August 18, 2008 - 15:07
David Friend, THE CANADIAN PRESS
TORONTO - Canadian investors find out Monday afternoon whether they can
hope to see the money they have tied up in $32 billion of frozen
asset-backed commercial paper any time soon.
But the crucial announcement doesn't mean
that the legal fight is over, since the case could yet end up in
Canada's highest court.
The Ontario Court of Appeal will release its decision on the
restructuring plan on Monday at p.m. ET, but investors who are
dissatisfied with the ruling could take their case to the Supreme Court
of Canada, which could further delay the process.
"I can't imagine that the decision is
going to allow people to get their money back quickly," said Larry
Elford, an investor advocate and retired retail stock broker.
"If it did, that would be great...(but)
there are a number of people who won't be getting money back."
Elford suggested that the fight will
likely go on, businesses or or people who have more than $1 million in
ABCP, who aren't included in side deals meant to sweeten some of the
bitter aspects of the overall restructuring plan.
One of the conditions of the plan is that
investors agree to give up their right to sue the firms that sold or
recommended the ABCP.
Elford said some of the investors who
didn't qualify for one of the side deals will "try to throw a wrench
into things" if the Ontario appellate court approves the deal.
At least two firms say they will buffer
the impact for individual clients who invested less than $1 million in
the now-frozen commercial paper. In return, the individual clients have
voted in favor of the overall restructuring plan - although many had
expressed unhappiness of the requirement that they give up the right to
Canadian ABCP was a victim of last
summer's crisis in U.S. subprime mortgages, amid worries that some of
the paper was tied to dodgy American home loans, in addition to bundles
of higher-quality mortgages, car loans, credit card receivables and
A rescue plan was hatched by the
Pan-Canadian investors committee - representing very large investment
groups, including pension plans - late last summer to clean up the
problems, and was headed by Bay Street lawyer Purdy Crawford.
Individual investors who had chunks of
their life savings in ABCP have seen that investment teeter on the brink
of either being tied up for several years or wiped out if the rescue
plan failed and the notes were dumped at a discount by the major
Two other groups of investors have more
money invested in the commercial paper.
Stuck in the middle are the mid-sized
investors, a number of corporations and large individual investors with
ABCP holdings of more than $1 million but less than hundreds of
millions. Many regard themselves as disadvantaged by the plan.
Holders of massive amounts of ABCP, such
as the Caisse de depot et placement du Quebec with $13 billion worth,
are onside for the deal because they have investments that would become
significantly undervalued if the restructuring plan crumbled.
If the appeal isn't accepted, then the
restructuring plan is essentially tossed out the window.