A syndicate including the Canadian Deposit Insurance Corportion and six major Canadian banks agreed to provide financial support to Canadian Commercial Bank ("CCB") by advancing $255 million to CCB for undivided interests by way of participation in a portion of a portfolio of assets held by CCB, with the right to receive from CCB on a proportionate basis the money recovered on those assets as well as a specified percentage of CCB's pre-tax income, until such time as the money advanced had been repaid, and with the further right in certain circumstances to receive warrants to acquire treasury shares of CCB representing approximately three-times the number of common shares currently outstanding.
The full amount advanced qualified as a loan (with the warrants as an equity sweetener), rather than as an equity investment. Accordingly, the syndicate's claim under the loan ranked equally with the claims of CCB's other unsecured creditors. Although the participation agreements had some aspects of equity, of particular relevance to their debt character was that CCB was legally obligated to repay $255 million and no more to the syndicate members.