JC, in your DD did you come across any companies in our unique situation when searching for CCAA protection continuing?

By this I mean that in most cases of insolvency there is no pot of gold so to speak at the end of the process. Would it be fair to say that normally when a company files for protection it is to reorganize debt so that company can continue operations in some form to pay off that debt. This is caused by not enough cash flow to service the debt. It can happen for so many reason. Poor management, product competition, labour issues, general down turn in the economy, specific down turn related to a companies product, etc, etc, etc.

Crystallex is in an unique position of being able to pay off all creditors, workers and shareholders in full with no discount when the arbitration process is complete if Kry wins. I don't know of any companies that have filed for protection that could say that.

Another issue is when a reorganization takes place management if usually let go to some extent. In our case we have down sizing that has taken place already (not enough for my liking). Whether we continue to own the company or the noteholders are able to take control won't change the need for Fung and his cronies for the arbitration process. The noteholders had no plans to let them go if they had won. I think the judge recognized the fact that no matter who controls Kry the only way for anyone to get money out is if we win arbitration.

You may be correct that CCAA usually doesn't go on for years. A comparison case could be made between Nortel and Crystallex.

Nortel files in Jan. 2009 with plans to emerge from bankruptcy. 5 months later it said it wasn't going to emerge but planned to sell off its business units. Nortel is still under protection with the latest stay being until October 31st, 2012. It has been almost 4 years under protection while it continues to wind down and sell the companies. It is interesting to note that the monitor for Nortel is Ernst & Young.

Crystallex has no businesses to sell off but they do have a potential 3.8 billion dollar asset that will pay off everyone. We can debate the worth of the asset just like Nortel can debate what the companies were worth. Getting fair compensation for our asset is similar to Nortel getting fair compensation for the business units.

I realize that there are more differences than similarities because of the nature of the business but hopefully in both cases the judge will agree with the monitor ( E&Y )who has recommended continuing stays so as much money can be liquidated as possible.

I would think that if the judge had wanted the noteholders to take over he would have done so already. Both the Judge and monitor have seen the noteholders as being unreasonable in their desire to take everything. I don't know why this would change now.

It will be interesting to see what happens with the mediator.

Keep up the good work and posts JC.

JJ