Investors in Canada’s third-party asset-backed commercial paper (ABCP) market will have to wait until mid-May for a ruling on the fairness of the restructuring plan, according to the judge presiding over the case.
Ontario Superior Court Justice Colin Campbell was due to hold a hearing on the restructuring plan on Friday, but said he would like to move the hearing to May 12 and 13 instead, saying he needs more time to review the complex case.
He has asked that a key standstill agreement with banks that prevents a meltdown in the market be extended. The current agreement expires May 9.
“I can’t think possibly how I can get a decision out by May 9,” says Justice Campbell.
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At issue are demands from corporate ABCP investors who are fighting the so-called master release clause, which denies them the right to sue the banks and investment dealers that sold them the frozen ABCP. The legal release is integral for the restructuring deal to go through.
A ruling in mid-May might be problematic for the timetable of the restructuring scheme, as the engineers of the plan would be unlikely to meet their target of late May to swap the frozen ABCP for new notes.
The delay is likely to cause consternation amongst investors who have been waiting for a final resolution since last summer, when the entire market seized because buyers disappeared during the early days of the credit crunch.
For more information about the ongoing ABCP story, click here to visit our special section, The Paper Chase.
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