Brian O’Connor

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.

In the context of the global insolvency of Nortel Networks, the UK Pension Claimants (UKPC) asserted multiple claims against the Canadian debtors (NNC and NNL).

The UKPC claimed for a contingent Financial Support Direction (FSD) under UK pension law, amounts under a Funding Guarantee and a Swift Guarantee, and remedies for oppression and unjust enrichment.

The court dismissed the FSD claim as too remote and speculative to constitute a provable claim in the CCAA proceedings.

The court also dismissed the claims under the Swift Guarantee, oppression, and unjust enrichment.

However, the court allowed the UKPC's claim under the Funding Guarantee, finding NNL liable for £339.75 million.