Canada ABCP plan verges on winning court approval

Tue Jun 3, 2008 1:14pm EDT
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By Lynne Olver

TORONTO (Reuters) - An Ontario Superior Court judge said on Tuesday that he would likely approve a massive C$32 billion ($31.8 billion) restructuring plan for Canada's nonbank asset-backed commercial paper market this week.

"Unless something remarkable in my notes changes my mind, I'll approve (the plan)," Judge Colin Campbell told the court.

Campbell's decision is expected before Friday and could come as early as Tuesday afternoon when court reconvenes.

The complex ABCP restructuring plan was developed over the fall and winter by a committee of institutional investors, and won the approval of 96 percent of noteholders at an April meeting.

But a key sticking point in the plan was a broad legal release, which would have prevented investors from suing the banks and brokerages that sold them the short-term debt, which has not traded since last August.

The plan now includes an amendment to allow lawsuits in specific cases of alleged fraud.

Several lawyers for various corporate noteholders told the judge on Tuesday that the amendment defined fraud in very narrow terms, making it unlikely that many cases would proceed, prompting one to describe it as mere "window dressing."

Judge Campbell disagreed with some of those who complained about the fraud amendment, known as a "carve out."   Continued...