Juroviesky and Ricci LLP announced today that after failing in its initial attempts to persuade the Pan Canadian committee to buy its clients frozen asset backed commercial paper (ABCP) using moral persuasion, it would consider auctioning the retail holders’ voting and economic rights to the highest bidder.

Lawyer Henry Juroviesky said that he was soliciting bids from U.S. based private equity and hedge funds, known for buying distressed debt, “to keep the process honest”.

“The impression we gleaned from the Pan-Canadian committee was that they felt that they had no moral duties to the class of retail Investors, and that a deal that even if forthcoming would most likely only benefit the persons needed to secure a successful vote on the restructuring.” Juroviesky said in a release.

“We feel that an auction of all my clients’ economic interests would add significant value to those looking for an alternative to the proposed restructuring,” he added.

The law firm has retained Blackmore Partners, a consulting firm with established contacts in the private equity and hedge fund markets, to find a buyer for the voting and economic rights of the retail noteholders. Blackmore has offices in Chicago and Toronto.

Juroviesky added that the legal firm has already had preliminary expressions of interests to purchase its clients’ interests.

“We feel that there is an opportunity for a well funded institutional fund, with a longer liquidity time frame, to extract more value from the Pan-Canadian Investor committee, than what we have been offered to date, and to accordingly offer my clients an appropriate deal, including a percentage of any upside”, Juroviesky said.

“The PC committee stands to lose approximately $22 billion dollars if the restructuring fails,” warned Juroviesky, “so there is some leverage there for a party whose threats to vote it down are believable.”

Under the structure proposed by Blackmore, all noteholders would authorize Juroviesky and Ricci LLP to vote their proxies for them in a voting trust, and a winning bidder would have the right to direct the voting trust to either vote for or against the Pan Canadian sponsored CCAA proposal.