In August 2007, two large investments made by the Yukon government were frozen in the collapsed asset-backed commercial paper market.
A year later, the territory is still waiting to get its money back.
The latest development in the commercial paper debacle was good news for the government’s Finance department.
On August 18, the Ontario Court of Appeal ruled against a number of investors who were seeking to alter a restructuring plan to change the paper into longer-term investments.
These investors were appealing the immunity that the deal gives to the companies that rated and sold the paper.
Specifically, the investors wanted to be able to sue these dealers for fraud.
However, the Court of Appeal ruled in favour of the moving the restructuring forward.
But the agreement isn’t out of the woods yet.
The disgruntled investors have 60 days to take their appeal to the Supreme Court of Canada and one company, Ivanhoe mines, has already confirmed that’s what it plans to do.
Finance officials aren’t too concerned about the case being taken to the Supreme Court.
“(The Ontario Court of Appeal) endorsed the restructuring proposal and it was a unanimous decision of the three judges that were hearing the appeal,” said acting assistant deputy minister Elaine Carlyle.
“We’re confident, given the wording of the decisions, that we’ve had from the two lower courts, that the Supreme Court, even if they did hear the appeal, would side with the lower courts.
“They’ve just been really strong decisions.”
Two other investors that had been appealing the deal have now backed down, and will not push the appeal further, Carlyle added.
“That’s good news from our perspective because they’re dropping out essentially.”
The restructuring deal will change the Yukon’s month-long investments into longer term paper.
The new investments will mature over the next eight and a half years.
However if the government chooses to sell the paper before it matures, it could stand to lose up to 40 per cent of the money.
“There’s been no decision regarding selling them,” said Carlyle.
“Right now, our intention is to hold them.”
Even though the frozen cash represents more than 15 per cent of the Yukon’s total investment portfolio, the government can get by without the money for the next eight and a half years, she said.
“We can hold them until maturity, that’s not a problem for us.”
Purdy Crawford, the Bay Street lawyer who has been overseeing the restructuring for the past year, has said he’s aiming for a new September 30 deadline for issuing the new notes to investors.
“He said, even if there was an appeal he still wants to aim for September 30,” said Carlyle.
But after a year of missed deadlines, the territory will have to wait and see if this is indeed the date that it gets its money back.