The restructuring committee that is sorting out the tattered non-bank asset-backed commercial paper market in Canada is willing to make a deal with retail investors, lawyer Purdy Crawford told a Toronto audience today.

“The big issue is retail investors who say, quite justifiably, that they’re being left out, that they are not being treated properly,” Crawford, the chair of the Pan Canadian Investors Committee for Third Party ABCP told a Canadian Club luncheon today. “We have to, in a major way, turn out attention to how we are going to deal with those issues.”

“We’ll make a deal [with retail investors],” said Crawford. “I can’t say what the deal will be. I can just tell you we’ll make a deal.”

Crawford’s candor comes on the same day a group of retail investors announced they have secured legal representation in regard to their holdings of the complex paper products.

The retail investors were acting after Crawford’s ABCP committee received approval from an Ontario Superior court last week for bankruptcy protection for $32 billion in notes, while it awaits investor approval for its complicated restructuring plan.

The plan requires a two-thirds vote in favour of the plan in terms of the total dollar amount of notes held, as well as a 50% majority of noteholders (every investor receives one vote, regardless of how much paper held) in order to pass. The vote is scheduled for April 25th.

Crawford said angry retail investors know they have some power, and they won’t hesitate to use it. “My main concern is that they’ll overplay their hand and the thing will come crumbling down,” he said.

The “thing” he is referring to is a highly complex restructuring plan for troubled asset-backed commercial paper, which would have investors hold the new paper for longer periods in order to recoup value. The ABCP market was frozen in August amid fears of connections to the sub-prime mortgage mess in the U.S. Crawford said today he is confident a secondary market will crop up for the new paper, thereby allowing investors to unload before maturity if necessary, which could be up to nine years.

Crawford said he feels for the retail investors, but doesn’t believe they’ve been treated unfairly in the restructuring process, noting that larger investors also gave up a lot in the deal. The master release clause, which protects the sellers of the paper from any future lawsuits, is an example of “the art of the possible” tactics that the committee was forced to used in order to create a viable plan, according to Crawford.

“Every step of the way we’ve made deals,” Crawford told reporters. “We’re not going to be held up by a lack of ability to deal with difficult situations.” When asked if the desire to make a deal is the committee’s or his personally, Crawford replied: “I’m talking about ‘we’ being ‘me’.”

Crawford’s committee, which includes advisors from JPMorgan and Goodmans LLP, has been working on the restructuring plan for more than seven months. He said some of the smaller retail investors are suffering from burnout, as they have been unable to access the frozen funds during this period. Crawford said one retail investor told him that when he received the telephone-book sized information package in the mail, he simply threw it against the wall in frustration.

The committee is heading out on the road tomorrow to meet with retail investors and answer questions about the plan before the vote on April 25. “We’ll make our case and the voters will have to decide, just like a democracy,” said Crawford.

Those smaller retail investors who have retained legal counsel are looking to sell all of their notes immediately at full value, 100 cents to the dollar. In terms of making a deal with these angry investors, Crawford told reporters: “All I can tell you is that work is going on.”