On February 14, 2000, noteholders of a $100-million debenture issue by the ill-fated BCE property development vehicle, BCE Development Corp (BCED), opened their case against BCE and the EdperBrascan Corp. group of companies before Cummins J. in the Ontario Superior Court. Following its poor performance in the depressed market of the early 1990s, BCED, which once held a glittering array of North American commercial real estate in the 1980s, was sold to the EdperBrascan group by BCE in 1994 after a joint effort between EdperBrascan and BCE had failed to salvage the company. BCED’s assets were subsequently transferred into a new holding company, leaving BCED, and the debentures, valueless.
The noteholders claim that the trust indenture governing the BCED debentures was breached by the transactions, even in the absence of a mal fides by either of the defendants. BCE and the various members of the EdperBrascan group are defending the asset transfer, arguing that BCE had genuinely attempted to resurrect its subsidiary, but that continuing depression in the real estate market had forced it to strike a deal with EdperBrascan and surrender its interest in BCED.
Keneth Prehogan, Kerry Boniface and John Rosolack of Weir & Foulds are acting for the noteholders in the proceedings. David Byers, Elizabeth Pillon and Manizeh Fancy of Stikeman Elliott; Edward Babin, Jane Bailey, Andrew Bernstein and Belinda Burnett of Torys; Alan J. Lenczner and Anne E. Posno of Lenczner, Slaght, Royce, Smith, Griffin; and Mark A. Gelowitz of Osler, Hoskin & Harcourt LLP are co-counsel for the other defendants.