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In a case like this, he says, "there is confusion over who owns what." As well, he says, it will lead to a single list of creditors, making the claims process easier to deal with. Allan Nackan, a chartered accountant at restructuring firm Farber Financial Group in Toronto, says in the last five years, there have been 40 cases that have implemented a cross-border protocol, similar to the one in MMA. "It addresses procedural issues, rather than substantive . . . and encourages communication between the courts." Andy Kent, an insolvency lawyer at McMillan LLP, calls it the "necessary plumbing" of the case and "how courts will coordinate proceedings." However, the real test, he says, will come in the claims process. Natasha MacParland, an insolvency layer at Davies Ward Phillips & Vineberg LLP in Toronto, adds the "claims resolution part of this proceeding is going to be complicated. It is not going to be resolved in six months." The claims process Court documents filed by the debtor companies give a hint of the strategy at play. The first is to sell the business as a going concern before the end of the year. That was almost stymied early in the game when Transport Canada pulled MMA Canada's Certificate of Fitness (essentially its operating license) over thirdparty liability insurance concerns. After some legal wrangling and a $250,000 security charge over assets to cover the deductible, the certificate was restored. A sales process is under way and an investment bank is soliciting offers. Next up is the claims process, which the lawyers hoped to have finalized by the end of November and discussions are ongoing as to what that will look like. The initial order authorizes MMA Canada to develop a plan of arrangement, which lawyers say will be key to resolving claims. The court documents hint at what's to come. The goal is to use proceeds from the sale and any insurance policies to fund trusts for the benefit of claimants. According to the U.S. filing, MMA will work with "representatives from the various classes of claimants to develop an efficient process for liquidating claims and distributing funds. This process would likely provide for contributions to be made by certain parties in exchange for full and final releases of all claims and liabilities." The Canadian filing adds that the companies are preparing a plan that is "in the best interest of all of the stakeholders and potential stakeholders, including the train derailment claimants and other creditors or potential creditors . . ." Mediation also appears on the horizon, since the plan includes "developing a less costly, more effective and more rapid process to deal with all of the claims or potential claims than legal proceedings in Canada and the U.S.," which would only "contribute to the erosion" of the assets and insurance indemnities. Kent says "it's a small estate with an in- credibly sad result. The trick is to try to avoid a lot of fighting that dissipates the pot." Maximizing the asset pot Nackan says what the monitor and trustee are also "trying to do is maximize the pot of money they have to deal with these obligations." That means turning to third parties to help fund the settlement pot. "Ultimately the hope is that there will be some sort of settlement with everyone contributing and everybody getting their releases." So who will those third parties be? The class actions give some insight into who will be called on. Everyone from World Fuel Services, which sold the oil, to Irving, which bought it, and Western, whose cars it was shipped in, and Dakota Plains Holdings Inc., which loaded the oil, are potential funders It's based on how cases have been developing under the CCAA, starting with MuscleTech Research Development Inc., a products' liability case dealing with supplements, the drug Ephedra, and class actions. The company filed in Canada and used the Chapter 15 recognition clause of the U.S. bankruptcy court to have its court rulings recognized in the U.S. That allowed for a global claims resolution process, which included mediation, and lead to global immunity from future lawsuits for the parties that provided settlement funds. Since then, such global releases have become bait to induce parties to settle and have been used in other cases, including the $32-billion restructuring of Canada's third-party asset–backed commercial paper market, Sino-Forest Corp., where the company's auditor E&Y coughed up $117-million, and Nortel Networks Corp. Interestingly some of the same parties in Your lawyer. Your law firm. Your business advisor. BennettJones-2_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 10:2925 2014 • AM

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