JACQUIE MCNISH AND TARA PERKINS
June 5, 2008
An Ontario judge has approved the plan to restructure $32-billion of
asset-backed commercial paper, moving individual and corporate investors
closer to recovering troubled investments that have been frozen since
Mr. Justice Colin Campbell of the Superior Court of Ontario issued
reasons for his decision to approve a plan that was challenged by a
number of individual and corporate investors.
The plan grants a sweeping immunity to every bank, rating agency and
other major funds that helped nurture the market. The immunity will
shield the ABCP players from future lawsuits related to the investment
crisis. Not protected from this immunity are brokerages or dealers that
may have fraudulently sold the troubled notes to investors.
A number of investors have challenged the legal release, but architects
of the restructuring said it was necessary to win bank and other
backers' financial support and concessions that are central to the plan.
Judge Campbell said in his reasons: “The plan does in my view represent
a reasonable balance between benefit to all noteholders and enhanced
recovery for those who can make out specific claims in fraud.”
It is widely expected that some investors will seek to appeal the
judge's decision, meaning that investors may have to wait at least
another month to receive money or new securities that will be issued
under the plan.
“We are gratified that the court has approved the restructuring plan and
determined that is was fair,” said Purdy Crawford, chair of the
investors' committee, that led the restructuring.
“After nine months of arduous negotiations with, and compromise among
all stakeholders, we are poised to bring this process to a successful
conclusion for the benefit of noteholders.”