Barbara A. Walancik

Self-represented long-term disability beneficiaries sought leave to appeal a sanction order from the Superior Court of Justice in the Nortel Networks CCAA proceedings.

The applicants challenged their binding status under the 2009 Representation Order for Disabled Employees and the 2010 Employee Settlement Agreement.

The Court of Appeal dismissed the motion for leave to appeal, finding that the stringent test for leave in CCAA proceedings was not met.

The proposed appeal lacked merit, the applicants were bound by the settlement agreement, and further delays in the protracted litigation were to be avoided.

The court also rejected a late-filed notice of constitutional question challenging sections 6(1) and 11 of the CCAA.

The moving parties sought leave to appeal a CCAA judge's decision dismissing their motion to reinstate other post-employment benefits (OPEBs) to retirees of U.S. Steel Canada Inc. The CCAA judge had dismissed the motion but ordered a one-time payment of $2.7 million towards benefits.

The Court of Appeal applied the stringent test for leave to appeal in CCAA proceedings and found no prima facie merit to the appeal.

The court emphasized the broad discretion of the CCAA judge and the fact-specific nature of the decision, which did not raise issues of significance to insolvency practice.

Leave to appeal was denied with costs fixed at $2,500.

The applicant, U.S. Steel Canada Inc. (USSC), sought approval for a second key employee retention plan (KERP 2), while a group of unions and representative counsel (Moving Parties) sought an order to terminate the suspension of other post-employment benefits (OPEBs).

The court granted the KERP 2 motion, finding it fair and reasonable for business stability and restructuring efforts.

The OPEB motion was denied, as the court found no fundamental improvement in USSC's profitability to warrant OPEB reinstatement, and that USSC's proposed one-time contribution of $2.7 million to a transition fund for retired employees appropriately balanced competing interests during the ongoing sales and investor solicitation process (SISP).

The applicants (Representative Counsel for non-unionized employees and retirees, USW Locals 1005 and 8782, and the City of Hamilton) sought "for counsel's eyes only" disclosure of a confidential settlement agreement between United States Steel Corporation (USS), U.S. Steel Canada Inc. (USSC), and the Government of Canada.

The motion was brought in the context of CCAA proceedings, with applicants arguing procedural fairness and a minor exemption from settlement privilege.

The court dismissed the motion, finding that the applicants failed to demonstrate how they would be prejudiced without access to the specific details of the undertakings in the agreement, or how the information was material to their claims or negotiations.

The court emphasized that there is no exemption from settlement privilege for the purpose of reviewing a document to determine if a public interest exists that would displace the privilege.

In the CCAA proceedings of U.S. Steel Canada Inc., its parent company, United States Steel Corporation, sought approval of several proofs of claim totaling over $2 billion.

Various stakeholders objected, arguing that the intercompany loans should be re-characterized as 'equity claims' under the CCAA and that the security granted for certain advances was void as a fraudulent preference or unenforceable for lack of consideration.

The court rejected the objections, finding that the parent company had a reasonable expectation of repayment when the advances were made, and that the security was validly granted for fresh consideration and did not constitute a fraudulent preference.

The claims were confirmed as debt claims.

Various parties brought motions seeking reconsideration or clarification of a prior joint allocation decision determining the distribution of $7.3 billion in escrow among debtor estates in multinational insolvency proceedings.

The moving parties argued that aspects of the allocation methodology—including treatment of bond guarantee claims, certain asset sale proceeds, intercompany claims, tax claims, and settled claims—required amendment or clarification.

The court reiterated that reconsideration is an exceptional remedy and rejected most requests because the issues either had been addressed at trial or could have been raised earlier.

Limited clarification was granted regarding the treatment of bondholder claims against guarantors and recognition of certain court‑approved settled pre‑filing claims that had been paid.

Other requested clarifications or amendments were denied.

In a joint cross-border insolvency trial concerning the allocation of approximately $7.3 billion in lockbox funds from the sale of global business lines and residual intellectual property, the court interpreted the Master R&D Agreement as an operating transfer-pricing document that granted limited licence rights but did not govern post-insolvency allocation.

The court rejected both the position that one Canadian debtor owned all sale proceeds by virtue of legal title and the position that the EMEA debtors jointly owned all intellectual property by operation of law.

Applying unjust enrichment principles and the broad remedial jurisdiction available in CCAA proceedings, the court held that a just result required a pro rata allocation among debtor estates based on allowed claims.

The court further directed that duplicate claims be counted only once for allocation purposes, that intercompany claims be included, and that interim distribution proposals be brought forward.

The applicant insurer sought leave to appeal an order requiring it to pay the legal fees of Nortel's executives without reference to a $10 million retention amount or a directors and officers trust fund.

The motion judge had found that the indemnification was a pre-filing claim subject to the CCAA stay, and that allowing access to the trust would improperly elevate the insurer's priority.

The Court of Appeal denied leave, finding the motion judge's conclusions were within his expertise and entitled to deference, and the issues were specific to the case rather than of broader interest.

The Court also declined to consider fresh evidence filed by the applicant because no motion for leave to admit it was brought.