TORONTO (Reuters) - Some individual owners of asset-backed commercial paper have hired a law firm that handles class actions to try to negotiate a better deal for them as the restructuring of Canada’s C$32 billion ($31.4 billion) nonbank ABCP market proceeds.
Law firm Juroviesky and Ricci LLP said on Wednesday it has been retained by Brian Hunter, Ted Mcfeely and other dissatisfied retail ABCP investors, who have organized a group on the Facebook social networking site.
These retail customers, along with other owners of ABCP not issued by Canada’s big banks, are scheduled to vote next month on a proposed restructuring under which they would receive longer-term notes for their frozen short-term investments.
Half of the ABCP investors voting at the meeting, in person or by proxy, must approve the deal for it to go ahead.
It is estimated that 1,800 retail investors were hit by the ABCP freeze-up last August, when concerns mounted about U.S. subprime mortgage-related assets. About 1,400 of the investors are clients of Canaccord Capital Inc CCI.TO.
Juroviesky and Ricci said that it will be advised by Diane Urquhart, an independent analyst and investor advocate, about the valuation of the notes under the proposed restructuring.
One Canadian bank analyst has estimated that poor credit market conditions have wiped out more than 40 percent of the value of the paper, which was issued by 20 different trusts.
Henry Juroviesky said in a news release that he will seek a deal under which the retail purchasers of nonbank ABCP could sell their notes immediately for full value.
A proposed restructuring deal to fix the market has emerged after nearly seven months of talks led by lawyer Purdy Crawford and a group of large Canadian institutional investors.
Juroviesky said his retail clients, unlike these large institutions, can’t afford to wait until maturity to get full value for their holdings, and they do not want to support a plan that would force them to wait to receive their funds.
Retail clients are already experiencing “significant financial hardship” from the delay in accessing their funds, he said.
“We will be looking to the institutional clients and other stakeholders in the pan-Canadian committee arrangement that stand to benefit from the proposal to assist our clients in making the arrangement a positive plan for them, as well,” the release said.
Reporting by Lynne Olver; Editing by Janet Guttsman