Legal news and trends for Canadian in-house counsel and c-suite executives
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restructuring group in Toronto, says there is currently no "gold rush" of opportuni- ties to snap up financially strapped com- panies in cross-border deals. He suggests such deals likely only pop up when a U.S. parent company is facing a cash crunch and looks north for an infusion, likely from a non-core, stand-alone operation in Canada. That type of deal likely would come about outside of a formal restruc- turing proceeding. Gage points to Nortel as an example of a completely integrated business that largely does not present an opportunity to sell off Canadian parts as distinct from selling off a particular business unit with a more "cross-border or international flavour." He contrasts that example with Linens 'n Things and Circuit City, where units were easily divided. Overall, Gage says companies face "some interesting challenges" when looking to restructure when their affil- iates are solvent. It is common for reasonably well-performing Canadian wings to face pressure from their U.S. counterparts for cash — wheth- er through dividends, inter-company trade credit, or loans. That puts the heat on directors, who are forced to balance those demands with perfor- mance expectations from Canadian stakeholders. Businesses also face a slew of issues once they begin debating the merits of either divesting Canada or selling the entire company. A joint process where the entire company is sold off may maximize overall recov- ery, but it could be best to sell the parts individually, or to sell the Canadian side separately for those stakeholders. Those decisions come down to number crunching, and determining whether the value of one side of the opera- tion will be too drastically downgraded by marketing it separately. Either way, allocation issues must be addressed, as it would be unfair to give a less than New economy. New demands. Proven value. Meritas law firms: a world of confidence Seeking a safe alternative when evaluating your legal resources? Next door or halfway around the world, Meritas law firms are carefully qualified, offering you partner-led service, local knowledge, local rates — and peace of mind. Connect with Meritas law firms across Canada 12 full-service, independent law firms 497 experienced lawyers Local representation in 12 provinces Call or connect online today: +1 (612) 339-8680 or www.meritas.org/canada Untitled-1 1 INHOUSE DECEMBER 2009/JANUARY 2010 • 12/1/09 9:39:54 AM 19 Undervalued Real Estate Undervalued Real Estate