Nortel Allocation Trial A Cross-Border First, But Will It Be Worth It?

The ongoing Companies' Creditors Arrangement Act [CCAA]¹ proceeding of Nortel Networks Inc. et al. is certainly not the first Canadian-based restructuring with assets spread through different jurisdictions, to which creditors from those different jurisdictions have laid competing claims. Almost all major Canadian insolvencies experience this to some extent. However, Nortel is, it seems, the first such restructuring where the amounts at issue are large enough, and the affected creditor groups diverse and active enough, to prevent what Canadian insolvency professionals are usually able to do: agree on a consensual solution that is close enough to perfect.² Unfortunately, in the Nortel insolvency, the difference between "close enough" and "perfect" could easily be hundreds of millions of dollars. One can only speculate that it is very hard to convince one's clients to take a settlement when so much might potentially be left on the table.