April 15, 2008 at 11:03 AM EDT
TORONTO — An Ontario Superior Court judge has agreed to extend the
bankruptcy protection that's covering Canada's $32-billion third-party
asset-backed commercial paper market until the end of May.
Lawyers told Justice Colin Campbell that the extension is necessary
because a vote on the plan to fix this market is scheduled for April 25,
and the court would have to hold a sanction hearing after that date.
The committee that's working to salvage this market, led by Toronto
lawyer Purdy Crawford, has warned that the sector could collapse if
court protection were lifted before the market is fixed.
Meanwhile, Justice Campbell spoke toughly to a lawyer who said he wants
permission to examine an executive from National Bank and an official
from DBRS, as well as permission to carve out a new class of investors.
The requests came from Allan Sternberg, a lawyer representing Montreal
businessman Hy Bloom, whose companies are holding frozen ABCP and who is
suing National Bank in Quebec Superior Court.
“We are rapidly running into a position where the relief that you are
seeking...is going to go past the vote time,” Justice Campbell said.
Mr. Sternberg's request to reclassify investors “would fundamentally
change a plan that's been worked on for six months,” the judge said.
“I'm very reluctant to see the court have to get involved,” he added.
“Maybe you better go back and look at the consequences if this plan
fails,” he told Mr. Sternberg.
“It is absolutely essential for thousands of Canadians that we get this
Justice Campbell said he doesn't know that he has the authority to
compel officials from National Bank and DBRS, and suggested Mr. Bloom
should try to deal with some of his issues in the Quebec Superior Court.
Mr. Sternberg noted that if the restructuring plan for the ABCP sector
passes, Mr. Bloom's lawsuit against National Bank would fall by the
wayside because of blanket legal releases the plan grants to all of the
major players who created or sold ABCP.