August 19, 2008
TORONTO - The restructuring plan for $32 billion in asset-backed commercial paper hit another snag on Tuesday as a lawyer for Ivanhoe Mines (TSX:IVN), says he plans to take his case to the Supreme Court of Canada.
"We are appealing," lawyer Howard Shapray said in a phone interview a day after the Ontario Court of Appeal ruled that the controversial restructuring plan should go ahead.
"My client is a large investor and while there are small investors who are being squeezed in this process the principles here are simply too important."
Some mid-sized investors - individual investors with ABCP holdings of more than $1 million and a number of corporations - launched the initial appeal.
Many regard themselves as disadvantaged by the restructuring plan, especially because the plan removes their right to sue in all instances except certain circumstances of fraud.
"We're not looking to stall things," Shapray said. "We don't want to see small investors hurt in this process any more than is natural."
It's widely expected that other mid-sized
investors will take their concerns to Canada's highest court, including the Jean
Coutu Group (TSX:PJC.A), which is represented by Montreal lawyer James Woods.
Earlier Tuesday, Woods sent a letter to lawyers for the restructuring committee and others involved in the ABCP case outlining potential plans to appeal.
"We are also ready to co-operate with other parties to have this matter proceed before the Supreme Court of Canada on an accelerated timetable," he wrote in a letter obtained by The Canadian Press.
Woods said that if Crawford and his committee insist on implementing the plan before the Supreme Court of Canada hears the appeal, then he will push for his clients to apply for a stay of the order, which would ensure the plan would be held off until the final judgement.
Woods did not return phone calls for comment.
On Monday, three-member panel of Ontario's top appeals court unanimously found that an earlier decision made by the Ontario Superior Court two months ago should be upheld.
That decision removed a major roadblock in the restructuring process designed to unfreeze the ABCP market, which has been locked up since last August.
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 U.S. home loans, in addition to bundles of higher-quality mortgages, car loans, credit card receivables and other assets.
Many corporate investors relied on bond rating agencies, who rated the debt as an acceptable risk, and poured millions of dollars into the short-term investments, hoping to get their money back quickly when they needed it.
The court decisions so far would uphold the restructuring plan's provision that will prevent investors from suing brokerages, financial services companies, the banks and bond rating agencies for millions of dollars in losses they suffered from the collapse of the short-term investments.