BCE Inc., et al. v. A Group of 1976 Debentureholders composed of: Aegon Capital Management Inc., Addenda Capital Inc., Phillips, Hager & North Investment Management Ltd., Sun Life Assurance Company of Canada, CIBC Global Asset Management Inc.,, et al.

(Quebec) (Civil) (By Leave)

(Sealing order)




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Commercial law - Corporations - Court approved arrangement under s. 192(f.1) of the Canada Business Corporation Act, R.S.C. 1985, c. C-44 - What duties do directors owe to creditors, shareholders and other corporate stakeholders when considering a change of control transaction - What is the test for determining whether a plan of arrangement is fair and reasonable in circumstances where the proposed plan does not alter or arrange the rights of creditors, but may affect their economic interest - What standard of review applies to a trial judge’s finding that an arrangement is fair and reasonable - Peoples Department Stores Inc. (Trustee of) v. Wise, [2004] 3 S.C.R. 461.

BCE is a public company held by 600 000 shareholders. It has owned Bell Canada since a plan of arrangement under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (“CBCA”) was approved in 1983. The dispute involves debentures issued by Bell Canada under three separate trust indentures.

On June 30, 2007, BCE entered into a definitive agreement with the Teachers Group. The agreement has been approved by BCE’s shareholders and should close on June 30, 2008. Pursuant to s. 192 CBCA, this “Proposed Arrangement” must be approved by the Superior Court. Accordingly, BCE filed a motion for interim and final orders to have the plan approved. Some of the debenture holders filed contestations under s. 192 CBCA alleging that the proposed plan adversely affected their interests. They also filed, ex abundante cautela, two motions for oppression remedies (s. 241 CBCA). Finally they filed two motions seeking a declaration that, in light of the words “reorganization or reconstruction” found in the trust indentures, a section of their trust indentures would apply and give their trustees a right of approval of the transaction.

The Superior Court (Silcoff J.) dismissed the contestations and approved the plan of arrangement. Silcoff J. also dismissed the motions for oppression remedies. Finally, he declared that the proposed transaction did not constitute a “reorganization or reconstruction” of Bell Canada as these terms are understood, notably in the CBCA.

The debenture holders appealed the five judgments of the Superior Court. The Court of Appeal allowed the appeals relating to the approval of the plan of arrangement on the ground that BCE had not shown that the plan was fair and reasonable given the circumstances. With respect to the declaratory proceedings, the court confirmed that the words “reorganization or reconstruction” had been correctly interpreted by Silcoff J., but had to allow the appeals to correct a formal mistake in the formal order. As for the motions for oppression remedies, the court ruled that while the debenture holders would have standing as “security holders” to institute oppression proceedings under s. 241 of the CBCA, such remedy was no longer relevant since the plan was refused.

Lower Court Rulings

March 7, 2008
Superior Court of Quebec

see file
May 21, 2008
Court of Appeal of Quebec (Montréal)

500-09-018522-086, 500-09-018523-084, 500-09-018524-082, 500-09-018525-089, 500-09-018526-087, 500-09-018527-085
see file