The Supreme Court of Canada ruling Friday on the proposed takeover of BCE Inc. was, arguably, the most important Canadian corporate law case in 35 years, says Christopher Nicholls, professor in the faculty of law at the University of Western Ontario. The implications are enormous.
Prof. Nicholls, a corporate law specialist, was online Monday to take your questions about the Supreme Court decision, the BCE takeover and what might happen next. Your questions and Prof. Nicholls' answers appear at the bottom of this page.
Prof. Nicholls joined Western's law faculty in 2006. Prior to that, he was a member of the law faculty at Dalhousie University, where he held the Purdy Crawford Chair in Business Law and acted a director of Dalhousie's business law specialization program. He twice won the Dalhousie Law School Excellence in Teaching Law Award, most recently in 2005.
Before joining Dalhousie, Prof. Nicholls practised corporate and securities law, first with two of Toronto's largest corporate law firms, then as a corporate finance and securities attorney in Hamilton, Bermuda. Prof. Nicholls currently serves as associate editor of the Canadian Business Law Journal and is a member of the editorial board of the Canadian Journal of Law and Technology. He is also the author of the 2007 book Mergers, Acquisitions and Other Changes of Corporate Control
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Chris Hannay, reportonbusiness.com: Welcome, Professor Nicholls. This case has been the talk of Canadian business for months, and our readers have a lot of questions. To get us started, were you surprised by the Supreme Court ruling?
Prof. Nicholls: No, I wasn't surprised by the decision itself. But we'll all be interested to see if there is anything surprising to come in the reasons for the decision. Perhaps I can offer a hockey analogy, at least for those of us old enough to remember the Canada-Soviet Summit series in 1972. Suppose a Canadian hockey fan had been out of the country that fall, and had somehow missed seeing or hearing anything about the series. Upon his return, he would certainly not have been surprised to learn that Canada had won. After all, most Canadians expected that outcome. But then imagine how that same fan would feel after later seeing tapes of those remarkable 8 games, and realizing that the Canadians didn't win in quite the way that he may have expected before the series began.
Chris Hannay: While the Supreme Court's ruling was unanimous, of course everyone really wants to read the reasons for this judgment in favour of Teachers' and BCE. When can we expect to get this?
Prof. Nicholls: It's difficult to say. The Supreme Court has a full docket. I do note that the Peoples v. Wise case, the important 2004 Supreme Court corporate law decision referred to in argument in the BCE case, was originally decided in the spring of 2004, with reasons issued late in October. And the Peoples case had come before the court in the conventional way, not in the BCE appeal's expedited fashion. So there could be a considerable wait.
Barry Cameron from Canada writes: I am both a holder of BCE stock and Bell Bonds. And although I understand and accept the decision made by the Supreme Court, I remain sympathetic to the bondholders. The reality is that with the added debt BCE is taking on, Bell Bonds have and will continue to lose value in the marketplace. It's not just about interest and principal being rendered according to contract. This was a legal decision, but there is a moral question of responsibility left unanswered concerning those who lend money to corporations when such a significant leveraged buyout occurs that affects the price of debt so profoundly. How do we solve that problem?
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