SUPERIOR COURT OF JUSTICE – ONTARIO

(COMMERCIAL LIST)

COURT FILE NO.: 09-CL-7950
DATE: 20130131

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 NORTEL NETWORKS CORPORATION, NORTEL NETWORKS LIMITED, NORTEL NETWORKS GLOBAL CORPORATION, NORTEL NETWORKS INTERNATIONAL CORPORATION AND NORTEL NETWORKS TECHNOLOGY CORPORATION, Applicants

BEFORE: MORAWETZ J.

COUNSEL:
J. Pasquariello, for the Monitor, Ernst & Young Inc.
D. Tay, for Nortel Networks Corporation
B. Wadsworth, for CAW-Canada
M. Zigler, for the Former LTD Employees
A. Gray and S. Bomhof, for the U.S. Debtors
A. Hirsh, for the Former Directors and Officers
A. Jacques, for the Continuing Nortel Employees
M. Starnino, for the Pension Benefit Guarantee Fund
D. Ward, for the UK Pension Trustees/PPF
R. Swan and S. R. Orzy, for the Noteholders
J. Gage and E. Marques, for Morneau Shepell
R. S. Kukulowicz and M. Wunder, for the Unsecured Creditors’ Committee
R. B. Schwill, for Nortel Networks UK Limited

HEARD: JANUARY 31, 2013

ENDORSEMENT

[1] The requested relief relating to the Employee Hardship Application Process was not opposed. The requested relief is, in my view, appropriate in the circumstances and is granted.

[2] The motion for extension of the stay was not opposed, although the Noteholders wanted certain conditions attached to the extension.

[3] The test for the extension is set out in s. 11(6) of the CCAA. The Applicants have to satisfy the court that:

(a) circumstances exist that make such an order appropriate; and

(b) the Applicants have acted, and are acting, in good faith and with due diligence.

[4] The affidavit of Mr. Bifield and the 91st Report of the Monitor review the progress that has been made in the estate in recent months. In particular, the Report reviews the status of the compensation claims process.

[5] Counsel to the Applicants and the Monitor both expressed the view that progress is being made. The Noteholders take the position that the Monitor and the Canadian Debtors be directed to proceed in earnest and with diligence with the claims process and that the Monitor be required to provide additional monthly reports to the creditors and the court on the claims process and, in particular, report on certain claims of employees.

[6] The Noteholders also seek a provision that would allow other parties to determine whether they wish to intervene in the process before decisions are made.

[7] The Monitor and the Canadian Debtors have obligations to act with due diligence in this process and these parties have confirmed today that they are doing so. Much work remains to be done in this area and further progress will be strictly monitored.

[8] With respect to the claims process and the suggestion of the Noteholders that other parties can determine whether they wish to intervene, it seems to me that the procedure in respect of the claims process is covered in other court orders. If the parties wish to have this issue reviewed, it is more properly canvassed in a motion to vary existing orders as opposed to being part of a motion to extend the stay period.

[9] The Noteholders also suggested that, during stay period, parties should have the ability to bring motions for various types of relief. It seems to me that, following CCAA procedure generally, appropriate motions can be brought at any point during the proceedings. Any such motions should be carefully considered before being launched.

[10] In my view, circumstances are such that there is no alternative, at this time, to do anything but grant the stay extension and, accordingly, I find that the making of such an order is appropriate. I also recognize that there has been some progress made in the estate relating to claims such that I can conclude that the second part of the CCAA test has been satisfied.

[11] The motion is granted and the order signed in the form presented.

[12] Going forward, all parties are required to submit a list of what they consider to be current, outstanding issues. These lists will be reviewed and further scheduling directions will be provided. These lists are to be submitted by Friday, February 8, 2013.

[13] Immediate steps are to be taken by all parties to strictly control professional costs. This includes limiting the number of court attendances as well as the number of counsel appearing on such attendances.

MORAWETZ J.

Date: January 31, 2013