Investors with life savings stuck in non-bank, asset-backed commercial paper are expressing cautious optimism about getting their money back this fall after the Ontario Court of Appeal upheld a controversial restructuring plan for $32 billion worth of the frozen notes.
Yesterday's unanimous decision by a three-judge panel clears the way for the restructuring to close by late September.
Even so, there continues to be lingering uncertainty about whether the case could end up at the Supreme Court of Canada.
Mike Miles of Victoria, B.C., is among some 1,800 retail investors with money ensnared in the moribund commercial paper. He called yesterday's court ruling a "wonderful step," but suggested it is simply too soon to exhale.
"It depends on whether this gets appealed to the Supreme Court or not," he said in a telephone interview. "I think all of us are ecstatic to get our money back. There is still a lot of hardship that is going to linger from this. It has been a very, very difficult year for everybody concerned."
Those sentiments were echoed by Brian Hunter, a Calgary-based engineer who started a Facebook group to help galvanize support for retail investors.
"Suffice to say, until it is in my hand, I will not be sure," he said.
It was unclear late yesterday whether the small group of corporate investors, led by pharmacy chain Jean Coutu Group Inc., planned to pursue an appeal to the Supreme Court.
The group had appealed a June 5 decision from Ontario Superior Court Justice Colin Campbell that had allowed the plan to proceed.
It opposes a provision in the plan that shields the banks and brokerages that sold the affected commercial paper from potential lawsuits. Unlike retail investors, these corporate note holders are not eligible for any special buyback plans.
The three-judge appeal panel concluded Campbell had the authority to approve the plan and it declined to "interfere" with his finding that the plan was fair and reasonable.
Neither a Jean Coutu spokesperson nor the group's lawyer returned telephone messages seeking comment yesterday.
The Pan-Canadian Investors Committee that produced the restructuring plan applauded the court's decision.
"Our committee is now in a position to put the final steps in place to complete the restructuring plan and note holders can look forward to the issuance of new notes and the establishment of a liquid market for them," committee chair Purdy Crawford said in a release. "Absent any further appeals, we expect the restructuring to close by Sept. 30, 2008."
Canadian non-bank ABCP, a type of short-term commercial debt, has been in crisis since seizing up in August 2007. The market experienced a dearth of buyers over worries that American subprime mortgages were among the assets backing the securities.
The investor committee drafted a restructuring plan last winter that proposes to convert the short-term securities into longer-term investments with maturities of up to nine years. Most retail investors, however, are eligible for special repurchase programs that would see them receive the face value of their ABCP, plus some interest.
The bailouts, however, hinge on a successful restructuring of the ABCP market.
With files from Reuters News Agency
