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Judge gives go-ahead to ABCP vote

John Greenwood

Thursday, April 24, 2008

A plan to restructure $32-billion of stalled asset-backed commercial paper cleared a key hurdle yesterday after an Ontario Superior Court judge ruled that a noteholder vote can go ahead on Friday as scheduled despite complaints by some investors that the plan is illegal.

In a brief decision, Justice Colin Campbell said that the vote must proceed despite objections by some investors that the plan is unfair and illegal.

"To postpone the vote would signal the failure of the plan," which would have "extremely serious consequences," he said.

However Justice Campbell left the door open to possible changes to the workout in early May may when he rules on the fairness of the plan.

About 1,800 retail investors are widely expected to approve the workout since they would get their money back in full if it succeeds. Because they are the largest noteholder group, a positive outcome of the vote is almost a certainty.