April Could Have Been The Month Of The Corporate Crusader

By: Ross Hendin, Hendin Consultants

Since the announcement that most Canaccord clients were going to be made whole, a number of groups have thrown their arms up and demanded the same treatment. Of course, because the Committee has been hands-off of the buyout, it has very much been every group for themselves in front of the Ontario Superior Court, to challenge the CCAA in whatever form they can.

The Credential Securities noteholders, who are exactly like the Canaccord clients except their numbers are too small for them to have a material impact on the vote itself, may also be finding a buyback offer on the table imminently.

Where does that leave the corporate noteholders that I spoke about here, or the ones that are attacking National Bank directly? According to this article, Montreal Businessman Hy Bloom and his counsel were pushed out of court for reasons including the potential economic chaos and impact on thousands of Canadians if the Plan fails. I know that other counsel representing other companies have also put forward motions, but as of now, those motions have not delayed the vote.

According to this article, the next move may be to wait until after the restructure is complete, and then go after the Committee and / or the groups that were apart of the "systemic breakdown". Mr. Crawford is apparently expecting that to happen, which I can only assume means that the parties to the ABCP market are also bracing for a legal battle to begin.

From a PR perspective, the idea of biding time now seems like a good one for the corporates. On the one hand, using PR in these weeks to discuss corporate unrest and the damage that this freeze has caused companies may seem somewhat irrelevant next to the needs of the retail clients, but as the vote successfully concludes and the notes are restructured, we may end up seeing a number of corporations take a legal avenue. If they all do it at once, every one of those companies will probably lose the chance to tell their story to the court of public opinion, and in fact, the market itself may become bored of the story and choose not to cover it.

It leaves the many companies that will be involved in this without the upside of visibility.
As I've said, April is the time for smart corporations to be pleading their case to the media, and to consider discussing possible ways that they will take legal matters into their own hands. The University of Western Ontario's Pension Fund could have organized a rally, telling their students that their professors have lost millions to this Canadian black-box investment. Mining companies could have shown videos of the mines that are no longer working as a result of the liquidity crunch, etc. And all of it, at the right time, would have made them corporate crusaders after the successful vote, when they decide to "invest in justice" rather than simple stay quiet and "throw good money after bad".