ABCP legal challenge
September 19, 2008 at 8:24 PM EDT
Canadian investors saddled with $32-billion of troubled asset backed
commercial paper for more than a year should start receiving cash and
securities as soon as next month after the Supreme Court of Canada
derailed a legal challenge to the rescue plan.
Canada's highest court on Friday denied an appeal from a group of
companies that claimed the restructuring improperly granted sweeping
legal releases to banks, brokers, rating agencies and others linked to
Lawyers for a committee overseeing the bailout said they expect to close
the workout plan next month and investors should start receiving cash or
new securities by the end of October. Under the terms of the plan, an
estimated 2,000 investors holding less than $1-million of ABCP will be
repaid in cash. Remaining investors will receive notes that can be
traded or held for maturities of up to nine years.
Calgary oil and gas engineer Brian Hunter, who became a de facto leader
for the retail investors, heard of the Supreme Court's decision while on
vacation in Prague. “It's been a long go here, and it's good to get it
over,” he said.
The Supreme Court's decision eliminates the last major hurdle to the
largest and most complex restructuring in Canadian history. Since a
global panic over risky U.S. mortgages prompted investors to flee poorly
designed Canadian ABCP, many critics speculated that a committee of
banks and pension funds overseeing the bailout would fail.
Veteran Toronto lawyer Purdy Crawford, who chaired the committee, said
Friday he was relieved the restructuring was near the finish line at a
time of global financial turmoil. “Canada is a land of tranquility in a
sea of storm.”
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