Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50891
INDUSTRY SPOTLIGHT By Robert Todd North America's auto industry is rising from the ashes of the recession with the help of in-house counsel and outside lawyers on both sides of the border. business Back in In the spring, General Motors of Canada Ltd. unveiled plans to invest $480 million for the next few years in its St. Catharines, Ont., production facility. It was a move that may have seemed improbable just a short time ago. After all, the company had teetered on the brink of a Companies' Creditors Arrangement Act filing a year earlier, while its U.S. parent was forced to enter Chapter 11 bankruptcy. If not for politi- cal will — and the hard work of massive teams of lawyers in an unprecedented restructuring process — those plans might not have gone ahead. But they did, securing an estimated 800 jobs. Lately, General Motors has been roll- ing out a steady stream of good finan- cial news in tandem with its shiny new autos, which themselves seem increas- ingly popular with Canadian consum- ers. Its most momentous announce- ment came April 21, when chairman and CEO Ed Whitacre reported the company had made its final payment of $5.8 billion — US$4.7 billion to the U.S. Treasury and Cdn$1.1 billion to Export Development Canada. "We appreciate the support the taxpayers have given GM, and our great new products are tangible results of that support," said Whitacre in announcing GM's early payback. The company also reported a first-quarter profit of US$865 million. Chrysler Canada Inc., which appeared to be in a less dire finan- cial position than GM in 2008, also seems to be swiftly extracting itself from taxpayer dependence. The com- pany received a $1.2-billion bridge loan from the Canadian and Ontario governments in late 2008, followed by an eventual pledge of $3.8 billion. That's on top of $4 billion from the U.S. Treasury Department to Chrysler Group LLC, which was spun off when the company emerged from bankruptcy in 2009. In late May, the U.S. govern- ment announced it had received $1.9 billion from Chrysler, a higher payback than it had expected. Chrysler Canada earlier that month announced its high- est sales results since June 2008, with April sales up 35 per cent from the same month in 2009. While GM's Whitacre voiced his thanks to North American taxpayers for funding his company's comeback, he's likely just as appreciative of the team of lawyers who helped pull the trigger on the swift transformation. Leading the legal charge for the com- pany's Canadian arm was vice president and general counsel Neil MacDonald. He views the GM restructuring as a shining example of lawyers leading the way for the rapid transformation of a company, recalling one conference call late in the process involving nearly 200 lawyers from political and auto centres across the United States and Canada. "I certainly haven't been involved in anything like this in any other deal," he says. "I can't imagine too many other lawyers have been. This was the single biggest in terms of volume of work, biggest in terms of the consequences, and biggest in terms of the emotional roller-coaster that I've ever been on. Certainly, I would suggest that would be an answer you would get from many lawyers." MacDonald notes that the sheer vol- ume of work that needed to be done presented a herculean task for in-house and outside counsel. "As you look at a restructuring, you look at every portion INHOUSE AUGUST 2010 • 35