The twenty trusts covered by the Montreal Accord have entered bankruptcy proceedings:
Twenty trusts received bankruptcy protection today in an Ontario court until April 16, giving investors time to review a plan drafted by a committee of some of the biggest debt holders. The proposal needs the support of a majority of noteholders, as well as investors holding a combined two-thirds of the debt.
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Crawford’s group had asked the Ontario Superior Court of Justice to call a noteholder meeting to approve the plan. Investors holding about C$21 billion of the notes have already agreed to the plan with some conditions, according to the filing.
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The restructuring includes a credit line of almost C$14- billion provided by institutional investors, foreign banks and Canadian lenders. Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Bank of Nova Scotia and Toronto- Dominion Bank indicated in a March 13 letter they would provide C$950 million to support the new notes as part of that credit line, court documents show.The group asked the court to appoint Ernst & Young Inc. as monitor in the restructuring. Investors will be sent information on the proposal and will hold meetings with noteholders in various cities.The group said legal and banking fees paid to advisers including JPM Morgan Chase & Co. and Goodmans LLP are about C$80 million to C$100 million.
DBRS has downgraded the trusts to D[efault]:
DBRS has today downgraded to D 20 of the Affected Trusts under the Montréal Accord. This rating action was taken following the announcement that a filing has been made on behalf of each of the Affected Trusts under the Companies’ Creditors Arrangement Act (CCAA) and should not be seen as indicative of deterioration in the credit quality of the assets held by the Affected Trusts.
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In a number of press releases, commentaries and newsletters published since August 16, 2007, DBRS has stated that the credit quality of the majority of the assets held by the Affected Trusts remained strong. This continues to be true. Today’s downgrade reflects the fact that the Affected Trusts are now subject to a court-supervised process which, if successful, will see the obligations of the Affected Trusts be restructured per the terms of the Framework Agreement.
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As part of today’s filing, the Committee has submitted to the court a Plan of Arrangement and Compromise (the Plan). Details of the Plan will be sent to holders of the ABCP issued by the Affected Trusts. The court will be asked to issue a Meeting Order so that a meeting may be held at which noteholders will be asked to approve the Plan. Approval of the Plan requires the votes of a majority of noteholders voting at the meeting and of noteholders holding 66 & 2/3 of the aggregate principal amount of ABCP held by noteholders voting at the meeting. If noteholders approve, the Plan will be brought before the court for approval.
Frankly, the most interesting line I’ve been able to find is: Investors holding about C$21 billion of the notes have already agreed to the plan with some conditions, according to the filing. Conditions? Some conditions? What kind of conditions?
There is a document centre maintained by Ernst & Young, but the court filing is not included in the available documents.
Update, 2008-3-18: The court orders are now available, but the Purdy Crawford affidavit and First Report of the Monitor are not.