The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Wade Hemsworth, published in the
April 1, 2006 edition
By Wade Hemsworth
The Hamilton Spectator
(Apr 1, 2006)
He is a man who has moved mountains of paper, ordered
warring lawyers into the hall to make peace and bridged some of the widest gaps
in Canadian business. In 17 years on the bench, Justice James Farley has built
a reputation as a pragmatic problem-solver, a pioneer in the complex field of
insolvency law and a sharp-tongued sergeant-at-arms with a sometimes disarming
sense of humour.
While the "real-time litigation" of modern
insolvency proceedings might not fire the imagination of the ordinary Canadian,
the solutions Farley has forged helped save many jobs, creditors' dollars --
perhaps even whole communities.
And now, with a restructured Stelco officially emerging from
bankruptcy protection today, Farley can finally retire. Actually, he still has
a few other matters on his judicial plate, but those should be wrapped up in
time for a public tribute to him April 20, when he will speak publicly about his
career.
Until then, his record speaks for itself. The problems of
Algoma Steel, Eaton's, Laidlaw, Air Canada and, for the last two years, Stelco,
have all gone through the Farley treatment, and his cases have helped to define
Canadian restructuring law.
When dying companies finally arrive at the doorstep of the
courthouse, there is a very small window of opportunity for anyone to save
them. The Companies' Creditors Arrangement Act is their oxygen tent and Farley
has a good record of bringing them out of it alive.
Restructuring specialist Hap Stephen has been at the
corporate bedside more often than most, and has developed an enduring
admiration for Farley's skill and pragmatism.
"Let's put it this way: I don't think there was another
judge who was around before who could do it as well as he could," said
Stephen, who was Stelco's chief restructuring officer.
"He is incredibly bright. He absorbs a tremendous
amount of information very quickly and he's got a good sense of judgment as to
what the issues are with various groups, and how the information plays
together. He reads the situation, in my view, extremely well."
The CCAA presented a wide-open legal frontier at the time
Farley began hearing insolvency cases. The act appeared to allow judges
tremendous latitude in wresting speedy, productive resolutions from apparently
hopeless situations. Farley's contemporaries say he not only pushed the
boundaries of the CCAA -- he defined them.
Though it took nearly two years to hammer out a deal, a
complex case such as Stelco might otherwise still be at the starting line with
nothing much left to save. The relentless cycle of business does not pause for
court proceedings, and with jobs, pensions, investments and suppliers all at
risk, time is not a luxury a bankruptcy judge can afford.
"I think he has really established the role of the
courts to try to really move CCAA's along -- to encourage out-of-court
solutions," Stephen said."He tries very hard to put whatever pressure
he can on the parties to go away and solve the business deal, as opposed to
getting into the technical law."
In the Stelco case, Stephen said, Farley's biggest challenge
appeared to be resolving the tremendous disparity between many deeply
entrenched stakeholders to produce a deal that could be broadly accepted -- in
time to save the company. That goal was endangered by a rising steel market
that temporarily buoyed the company's fortunes and slowed the pace of the
process -- until Farley put the spurs to it.
"The difficulty I have is that this company and all
people involved ... think that they have all the time in the world and that
they can continue to dance," Farley said.
"The music is stopping."
Expediency, vision, humour and a strong hand have all helped
Farley get the job done, said Gerry Apostolatos, the Montreal lawyer who
represented CN in the Stelco case, and who considers Farley the dean of
restructuring.
"He'll do what has to be done to move the process along
to fruition to ensure a successful restructuring, " he said.
"If these large-scale restructurings had gone the wrong
way and there had been a bankruptcy, you'd have a multitude of people whose
lives would have been turned totally upside-down. He would always do what had
to be done to make sure that the vast majority of people benefit."
During the case, he freely expressed frustration over the
slow progress of the hearing.
"I can't imagine how it could take so long for people
to inspect their navels for nits," he famously told the court.
"He is the kind of person who discriminates indiscriminately,"
said Apostolatos, laughing. "He's extremely democratic. It doesn't matter
if you're a five-year lawyer or a 20-year lawyer -- you're all on the same
level."
Bill Ferguson, president of the Steelworkers local
representing Lake Erie workers, went into Stelco's CCAA process with great
reluctance. But he came out of the process feeling his union had been treated
fairly, and he credits Farley.
"It was a very unusual case. It was unheard-of.
However, I can't argue with the results," he said. "It could have
gone a number of other ways. We could have been completely ignored and what I
have to appreciate about Judge Farley is that he didn't ignore us. He viewed us
as being stakeholders."
Ferguson said he's sure the judge was often unhappy with
him, and there were times when he was not happy with the judge, but he came
away admiring his ability to get the job done.
"He did kick people in the butt when they needed to be
kicked in the butt. He forced timelines and he made the process go," he
said. "As far as I'm concerned, he made the right calls and he made the
calls early."
whemsworth@thespec.com
905-526-3254