COURT OF APPEAL FOR ONTARIO
RE:
IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c.C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF GT GROUP TELECOM, INC., GT GROUP TELECOM SERVICES CORP., GT GROUP TELECOM SERVICES (USA) CORP. AND LONDONCONNECT INC.
BEFORE:
ROSENBERG, MOLDAVER and SIMMONS JJ.A.
COUNSEL:
William J. Burden for the appellant JP Morgan Chase Bank
John B. Laskin and Crawford G. Smith for the respondent GT Group Telecom Companies
Geoffrey B. Morawetz and David B. Bish for the Monitor PricewaterhouseCoopers Inc.
Kevin P. McElcheran for the Canadian Imperial Bank of Commerce
Michael J. MacNaughton and Michael McGrant for 360networks Corporation
Sheryl Seigel for Lucent Lending Syndicate
R. Shayne Kukulowicz for Cisco Lending Syndicate
HEARD:
JANUARY 28, 2003
RELEASED ORALLY:
JANUARY 28, 2003
Application for leave to appeal and if leave be granted, appeal from the orders of Justice James M. Farley of the Superior Court of Ontario dated December 18 and 23, 2002.
ENDORSEMENT
1The primary complaint of the unsecured noteholders is not that the parent company has been excluded from the reorganization plan, but that having been excluded, the plan is unfair and inequitable to the extent that it requires the parent company to transfer certain of its assets to the subsidiaries for the purpose of facilitating the plan, and it deprives the noteholders of rights and remedies they might have had against others, including the subsidiary operating companies, their officers, directors, employees and auditors, and the monitor.
2Without minimizing the importance of the broader issue raised, that is, a loss of rights without representation, we are not persuaded in the circumstances that leave should be granted. In particular, we believe that the complaint about the asset transfer is illusory since the assets of the parent company would be lost to the secured creditors in any event. As for the loss of rights to sue, beyond the rights preserved by the plan, any further rights are, in our view, unsubstantiated and at best speculative.
3When these factors are considered, along with the failure of the applicant to appeal Justice Himel's order of November 20, 2002, its failure to pursue its concerns with the diligence called for in the circumstances, its failure to propose an alternative plan, and the prospect that further delay may result in a loss of the subscription agreement and the many benefits flowing from it, we do not believe that this is an appropriate case to grant leave to appeal.
4Accordingly, the application for leave to appeal is dismissed with costs fixed on a partial indemnity basis as follows:
(a) The GT Group of Companies should have their costs in the amount of $10,000.
(b) The Monitor shall have its costs in the amount of $5,000.
(c) The remaining respondents shall have costs of $7,500 to be shared pari passu or as they may agree amongst themselves.
In all cases, the cost awards are inclusive of applicable G.S.T. and disbursements.
Signed: "M. Rosenberg J.A." "M. J. Moldaver J.A." "J. Simmons J.A."