Restructuring & Insolvency

Nick has extensive experience representing financial institutions in insolvency and restructuring matters – from ABL lenders and other financial institutions with secured positions, to all manner of unsecured banking exposures. Nick has advised the following institutions on numerous notable matters:

– Bank of Nova Scotia

– CIT

– Comerica

– HSBC Bank Canada

– J.P. Morgan

– Royal Bank of Canada

– Roynat

– U.S. Bank

– Wells Fargo

Nick has guided restructuring companies and their shareholders and directors in respect of all aspects of the insolvency and restructuring challenges they faced. This included a wide variety of legal work, including in relation to pensions law, labour and employment issues, commercial trade and credit challenges, and corporate governance matters. In addition, a number of these matters have included litigation management, involving cost-benefit and risk mitigation analyses in relation to ongoing and potential litigation. Several of these companies and their principals continue to retain Scheib Legal for their ongoing commercial legal needs after Nick assisted in their successful restructurings.

Nick has worked with Canada’s principal accounting firms in their roles as Court-appointed bankruptcy trustees, receivers, proposal trustees and monitors. Nick has worked closely over the years on matters with (and sometimes across the table from):

– Alvarez & Marsal (notably, for U.S. Bank relating to Maax Bath & Brookfield Asset Mgt.)

– Deloitte (notably, for a creditor-client in relation to the Homburg CCAA)

– Ernst & Young (for various clients, notably relating to Air Canada, Ivaco, ROL Manufacturing and Quebecor World)

– FTI Consulting (notably, in relation to Aveos)

– KPMG (on the GBO Inc. bankruptcy with a trustee now at the firm)

– PwC (for mutual client BNS as syndicate agent in relation to Yellow Media, and for RBC re Quebecor World)

– Richter Consulting (on numerous Montreal-based matters for various mutual clients)

At the outset of Nick’s career, he worked on the high-profile Ravelston / Hollinger (Conrad Black) matter, where McMillan LLP represented the receiver in the highly publicized and complex proceedings in Canada. As counsel to Richter Consulting as bankruptcy trustee on the Dominion Bridge Inc. matter, Nick dealt with a dispute with a union over the allocation of a surplus from a registered pension plan, the first of his several experiences with the complex interaction of the laws governing registered pension plans and corporate insolvency. Nick has since written about and delivered TMA-sponsored presentations about the leading Indalex, White Birch and Aveos decisions in the complex, ever-evolving intersection of insolvency and pension plan law.

Nick has counselled chief restructuring officers (CROs) and addressed CRO-related selection, mandate and liability issues, including in respect of the ROL Manufacturing and Ravelston/ Hollinger restructuring matters. Nick served as counsel to the Court-appointed CRO of the ROL Manufacturing group of automotive parts companies in their restructuring proceedings. Very quickly after his appointment, the CRO assumed all managerial control of the debtor companies. Nick worked closely with the CRO, and with Ernst & Young as Court-appointed Monitor, to source, negotiate and conclude a series of sales of all the debtors’ assets to different purchasers and obtain Court approval thereof (both in Canada and the United States).

Nick acted on numerous matters for purchasers of distressed assets in the context of Court-supervised sales of assets by insolvent debtors in restructuring and bankruptcy contexts.

Insolvency lease purchase assignments: Nick counselled Dollarama in acquiring portfolios of leasehold rights in the bankruptcy of Everything For A Dollar Store and the CCAA restructuring of The Bargain Shop.

CCAA sales process: Nick provided Canadian law advice to the offshore purchaser of significant aviation sector assets made concurrently with the Aveos CCAA proceedings.

Inventory liquidation: Nick advised Tiger Capital in their role as agent to Hart Stores for the purposes of liquidating assets in over 30 “closing stores” as part of their CCAA restructuring.

Insolvency proceedings-based sale of an operating business: In the ROL Manufacturing matter, Nick worked closely with the CRO and Ernst & Young in successfully selling the various divisions of the company as part of a CCAA proceedings-driven orderly liquidation. As part of this process, Nick worked with U.S. co-counsel to create a framework Canadian Court order in the principal proceedings, which was recognized by the U.S. Court, to sell and vest out U.S.-based assets.

CCAA claims trading: At the outset of my career as a lawyer, Nick gained extensive experience with secondary loan market trading documentation, in the context of the Air Canada restructuring proceedings. Working directly with senior partner Max Mendelsohn, Nick advised Société Générale and Merrill Lynch’s high yield trading desk in relation to their respective sales and purchases of distressed debt connected to Air Canada. Inasmuch as certain practices of the Canadian restructuring proceedings did not (and still do not) lend themselves readily to the type of conventional secondary market debt trading undertaken in the U.S. and U.K. markets, Nick developed novel forms of derivatives of the standard LSTA- and LMA-based sale documentation in order to close out the clients’ many sales and purchases in the matter. Nick has since been consulted on numerous other distressed claims trades arising from Canadian restructuring proceedings, including those of Jetsgo, AbitibiBowater and Homburg.

Bank debt purchase and assignment: Nick represented a major industrial concern in its purchase of debt owed by one of its competitors to a bank in the context of an out-of-court restructuring, in an Ontario law driven series of transactions.

Throughout his career, as a restructuring specialist, Nick has counselled all manner of different unsecured creditors in the context of their counterparties’ insolvencies, in various different industries and situations. This work requires a high degree of efficiency and client service and management, given the relative cost/rewards for such clients in these matters.

As an example of his recent notable work for unsecured creditors, Nick advised one of North America’s largest agribusiness processors, in their role as the shipping consignor in multiple (Ontario-based) restructurings involving sales of assets of a maritime carrier and post-sale receivership matters. Nick also recently acted as counsel to a major landlord of commercial and industrial property in respect of the debtor-in-possession restructuring proceedings of Quebec-based tenants.

Nick has extensive expertise on the contentious side of his insolvency and restructuring practice, highlighted by his experiences representing lender syndicates and bondholder groups/ trustees in the various high-profile CCAA and CBCA matters described elsewhere on this page.

Proposal annulment proceedings: Nick represented a creditor in obtaining a Superior Court order overturning an ex parte decision of the Bankruptcy Registrar which permitted a debtor company to unilaterally extend a term of its proposal, thereby causing the debtor’s automatic bankruptcy. The Court order Nick obtained will serve as guiding case law on the points of law in debate in this matter.

Preference action defence: Nick represented a party facing a preferential payment claim in relation to an alleged Ponzi scheme, ultimately settling the matter on acceptable terms further to the analysis of the applicable law and defences available and preliminary Court filings.

D&O claims defence: Early in his career, Nick defended the directors and officers of Ivaco, a steel manufacturing group of companies, from over 350 D&O claims filed as part of the company’s attempted restructuring. Over the two-year course of the file, all claims were successfully dismissed.

Nick has extensive experience enforcing secured parties’ collateral and mortgage security in Quebec.

Real estate mortgage enforcement: Nick acted for the master loan servicer in its management of securitized baskets of real estate collateral. He led the enforcement of security in relation to three (3) separate troubled real estate loans in Quebec, one of which was particularly acrimonious and litigious. This involved the use of different enforcement strategies in each case, including the appointment of a receiver in one matter, the withdrawal of the debtor’s right to collect claims in another, and the exercise of hypothecary security (i.e., mortgage foreclosure) remedies in the last matter.

Construction company receivership: Nick represented HSBC Bank Canada as operating lender in respect of the hostile, debtor-induced receivership of Infrabec Construction. In addition to being a publicized and sensitive matter, this was also raised novel legal issues due to the particularities of collecting receivables arising from public sector construction projects. Both in the Court proceedings and in subsequent negotiations, Nick and the team were successful in restraining the ambit of the receiver’s powers and in finding and executing viable solutions for the client.

Nick represented lender syndicates in respect of some of Canada’s largest restructuring proceedings of the last decade.

Yellow Media’s contested CBCA debt arrangement: Nick was part of the McMillan LLP team representing The Bank of Nova Scotia, as syndicate agent to a lender group composed of Canada’s seven (7) largest financial institutions, in respect of the contentious arrangement of approximately $2.7 Billion in debt (and equity) of Yellow Media Inc. and certain of its affiliates. This involved the heavily contested use of the Canada Business Corporations Act’s (CBCA) corporate arrangements provisions to attempt to compromise, inter alia, bank debt, based on the notion that such debt constitutes “securities” of the debtor. This was novel; there had never been an attempted compromise of bank debt without holders’ approval. Nick’s involvement included:

– formulating the principal theory of the case, in tandem with McMillan’s two senior corporate insolvency partners, and writing the majority of the over 75 page factum/plan of arguments. This was the principal written pleading setting out the key evidence and factual arguments, submissions of law and applicable legal authorities;

– assisting lead counsel with oral pleadings and examinations throughout the seven (7) day trial;

– guiding the team of McMillan associates in Toronto and Montreal in researching the many novel legal questions raised by the specific facts and unusual nature of the case, and applying the findings to the facts in a cogent manner for presentation in the factum and in oral pleadings;

– preparing and assisting with the conduct of pre-trial examinations of the debtor company’s management, special committee directors, and outside financial advisors; and

– drafting several pre-trial/ interim motions for specific relief from the broad ambit of the stay of proceedings and other protections afforded to the debtor companies further to their ex parte application to initiate the CBCA arrangements process.

Wavesat CCAA: Nick represented Comerica, the secured lender paid out in full in respect of the restructuring proceedings of Wavesat under the CCAA.

CDM Paper CCAA: Nick represented Wells Fargo, the secured lender paid out in full in respect of the restructuring proceedings of Quebec-based manufacturer CDM Paper under the CCAA.

Quebecor World’s cross-border CCAA and Chapter 11 proceedings: Nick had day to day carriage of representing the Royal Bank of Canada in Court in Montreal in relation to Quebecor World’s CCAA insolvency proceedings. The bank served as syndicate agent to a lender group in respect of their approximately US$750 Million loan exposure to Quebecor World Inc. and 50 of its affiliates during their parallel Chapter 11 proceedings in the United States and CCAA proceedings in Canada. Nick’s involvement included:

– appearing in numerous hearings before Montreal Superior Court throughout the 18-month CCAA proceedings;

– drafting the motion to rescind a number of elements of the “first day” ex parte orders issued by the Court. This included drafting the terms of what became a novel, Court-ordered charge on the debtors’ assets, to ensure that certain inter-corporate indebtedness was treated so as to preserve our clients’ relative structural priority advantage vis-à-vis other creditor groups. The team also successfully convinced the Court to subordinate its previously granted DIP super-priority charge, to protect the clients’ security for pre-filing indebtedness (and this notwithstanding the absence of a Canadian law equivalent to the U.S. bankruptcy law notion of adequate protection), as well as to restrain the debtors’ governance rights;

– drafting a motion in response to, and successfully appearing in Court for the syndicate agent to contest, the resourceful effort by a syndicate member to argue that an unsecured foreign exchange facility that such member provided to the debtors should be granted status as secured indebtedness, notwithstanding that this facility was not part of the syndicated loans;

– participating in the drafting of a Court-to-Court protocol to govern the parallel Court proceedings in Montreal and New York; and

– appearing in simultaneous U.S. and Canadian court hearings, as well as in numerous hearings before Montreal Superior Court throughout the18 month CCAA proceedings. This included appearing during the final plan confirmation joint hearing by the Courts, when the creditors’ approval of the arrangement was put into dispute by the committee of unsecured creditors. Onerous Court intervention was sought and obtained, and the clients obtained majority control of the debtors upon their emergence from the restructuring.

GM restructuring financing: Nick was part of the team of transactional financial services lawyers acting for Export Development Canada as agent to a syndicate of lenders composed of the Governments of Canada and Ontario, in providing approximately $1.4 Billion in loans to General Motors Canada as part of its much-publicized “bail out”. It was substantially completed by a relatively modest number of lawyers during the course of a 96-hour marathon of negotiations, drafting and deal-closing, under intense pressure from the principals concerned and in a much publicized, and politicized, context.

Nick has represented bondholder groups and bond indenture trustees on some of the most novel, hotly contested, and prominent corporate litigation matters of the last decade.

Bell Canada/BCE’s contested LBO: Nick worked as part of a team that represented a group of institutional bondholders holding a significant portion of the bonds jeopardized by the attempted $48.5 Billion leveraged buyout (LBO) of BCE (Bell Canada’s parent company), one of the largest LBOs ever attempted. Until the LBO was abandoned, the clients hotly contested the LBO all the way to the Supreme Court of Canada. Nick’s involvement included:

– working closely with the financial advisors on their analysis of the bond industry and the legal norm and reasonable expectations applicable to bond issuers and holders, in the context of applicable securities law and oppression remedy recourses; and

– developing arguments as to the individual bondholders’ right of standing in the proceedings, given the ambit of the typical “no suits” clauses found in the applicable trust indentures. In distinguishing existing case law on the matter, standing was obtained for the clients and their substantive arguments were allowed to be brought.

Maax Bath’s contested CBCA debt arrangement: Nick acted for U.S. Bank, in its capacity as subordinated bondholders’ trustee, in contesting the CBCA plan of arrangement of Maax Bath, a major manufacturer financed by Brookfield Asset Management, and its attempt to sell and vest out assets based in both the U.S. and Canada, through Court approval proceedings in Canada alone. The prospect of initiating proceedings in the U.S. was leveraged to obtain better terms for the client. Nick’s understanding of cross-border insolvency proceedings – and of the CCAA, BIA and US Bankruptcy Code foreign proceedings recognition rules (that he also gleaned from the Quebecor World and ROL Manufacturing matters) – was instrumental in this success.

Terrestar Networks CCAA and Chapter 11 proceedings: Nick served as the bondholder trustee’s Canadian counsel in the CCAA cross-border proceedings of this international aerospace company conducted in the Ontario Superior Court of Justice.