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.
Click for more on ABCP