AXXENT'S Insolvency Proceedings

AXXENT Corp., a TSE-listed insolvent telecom, was the subject of duelling insolvency proceedings initiated by General Electric Capital Canada Inc., the senior secured lender, with respect to its $70 million multiple advance term credit facility, and by the holders of $75 million in senior unsecured notes. The noteholders were first off the mark with a CCAA application seeking protection to enable possible exploration of restructuring options. GE Capital applied for the appointment of an interim receiver. At a late Friday, April 20 hearing, Mr. Justice Farley adjourned the proceedings to the following Monday, allowing both parties’ financial advisors to assess AXXENT’s prospects over the weekend. Armed with that information, the noteholders and GE Capital agreed to a consent order granting GE Capital’s request for the appointment of an interim receiver but authorizing the noteholders and their financial advisor to obtain information and provide advice to the interim receiver on the conduct of the receivership. The order also directed the interim receiver to pay the costs of the noteholders’ financial and legal advisors, capped at an agreed amount.

Acting for GE Capital was a team from McMillan Binch, consisting of Jeff Gollob (corporate restructuring), Scott Horner (corporate financial services), Paul Macdonald (litigation), Ed Ra (corporate financial services) and Stephanie Donaher (corporate restructuring).

The senior noteholders were represented by Torys, whose team included Insolvency and Restructuring Group members Michael Rotsztain, Tony DeMarinis and Marc Lavigne and litigator Trisha Jackson. S. Richard Orzy, James Gage (bankruptcy and restructuring) and Malcolm Mercer (litigation) of McCarthy Tétrault acted as special restructuring counsel to AXXENT, while Peter Griffin of Lenczner Slaght Royce Smith Griffin represented Axxent’s board of directors.