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The Supreme Court of Canada ruling Friday on the proposed takeover of BCE Inc. was, arguably, the most important Canadian corporate law case in 35 years, says Christopher Nicholls, professor in the faculty of law at the University of Western Ontario. The implications are enormous.

Prof. Nicholls, a corporate law specialist, was online Monday to take your questions about the Supreme Court decision, the BCE takeover and what might happen next. Your questions and Prof. Nicholls' answers appear at the bottom of this page.

Prof. Nicholls joined Western's law faculty in 2006. Prior to that, he was a member of the law faculty at Dalhousie University, where he held the Purdy Crawford Chair in Business Law and acted a director of Dalhousie's business law specialization program. He twice won the Dalhousie Law School Excellence in Teaching Law Award, most recently in 2005.

Before joining Dalhousie, Prof. Nicholls practised corporate and securities law, first with two of Toronto's largest corporate law firms, then as a corporate finance and securities attorney in Hamilton, Bermuda. Prof. Nicholls currently serves as associate editor of the Canadian Business Law Journal and is a member of the editorial board of the Canadian Journal of Law and Technology. He is also the author of the 2007 book Mergers, Acquisitions and Other Changes of Corporate Control

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Chris Hannay, reportonbusiness.com: Welcome, Professor Nicholls. This case has been the talk of Canadian business for months, and our readers have a lot of questions. To get us started, were you surprised by the Supreme Court ruling?

Prof. Nicholls: No, I wasn't surprised by the decision itself. But we'll all be interested to see if there is anything surprising to come in the reasons for the decision. Perhaps I can offer a hockey analogy, at least for those of us old enough to remember the Canada-Soviet Summit series in 1972. Suppose a Canadian hockey fan had been out of the country that fall, and had somehow missed seeing or hearing anything about the series. Upon his return, he would certainly not have been surprised to learn that Canada had won. After all, most Canadians expected that outcome. But then imagine how that same fan would feel after later seeing tapes of those remarkable 8 games, and realizing that the Canadians didn't win in quite the way that he may have expected before the series began.

Chris Hannay: While the Supreme Court's ruling was unanimous, of course everyone really wants to read the reasons for this judgment in favour of Teachers' and BCE. When can we expect to get this?

Prof. Nicholls: It's difficult to say. The Supreme Court has a full docket. I do note that the Peoples v. Wise case, the important 2004 Supreme Court corporate law decision referred to in argument in the BCE case, was originally decided in the spring of 2004, with reasons issued late in October. And the Peoples case had come before the court in the conventional way, not in the BCE appeal's expedited fashion. So there could be a considerable wait.

Barry Cameron from Canada writes: I am both a holder of BCE stock and Bell Bonds. And although I understand and accept the decision made by the Supreme Court, I remain sympathetic to the bondholders. The reality is that with the added debt BCE is taking on, Bell Bonds have and will continue to lose value in the marketplace. It's not just about interest and principal being rendered according to contract. This was a legal decision, but there is a moral question of responsibility left unanswered concerning those who lend money to corporations when such a significant leveraged buyout occurs that affects the price of debt so profoundly. How do we solve that problem?

Prof. Nicholls: Until we see the Supreme Court's reasons, we can't be entirely sure what this decision says about the respective interests of creditors (including debt securityholders) and shareholders in a transaction of this sort. One assumes that, depending upon the guidance offered by the Supreme Court's reasons, bondholders, prospective bondholders, underwriters of public debt offerings, and their counsel will carefully assess what protective covenants they would like to see in trust indentures, and will negotiate accordingly.

Jon A. from Montreal Canada writes: Hello. In light of the heavy debt load that BCE will now carry do you believe the teachers will try and sell off potions of the company? It seems like a lot of companies would be interested in the mobility portion and would probably pay top dollar. Thank you for your time.

Prof. Nicholls: A thoughtful and important question, but one which, I am afraid, is best left to business decision makers rather than law professors.

Garry Fletcher from Canada writes: I am extremely concerned with the variance of decisions by our court system. We see this in all areas of decisions. The court decisions with the Bell controversy is another example how different court decisions have created complete bedlam. I ask how can our judicial system explain such inconsistency?

Prof. Nicholls: One of the things that's important to remember is that the number of business transactions that lead to litigation are few; of those relatively small number of cases that are launched, the number that are not settled before reaching the courts are fewer still; and of that small number of cases that are heard by courts, even fewer are appealed. So it is that it is the most difficult cases, typically, that lead to judicial decisions in the first place, and so we should perhaps not be completely surprised to see differences of opinion among judges in those difficult cases - just as we observe profound differences of opinion among intelligent and well-informed people on a host of important social, political, and economic issues. It seems, to me at least, that the important thing is that we have a civilized system for dealing with conflicts, and a well-defined system of court hierarchy that ensures, on the one hand, that parties have a full and fair opportunity to be heard, while on the other hand when the highest court has spoken, or all rights of appeal have been exhausted, the dispute is settled once for all.

B T from Lost In Cyberspace Canada writes: If the deal was to close on June 30, why will it take now to the end of September? Didn't the board of BCE and Teachers continue to prepare for the transaction pending the Supreme Court ruling? It seems strange to me that once the Quebec Court of Appeal ruled against them, that they appear to have stopped all work on completing the transaction if the court ruling was the last hurdle.

Prof. Nicholls: Needless to say, I can't speak to the dynamics and timing of the transaction since I have no direct knowledge about that. I do note that this is a very large, very complex transaction, and, as recent media reports have indicated, there have been various matters that have had to be managed by the parties in addition to awaiting the outcome of this litigation. As a general matter, based on my own practice experience, I can say that adjusting the closing date is by no means unusual.

George Jenney from Caledon East Canada writes: Do you think that the unanimous Quebec Court of Appeal decision will result in more companies moving their head offices out of Quebec?

Prof. Nicholls: Among the many complicated factors that firms would consider in taking such an important decision, it seems to me that it would be very surprising if one specific court case on one particular set of facts - and about which reasonable people can and do differ - would be material.

Jerry Aznavourian from Canada writes: Chris, for a lay person like me it is very difficult to appreciate the contradictory voting that took place among the two courts. Quebec Court of Appeal judges, I believe five of them, voted unanimously in favour of the bond holders. Then the seven judges of our Supreme Court sided unanimously with the shareholders. Such complicated issues normally receive split decisions which explain the differences of thinking between the judges of an appeal's court. Please shed some light between the views of the Court of Appeal and Supreme Court judges that have been so polarized. How could the Appeal Court judges be so wrong in view of the Supreme Court ruling?

Prof. Nicholls: The answer to this question, I am afraid, will have to be deferred because we don't have the Supreme Court's reasons yet; so we don't know specifically where they disagreed with conclusions of the Court of Appeal.

l h from Canada writes: Hello, can you comment on holding BELL bonds? What do you think is the private Bell's risk of insolvency and default as it sounds that they will be highly leveraged with debt and in a difficult telecom market, (declines in land line, increased competition, history of low innovation). Thank you.

Prof. Nicholls: To answer this question, I'm afraid, would involve giving investment advice, which I am not able to do.

Chad Barrette from Amherstburg, Canada writes: Can you explain in layman's terms the Supreme Courts decision? If the bondholders don't feel protected will this hurt future investment in Canadian companies? Thanks.

Prof. Nicholls: For the moment - until we receive the Supreme Court's reasons for their decision - all we know is this. The Plan of Arrangement which BCE put forward, and which received the approval of its shareholders at a shareholders' meeting and was originally approved by the Quebec Superior Court, may now proceed. That means the Teachers' acquisition may be completed and, as part of that acquisition, Bell Canada will give a guarantee of BCE debt. To give a little more background, a plan of arrangement is a particular way that Canadian companies may choose to structure acquisition deals. It's a very useful and flexible way of completing complex transactions that is provided for in corporate law statutes. But when companies choose to structure their deals as plans of arrangement, they are specifically required to obtain court approval. And before the court will grant that approval (at a so-called "fairness hearing"), the court must be satisfied that the arrangement is fair and reasonable. In this case, the Quebec Superior Court (Justice Silcoff) found that the arrangement was fair and reasonable, and so gave his approval. The Quebec Court of Appeal overturned that decision. The Supreme Court of Canada has now affirmed the trial judge's approval of the plan of arrangement. But what we don't know yet is whether the Supreme Court agreed with all of the trial judge's reasons for granting that approval. That's what the reasons for judgment will reveal when they are released at a later date.

Chris Hannay: Thank you very much for your answers today, Prof. Nicholls. Before we finish the discussion, do you have any final thoughts on this case?

Prof. Nicholls: The BCE case is remarkable in so many ways: the size of the transaction; the fact that it involved an iconic Canadian company; the fact that the Supreme Court agreed to hear an appeal of a corporate law decision on an expedited real-time basis; and the fact that it involves issue of law that those of us interested in the mergers and acquisitions area have been long awaiting authoritative guidance. I was delighted to have a chance to discuss the case in this online discussion.