operation in international insolvency cases. For a complete list of the Cross-Border Insolvency Protocols please contact Alex Tarantino at firstname.lastname@example.org