RE-ARRANGING THE ARRANGEMENT LANDSCAPE: THE IMPLICATIONS OF RE MAGNA INTERNATIONAL INC

Abstract

Although plans of arrangement have been widely used in Canada as a means of effecting a variety of commercial transactions, a comprehensive analysis of the interplay between the relevant considerations that factor into the courts’ review and approval of such corporate vehicles was only recently articulated by the Supreme Court in BCE Inc v 1976 Debentureholders. However, the Supreme Court’s two-pronged “fair and reasonable” analysis arguably raised as many questions as it did answer, particularly insofar as how the newly articulated legal test would play out in the practical commercial setting. The Ontario courts’ recent decisions in Re Magna International Inc, which were among the first to give life to the Supreme Court’s “fair and reasonable” test, directly confronted and resolved many of these practical questions. This paper discusses the Magna decision, and the guidance it provides with respect to how the BCE test will be applied by the Canadian courts. In particular, Magna reveals that the practical application of the “fair and reasonable” test requires a contextual and multifaceted evaluation of the transaction in question, resulting in a fluid interplay between the Supreme Court’s various indicia of fairness.