ABCP challengers file
arguments with court
September 2, 2008 at 4:39 PM EDT
Corporate challengers to the $32-billion restructuring plan for the
asset-backed commercial paper market have filed their arguments with the
Supreme Court of Canada, arguing the high court needs to hear the case
because it is of national importance.
The challengers are upset that the plan virtually takes away the right
to sue the financial institutions that sold the paper, under the terms
of legal releases. The backers of the plan say that the restructuring
isn't possible without the releases, which were a condition of support
from the banks that are a key part of the plan.
Challengers, which include Domtar Inc. and Jazz Air LP, argue that the
releases aren't allowed under Canadian bankruptcy law and that the
Ontario courts were wrong to declare the plan fair and legal.
The case raises “issues of public and national importance, which will
impact upon many Canadian companies, individuals, debtors, creditors and
investors as well as numerous other participants in the Canadian
investment and business community,” James Woods, a lawyer for Domtar and
Jazz, wrote in a submission Tuesday to the Supreme Court.
Both the challengers and the committee that crafted the restructuring
plan have asked the Supreme Court to speed up its usual process for
hearing a case so that investors who have been stuck with the paper
since last August can get a decision sooner. If the court allows the
plan to go ahead, the proposal calls for swapping the frozen paper for
freely trading bonds.
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