Lawyer to appeal ABCP ruling

The restructuring plan for $32 billion in asset-backed commercial paper hit another snag on Tuesday as lawyer Howard Shapray, who represents Ivanhoe Mines, says he plans to take his case to the Supreme Court of Canada.

"We are appealing," Shapray told The Canadian Press in a phone interview a day after the Ontario Court of Appeal ruled that the controversial restructuring plan should go ahead.

"My client is a large investor and while there are small investors who are being squeezed in this process, the principles here are simply too important."

Upset investors

Some mid-sized investors — individual investors with ABCP holdings of more than $1 million and a number of corporations — launched the initial appeal. Many regard themselves as disadvantaged by the restructuring plan.

It's widely expected that lawyers representing other mid-sized investors will take their concerns to the higher court.

"We're not looking to stall things," Shapray added. "We don't want to see small investors hurt in this process any more than is natural."

On Monday, a three-member panel of Ontario's top appeals court unanimously found that an earlier decision made by the Ontario Superior Court two months ago should be upheld.

That decision removed a major roadblock in the restructuring process designed to unfreeze the ABCP market, which has been locked since last August.

History lesson

Canadian ABCP was a victim of last summer's crisis in U.S. subprime mortgages, amid worries that some of the paper was tied to dodgy U.S. home loans, in addition to bundles of higher quality mortgages, car loans, credit card receivables and other assets.

Many corporate investors relied on bond rating agencies, who rated the debt as an acceptable risk, and poured millions of dollars into the short-term investments, hoping to get their money back quickly when they needed it.

The decision by the Ontario Superior Court had prevented ordinary corporate and individual investors from suing brokerages, financial services companies, the banks and bond rating agencies for millions of dollars in losses they suffered from the collapse of the short-term investments.

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