But this standstill agreement has the elasticity of a rubber band and continues to get stretched when needed, so don't look for it to fall apart just yet. That's wishful thinking on behalf of the lawyers challenging Justice Colin Campbell's approval of an arrangement that restricts lawsuits against the parties involved in the ABCP market. It's still not clear what the breaking point is for the standstill agreement, but we'll find out pretty quickly if the Appeal Court rules in favour of the appeal, though that would be kind of like the Quebec Court of Appeal ruling on favor of the bondholders — unexpected.
Expect the appeal court to follow in the steps of the Supreme Court of Canada and give a day's notice that it will be issuing its ruling. If that's the case, it would have to indicate that today if the case is going to come out by the end of the week. If not, then we're into next week.
It's an important decision and a lot of brokerage firms and banks are waiting for the court's ruling, especially Canaccord Capital, which sold a boat load of ABCP to its clients. The firm noted in a Sedar filing yesterday that seven clients have commenced legal actions against the company or its subsidiaries. Here's what the filing discloses:
"Of these seven clients, four hold $1.0 million or less of ABCP and will be eligible under the Canaccord Relief Program if it is implemented. In addition, one legal action has been
commenced against a subsidiary of the Company by the client of an introducing broker for which a subsidiary of the Company acts as a carrying broker. The Company has been advised that this client is eligible under an ABCP relief program established by the introducing broker. Although the
outcome of these actions cannot be predicted with certainty, a subsidiary of the Company believes these claims are without merit and intends to defend itself vigorously in each case.
"As currently drafted, the ABCP Plan provides for a declaratory release that would result in the release of the claim against a subsidiary of the Company in each of the eight pending lawsuits described above as well as any future ABCP-related claims against a subsidiary of the Company."
There's a lot riding on this ruling.