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There is the room for creativity and to come up with something that ultimately recognizes the hardships suffered by the victims' families. The CCAA law, in particular, is not static. New law is made all the time. Tony DeMarinis, Torys LLP Another interesting twist is that typically tort claims are unsecured creditors. However, in U.S. insolvency proceedings involving a railway, Molton says they actually get a higher priority. That's not so in the Canadian proceedings. As well, U.S. damages are higher than Canada's, so it will be interesting to see how the courts grapple with the victims' claims. Another interesting challenge is reputational in nature and involves the secured creditors and who is willing to stand down in favour of the victims. The optics of the Federal Rail Administration scooping all the money at the victims' expense would be bad. So, too, are the optics of a U.S. agency foregoing American tax dollars in favour of victims from another country. Molton says "the question becomes where is the money going to go and who benefits from that?" The global releases will also be a tricky issue. Canadian courts are much more wiling to grant them than U.S. courts. Kent says there are a number of U.S. cases where judges have approved global releases. "The question is how far will they go? It is not an easy issue." Despins adds that "Canadian courts are generally more generous in the CCAA context in granting releases. U.S. law has more stringent requirements than Canada." There is also a question over the envi- ronmental claim and its priority and whether it will trump the tort claims, although Quebec has already said it will forego its interest in the $25-million insurance policy in favor of the victims. Kent says if the value of the properties that were polluted exceeds the cost of the cleanup, then the private sector will pay to clean up the land because there is still profit to be made. "Where the government is at risk is if the properties are [financially] under water and can't justify the clean-up costs." People will abandon them and it will fall to the government to pay to remediate the land. Many of the outstanding questions aren't answered by the administrative protocol, because they are substantive in nature and will have to be ruled on by the courts if a negotiated settlement can't be reached. "The cross-border protocol doesn't address some of these complicated issues," Molton acknowledges. Tony DeMarinis, an insolvency lawyer at Torys LLP in Toronto, says the salvation may come in the plan of arrangement. "There is the room for creativity and to come up with something that ultimately recognizes the hardships suffered by the victims' families. The CCAA law, in particular, is not static. New law is made all the time." By the same token, eventually the dif- ferent classes of creditors will have to vote on the plan and that's never a sure thing. Lawyers say what the cross-border protocol will do is allow the judges to communicate and help build the road map to settlement. "They can be very helpful as a general expression of the need for courts to communicate and co-operate and in sending the proper messages to participants that the courts will take a holistic approach to the proceedings." He says success is "reliant on the degree to which the judges, courts, and presiding judges communicate and co-operate with each other." Add lawyer co-operation to that mix. Sibre notes that "the purpose of a restructuring is that everybody has to compromise somehow." Despins says, "We certainly hope that some people will be shamed into being more generous than they otherwise would." Melton says "time will tell if the parties on both sides of the border are able to consensually and in good faith produce a resolution that will be approved by both courts and accepted by the severely injured plaintiffs, who really should be the focus of these proceedings." IH Your lawyer. Your law firm. Your business advisor. BennettJones-3_IH_Apr_13.indd 1 www.ca na dia nl awy e r m a g . c o m / i n h o u s E december 2013/january 13-02-26 10:3427 2014 • AM

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