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ABCP plan backers argue against a Supreme Court hearing

September 5, 2008 at 3:15 PM EDT

The Supreme Court of Canada shouldn't hold a hearing on the challenge by a small group of corporations to the $32-billion asset-backed commercial paper restructuring because there are no issues of national importance that require settling, backers of the plan argued Friday in a filing with the high court.

Companies such as Jean Coutu Group (PJC) Inc. and Ivanhoe Mines Ltd., which together hold 3 per cent of the ABCP, have asked the court for a hearing on the plan to swap frozen paper for new bonds because they say it's unfair. They argue that the proposal illegally promises immunity from most lawsuits to all players in the ABCP market.

So far, they have lost in two lower courts, but managed to hold up the restructuring for months as they press the case. The committee that crafted the restructuring argues that the court challenge has gone on long enough and there is no basis for an appeal because the legal issues are well settled.

“In all, the committee submits that the applicants have not raised any issue of such national importance so as to warrant review by this court,” Benjamin Zarnett, the lawyer for the committee, wrote in an argument submitted to the high court.

“The applicants represent a small, dissident faction of the noteholders and have already had the benefit of one appellate review,” the committee wrote in its filings.

Many lawyers are betting that the high court will hear the case because of a seeming conflict between the courts of appeal in Ontario and Quebec that needs to be resolved.

The challengers are arguing that the country's bankruptcy laws don't allow such broad legal immunity. They are basing their case on a Quebec Court of Appeal decision that ruled such immunity was illegal. The Ontario Court of Appeal, in allowing the ABCP restructuring to go ahead, said that the Quebec Court was wrong.

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