Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

The Supreme Court of Canada Released Much Anticipateed BCE Decision

BCE Inc., et al. v. A Group of 1976 Debentureholders, et al. - and - Director Appointed Pursuant to the CBCA, Catalyst Asset Management Inc. and Matthew Stewart (Que. C.A., May 21, 2008)(32647)

The Supreme Court of Canada held: "The appeals...dated May 21, 2008, heard on June 17, 2008, are allowed with costs throughout. The decision of the Court of Appeal is set aside and the trial judge's approval of the plan of arrangement is affirmed.  The cross-appeals...dated May 21, 2008, heard on June 17, 2008, are dismissed with costs throughout. Reasons to follow."

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The short version of the sotry of significant legal importance is that the unanimous ruling by the seven Supreme Court of Canada judges has given the $35-billion takeover of BCE by Teachers and its partners the green light.

The longer version of the story is that a group of BCE bondholders, many of them powerful funds and insurance companies such as Manulife Financial Corp., opposed the take-over.  They argued that the board of BCE failed to consider their interests when they approved a debt-heavy takeover that eroded bond values.  The vitally important legal issue was: what duties does a public company board of directors owe to such persons in a take-over?

This question went to the Supreme Court of Canada after a May 21 Quebec Court of Appeal's decision essentially said that corporate directors of a Canadian corporation have some kind of higher or extra duty to "stakeholders" rather than primarily to shareholders.

This will be a topic of important discussion after the Supreme Court issues the reasons for its decision.

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