Spotlight: Examples of Boards’ Approaches to Financial Distress
TABLE 3-2: Director Best Practices The following chart illustrates best practices taken by directors of financially distressed companies that have gone through CCAA proceedings.
Corporation
Actions Taken by Directors
Canwest Global Communications Corp. (2009) 74
– Retained independent legal and financial advisers – Formed a special committee to oversee the restructuring; that committee made all material restructuring decisions – Retained two Chief Restructuring Advisers to deal with the separate interests of Canwest Media and Canwest Papers, which each had separate legal and financial advisers – Non-independent directors resigned on CCAA filing – Majority of directors resigned, and replacements experienced in insolvency and restructuring were appointed – Appointed a Chief Restructuring Officer who reported to the board – Appointed separate legal advisers for the directors
Nortel (2011) 75
Sino-Forest Corporation (2012) 76
– Formed a special restructuring committee with independent directors – Independent lawyers hired to advise the independent directors – Senior management implicated in fraud were replaced
The Cash Store Financial Services Inc. (2014) 77
– Independent directors appointed and directed an internal investigation into potential related party transactions – A special, independent restructuring committee of the board was struck and supported by external auditors and lawyers, as well as a Compliance and Regulatory Affairs Officer – Appointed a Chief Restructuring Officer on filing, who oversaw the restructuring, terminated five members of senior management and directed counsel in pursuing claims against directors – Appointed two independent directors with restructuring expertise (independent directors constituted a majority) – Retained independent financial and legal advisers – Appointed a Chief Restructuring Officer before seeking CCAA protection – Struck an independent committee of the board to investigate alleged regulatory non-compliance and oversee its remediation – Independent directors hired external legal advisers
US Steel Canada Inc. (2014) 78
CannTrust Holdings Inc. (2020) 79
Lydian Canada Ventures Corp. (2020) 80
– Struck a special committee of the board to direct the restructuring efforts – Hired external financial and legal advisers for the board
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Governance Insights 2020
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