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C$32 billion restructuring of ABCP

Date Closed

November 30, 2008

Lead Office



32.00 Billion CAD

On January 21, 2009, The restructuring of some C$32 billion of Canadian third-party structured asset-backed commercial paper (ABCP) was completed. The restructuring stemmed from events in mid-August 2007 when credit fears led to the inability of many third-party ABCP issuers to issue new notes to pay out maturing notes. On March 17, 2008, the Pan-Canadian Investors Committee of major Canadian investors, representing more than C$20 billion of the affected ABCP, successfully brought the majority of Canada's non-bank ABCP issuers under the protection of the Companies' Creditors Arrangement Act (the CCAA). On April 25, 2008, 96% of ABCP noteholders voted in favour of the proposed restructuring plan and on June 5, 2008, the Ontario Superior Court of Justice approved the plan, which became the largest court-supervised debt restructuring in Canadian history and what is believed to be the world's largest private-market restructuring response to the world-wide credit crunch. On June 25, 2008, certain dissident holders appealed the plan's approval to the Ontario Court of Appeal on the basis that releases of solvent third parties (primarily the dealers that had sold the ABCP) were not appropriate. The Court of Appeal affirmed the lower court's decision to approve the plan in a unanimous decision issued on August 18, 2008.

An application for leave to appeal to the Supreme Court of Canada was brought on September 8, 2008 by a number of applicants led by Jean Coutu Group (PJC) Inc. claiming that the breadth of the legal releases to banks, brokers, rating agencies and others raised issues of national importance that should be resolved by the nation's highest court. The Supreme Court of Canada dismissed the application for leave to appeal on September 19, 2008. Intense negotiations continued and the Ontario Superior Court granted a number of sequential extensions to the stay period under the plan. To address deteriorating conditions in the credit markets, a further agreement was reached on December 24, 2008 with all key stakeholders, including the governments of Canada, Québec, Ontario and Alberta, which had been approached to provide additional support to the restructuring. Pursuant to the terms of the agreement reached, the governments and certain members of the Investors Committee agreed to provide, in the aggregate, $4.45 billion of additional margin facilities under the plan. The Ontario Superior Court approved the implementation of the plan on January 12, 2009 and the closing and implementation of the plan took place on January 21, 2009.

McCarthy Tétrault LLP acted for the big five Canadian Banks (BMO, CIBC, Royal, Scotiabank and TD), with a team led by Barry Ryan and Kevin McElcheran.