Saturday, March 15, 2008

Canadian ABCP Rescue Saga Continues

After missing several deadlines to complete the rescue plan, the agreement has failed yet again. So now the major players are seeking bankruptcy protection for the 20 trusts that issued the paper. This saga has been going on since last August.

The banks will file an application in Ontario Superior Court to put the 20 trusts under the protection of the Companies' Creditors Arrangement Act, a law normally used by companies that are trying to restructure under bankruptcy protection, thus preventing creditors from seizing assets and halts lawsuits against the company.

Meanwhile, investors in the supposedly safe funds are out of luck. None of this is unexpected but with the deteroriation of the banks situtation in the US, any hope that whoever put money into these funds will be able to recover it at full value and soon is just misguided.

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