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ABCP judge to delay ruling


May 2, 2008 at 3:54 PM EDT

TORONTO — The judge overseeing the $32-billion restructuring of the seized-up market for asset-backed commercial paper wants to put off a ruling on the plan's fairness until mid-May, saying he needs more time to review the complex case.

Ontario Superior Court Justice Colin Campbell, who was originally scheduled to rule on the fairness on Friday, said he would like to hold the so-called “sanction” hearing on May 12 and May 13, but could do it sooner in a pinch.

To give more time, the judge asked that a key standstill agreement with banks that prevents a meltdown in the market be extended. The current standstill expires May 9.

“I can't think possibly how I can get a decision out by May 9,” the judge said.

The lawyer representing the banks that have to sign off on the standstill said he couldn't give “any assurance” that the deadline could be extended. The banks have generally been leery of delaying the fix for the market longer when that's been requested by other players in the market, “but obviously a request from the judge is received very differently,” the lawyer said.

Should the ruling come out in the middle of the month, the engineers of the plan would be unlikely to meet their planned timetable of swapping the frozen ABCP for new notes by month's end.

Investors are anxiously awaiting a final resolution after being stuck with the paper since last summer, when the entire market seized because buyers disappeared during the early days of the credit crunch.

The restructuring process has dragged on for months as a committee of big investors worked to negotiate a deal that would thaw the market.

The deal, however, includes a controversial clause that would give all the players in the market immunity from lawsuits, something that has angered many holders and led to challenges in court that the judge wants more time to consider.

The lawsuits, if allowed, could run into many hundreds of millions, according to court documents filed Thursday. Aeroports de Montreal, Air Transat A.T. Inc., Cinar Corp., Labopharm Inc. and dozens of other companies laid out the claims they believe they have, which total at least $700-million.

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