Muscletech Completes Cross-border Restructuring

The successful cross-border restructuring of MuscleTech Research and Development Inc. and its subsidiaries (MDI) under the Companies' Creditors Arrangement Act (CCAA) became effective on April 10, 2007, with the emergence of MDI from court-protection in Canada and the United States of America. Among other things, MDI resolved through its CCAA proceedings a number of US mass tort product liability claims and consumer class action claims in respect of certain of its historical products, which claims involved a complex web of plaintiffs, co-defendants and other third parties, including retailers, researchers, manufacturers, insurers and entities affiliated with MDI. MDI was successful in achieving through the CCAA a global resolution of this litigation.

MDI was granted creditor protection in Canada under the CCAA by the Ontario Superior Court of Justice on January 18, 2006, and the Canadian proceedings were recognized and given effect under Chapter 15 of the US Bankruptcy Code. The US Chapter 15 proceedings were presided over by the US District Court for the Southern District of New York.

Following extensive mediation efforts and bilateral negotiations, and the implementation of a call for claims process and claims resolution process, MDI's plan of compromise or arrangement under the CCAA (the plan) was unanimously approved by both classes of its creditors on January 26, 2007. The plan was sanctioned by the Ontario Superior Court of Justice on February 15, 2007, and the sanction order was recognized and given effect in the United States by the US District Court by order entered March 7, 2007. The plan provided for distributions to be made to all creditors, which distributions were fully funded by third parties, in return for broad releases and injunctions that extended not only to MDI, but also to the third parties involved in the litigation in question.

MDI was represented by a team from Goodmans LLP that included Jay Carfagnini, David Bish, Fred Myers and Cathy Costa. MDI's non-Applicant affiliates were represented by Derrick Tay, Alan Mark and Randy Sutton of Ogilvy Renault LLP. Thomas Ringe, Daniel Herling, John Horstmann and Lewis Olshin of Duane Morris LLP acted as US counsel to MDI and its non-Applicant affiliates.

Peter Farkas and Mitchell Vininsky of RSM Richter Inc. acted as CCAA monitor and foreign representative of MDI in the US Chapter 15 proceedings, with Jay Swartz and Natasha MacParland of Davies Ward Phillips & Vineberg LLP acting as Canadian counsel to the monitor and Kenneth Coleman and Daniel Guyder of Allen & Overy LLP acting as US counsel to the monitor.

The ad-hoc committee of MuscleTech Tort Claimants (the committee), which represented the majority of plaintiffs having product liability claims against MDI and the various third parties, was led by Anne Andrews of Andrews & Thornton and was represented in the US by David Molton, William Baldiga and Steven Smith of Brown Rudnick Berlack Israels LLP and in Canada by Jeffrey Carhart and Arthi Sambasivan of Miller Thomson LLP. A minority group of plaintiffs who elected not to be represented by the committee were represented in Canada by Justin Fogarty, Christopher Robertson and Fraser Hughes. A number of consumer class action plaintiffs were represented in Canada by the following, respectively: Pamela Huff and Beth Posno of Blake, Cassels & Graydon LLP; and James Grout, D.J. Miller and Kyla Mahar of Thornton Grout Finnigan LLP.

Other key participants in the MDI restructuring included: (i) various GNC “oldco” entities represented by Michael Etkin of Lowenstein Sandler PC in the US and by Aubrey Kauffman and Stuart Brotman of Fasken Martineau DuMoulin LLP in Canada, and their insurer, Zurich American Insurance Company, represented by Rex Littrell of Ulmer & Berne LLP and Mark Ledwin of Wilson, Elser, Moskowitz, Edelman & Dicker LLP; (ii) various GNC “newco” entities represented by Sheryl Seigel of Lang Michener LLP and Deirdre Ruckman of Gardere Wynne Sewell LLP; (iii) HVL, Inc., represented by Robert Behling of Dapper, Baldasare, Benson, Behling & Kane, P.C., and its insurer XL Insurance America, Inc., represented in the US by Victor Bushell of Bushell & Valliere LLP, and in Canada by Martin D. Rabinovitch and John Contini of Lang Michener LLP; and (iv) MDI's insurer, Zurich Insurance Company, represented in Canada with a team led by Steven Golick and including Artem Miakichev, John MacDonald and Jeremy Dacks of Osler, Hoskin & Harcourt LLP and Andrew Sanfilippo of O'Donnell, Robertson & Sanfilippo, and in the US by Mark Goodman of Squire, Sanders & Dempsey LLP.