ABC Finance

Investors holding $32 billion in frozen asset-backed commercial paper voted overwhelmingly yesterday in favour of a plan to restructure the investments.

Nearly 96 per cent of 1,932 noteholders – representing $28.8 billion of the assets – approved the restructuring proposal, which aims to recover money they haven’t been able to access for more than eight months.

Under the plan, formulated by the pan-Canadian committee headed by Bay Street lawyer Purdy Crawford, the troubled short-term notes are to be exchanged for securities that mature in as much as nine years.

"I feel good about the vote," Crawford told reporters. "I think the vote was stronger in favour than I anticipated. We’re not minimizing the fact that we have some work to do next week," ahead of an Ontario Superior Court hearing Friday on continuing objections to the plan from corporate holders of ABCP.

Crawford had warned that a rejection of the plan would provoke a disastrous collapse in the value of the non-bank asset-backed commercial paper – 30- and 60-day notes that , until last August, were regarded as secure and liquid parking places for cash.

Then the ABCP sector was swept up by last summer’s crisis in U.S. subprime mortgages, amid worries that some of the paper was tied to dodgy American home loans, in addition to bundles of higher-quality mortgages, car loans, credit card receivables and other assets.

Individual investors who had chunks of their life savings in ABCP saw that investment teeter on the brink of being wiped out.

Agreements linked to yesterday’s settlement will see the securities dealers that sold the ABCP ensure these investors will quickly get their money back.

Federal Finance Minister Jim Flaherty issued a statement calling the approval of the restructuring plan "an important milestone in what has been a long and complex process."

"Since the standstill began last August, the government has supported a market-led restructuring as a better course of action for investors and capital markets," Flaherty said 500 fast cash. "I look forward to next steps in the process being completed in a timely fashion."

The big institutions stuck with ABCP, such as Quebec’s Caisse de dép?t pension plan with $13 billion worth – are prepared to wait for their money, and the Crawford plan enables them to avoid hefty writeoffs of their holdings.

Many corporations and other middle-level players need the money sooner – but the only way they’ll get it under the Crawford plan will be to sell the long-term notes, likely at steep discounts.

This could mean, for example, that miners or other companies are forced to delay developments, or come up with alternative financing.

Yesterday’s meeting, attended by more than 200 noteholders, lawyers and corporate representatives, was low-key – in contrast to sometimes acrimonious recent information sessions for investors.

Those events were peppered with passionate speeches and exclamations that the Crawford committee had muddled the process for ordinary investors.

A key issue in the Crawford plan, and one that will be discussed in court next week, is its provision preventing litigation against banks, securities dealers and others involved in creating and selling the ABCP trusts.

Jeffrey Carhart, a representative of a committee of investors, said GM Acceptance Corp. of Canada, for one, voted against the plan "because they feel that the current (litigation) releases are too broad, fundamentally unfair, may be legally invalid."

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