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Asset Backed Commercial Paper: Why the Courts Got it Right

September-1-2009

Area Banking and Finance Law

Summary

Article originally published in the Banking & Finance Law Review, Carswell

Excerpt from Asset Backed Commercial Paper:  Why the Courts Got it Right:

The asset backed paper restructuring in Canada has been hailed as a unique, successful, private restructuring in response to the U.S. credit and sub-prime mortgage crises, which arose in 2007.   The decision of the Court of Appeal for Ontario in Metcalfe & Mansfield Alternative Investments II Corp. (Re) ("the ABCP Appeal Decision") and the denial of leave to appeal that decision by the Supreme Court of Canada, brought to an end to efforts to oppose the largest and, perhaps, the most controversial restructuring proceeding of recent note under the Companies’ Creditors Arrangement Act (the "CCAA").  By denying leave to appeal, the Supreme Court of Canada left in place the ABCP Appeal Decision which, at its narrowest, upheld the controversial provisions in the proposed plan of arrangement that provided for mandatory releases of third parties to be granted by all creditors.  Viewed more broadly, the ABCP Appeal Decision, authored by the Honourable Mr. Justice Robert A. Blair on behalf of the unanimous panel of the Court of Appeal for Ontario (Laskin and Cronk JJ.A. concurring), provides a template for the analysis and purposive interpretation of the CCAA that is bound to become the leading authority for the current generation of insolvency practitioners in Ontario, with persuasive influence across the country.