After the Ontario Court of Appeal provided a brief respite from the emotional rollercoaster that is Canada’s third-party asset-backed commercial paper (ABCP) market, investors may now have a new reason to worry: Ivanhoe Mines plans to seek leave to appeal to the Supreme Court of Canada.

According to Howard Shapray, a lawyer representing Ivanhoe, the company is appealing on the same basis they argued in the Court of Appeal, although with a more focused thrust. “I think the issue will be focused entirely on the principle of statutory interpretation and the jurisdiction of the court to apply the vague language of the statute in a way which authorizes confiscation of property,” he says.

Shapray voiced a widely held expectation that other mid-sized investors such as Jean Coutu Pharmacy will join Ivanhoe at the Supreme Court. “I would be surprised if there weren’t others at the bar with us,” he says. Ivanhoe has $66.5 million in ABCP.

Under the restructuring plan, investors forgo their right to sue anyone involved with the ABCP market except for certain circumstances of fraud.

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Toronto lawyer Purdy Crawford, chair of the Pan-Canadian Investors Committee for Third-Party ABCP, is doubtful as to the feasibility of a Supreme Court challenge. “I think they’ll have to think twice about it,” he says. “It’s one thing whether they can get leave. It’s another thing if they can be successful.”

ABCP market consultant Daryl Ching says he’s not surprised by Ivanhoe’s decision to appeal, as the agreement has been on shaky legal ground from the beginning. “Looking at it from a strictly legal perspective, the deal should never have gone through,” he explains. However, the implications of a failed restructuring of the market would be catastrophic. “That needs to be taken into consideration, especially since you have two thousand retail investors in limbo at this point, with their life savings in question.”

Henry Juroviesky, who represents approximately 1,800 retail investors, is hopeful that the momentum of the Court of Appeal’s unanimous ruling will overrule any technical legal arguments. “This is a delay that we don’t like, but we believe it will be short term and the appeal will be on an expedited basis,” he says.

While confident that the Court of Appeal’s decision will be upheld, Juroviesky says there are valid legal arguments against the plan, namely that it is a policy decision as opposed to one based on the technicalities of law. “If it’s a policy decision, there may be gaps in the legal reasoning,” he says. “The only people who would know that would be the Supreme Court of Canada.”

For more about the ongoing ABCP story, click here to visit our special section, The Paper Chase.

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