May 5, 2016
We are pleased to report that on Thursday, May 5, 2016 the Supreme Court of Canada denied the leave to appeal application of the Ad Hoc Bondholders with respect to the “interest stops rules” and granted costs against them. To view a copy of the decision please click here.
The leave to appeal decision followed a decision on Tuesday, October 13, 2015 from the Ontario Court of Appeal unanimously dismissing the Bondholders’ appeal, with costs also. The issue was whether the “interest stops rule” applies in CCAA proceedings. The Court of Appeal held at paragraph 8 that “there are sound legal and policy reasons for applying the interest stops rule in the CCAA context”. The Court adopted the CCC and Monitor’s submission that pari pasu and the status quo is not preserved if one group of creditors gets post-filing interest and the other is prevented from asserting their rights to sue and obtaining judgment with interest. To view a copy of the Court of Appeal decision please click here.
The issue of post-filing interest was first raised during the allocation trial. The Canadian and US Courts requested submissions from the parties and based on these submissions the courts agreed to a joint hearing on the entitlement of post-filing interest. The hearing in the US was adjourned but the hearing proceeded in the Ontario Superior Court of Justice (Commercial List) on July 25, 2014. On August 19, 2014, Justice Newbould released a decision finding that Nortel Bondholders were not entitled to post-filing interest in the Canadian allocation proceeding. To view a copy of the decision of the Ontario Superior Court of Justice (Commercial List) please click here.