Muscletech completes cross-border restructuring with GNC & entities

On April 10, 2007, the successful cross-border restructuring of MuscleTech Research and Development Inc. and its subsidiaries (MDI) under the Companies' Creditors Arrangement Act (CCAA) became effective, 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 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. Among the key participants in the MDI restructuring were various GNC "oldco" entities represented in Canada by Aubrey Kauffman and Stuart Brotman of Fasken Martineau.