The committee charged with sorting out the $32 billion mess in Canada’s asset-backed commercial paper market has reached an agreement with CIBC related to three credit default swaps, it announced this afternoon.

Reaching a deal on this was a condition of CIBC’s involvement in the margin funding facility that is key to the restructuring plan for the paper.

According to a statement, a deal has been reached between CIBC and satellite trusts of Structured Asset Trust (SAT) Series E and Structured Investment Trust III (SIT III) Series E. The deal includes the termination of one of CIBC’s credit default swaps (related to SAT Series E) and the inclusion of CIBC’s two other credit default swaps (related to SAT Series E and SIT III Series E).

The Pan-Canadian Committee for Third-Party Structured ABCP, a group led by Bay Street lawyer Purdy Crawford has been working since August on restructuring the troubled notes.

“We are pleased to see the successful restructuring of these swaps,” said Crawford. “This restructuring is a long and complicated road comprising many steps, and today’s announcement represents further progress towards successful implementation of the overall restructuring plan.”

As part of the agreement, a credit default swap transaction with Nemertes Credit Linked Certificate Trust (Commerce – LSS II) Series 2006, which is a satellite trust of SAT, has been terminated. The termination resulted in a loss to noteholders of SAT Series E of approximately $163 million, or approximately 23% of principal, according to the committee’s release. The maximum recovery of funds for SAT Series E investors as a result of this unwinding is now approximately 77%, it added.

The arrangement announced today resulted from negotiations that began several months ago among CIBC and investors who own a substantial majority of the outstanding SAT Series E notes, the committee said.

Crawford’s ABCP committee recently completed a series of meetings with individual investors in the paper, in order to explain the complex restructuring process. Noteholders are scheduled to vote on the plan on April 25. The plan must be approved by a majority of noteholders (regardless of the size of their holdings) that vote at the meeting, as well as by noteholders representing at least 66-2/3% of the total aggregate principal amount of affected ABCP that vote at the meeting.