Judge approves ABCP plan
An Ontario court has approved a revised deal to restructure $32 billion worth of asset-backed commercial paper (ABCP) that has been in limbo since last year.
Justice Colin Campbell of the Ontario Superior Court accepted an amendment to the deal so some noteholders could sue ABCP dealers for fraud, a committee of investors said Thursday.
The plan is expected to be in place by the end of June, the Pan-Canadian Investors Committee for Third-Party Structured ABCP said in a news release.
About 2,000 investors were caught last year by the sudden collapse of the market for ABCP, a short-term debt product that bundled a variety of loans together, including U.S. subprime mortgages, and was then sold to investors small and large.
When the subprime market began to fall apart last summer, their holdings were frozen as no one wanted to buy ABCP that wasn't sponsored by the big banks because of fears that it might contain subprime junk.
The committee has been working since last summer to get the money unstuck.
"After nine months of arduous negotiations with and compromise among all stakeholders, we are poised to bring this process to a successful conclusion for the benefit of noteholders," committee chair Purdy Crawford said.
Retail investors hold just a fraction of the total $32 billion, and those who individually hold less than $1 million of the ABCP are expected to get back their money promptly under repurchase plans launched by two dealers who sold them the products, Canaccord Capital and Credential Securities.
Bigger investors will get new long-term notes that will be repaid over nine years.
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