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"I also had shares in Algoma. When the time is right I will sell. Isn't it a coincidence that Argentina (a major investor in Algoma) defaulted on 82 billion dollars on Dec.23/2001. It was an international scam."

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I hope that Chris owns the new shares in Algoma Steel, because if he owns the old shares, he has nothing to sell.

One look at the stock chart shows just how upset Chris might be. You see; the chart shows the new" shares that were issued to new equity investors plus debt holders, management, workers and others.

The old shares were deemed worthless, zero, zip.

I have received other mail on this same point. I understand there is a lot of bitterness among the former shareholders.

One of the other letters I received came from a television producer who was speaking out for a seriously ill parent. I only wish she would produce a television documentary on this sordid business called the Companies' Creditors Arrangement Act (CCAA).

CCAA is, in my view, the bankruptcy laws that are in place in Canada to rip out the hearts of equity investors, and simultaneously serve the financial interests of those involved in the restructuring process.

CCAA is possibly one of the worst pieces of legislation in Canada, and certainly one of the least understood by shareholders, and by the Ontario Securities Commission, whose mandate from government it is to serve and protect the interests of shareholders.

But as it turns out, one whiff of the word CCAA" "- the big CC double A --, and OSC staff and commissioners seem to go blind, deaf and dumb. They certainly do not serve and protect shareholders during these times, as the Stelco shareholders are discovering today.

The least they could do is to form a shareholders' protection panel for every case of a publicly owned Canadian corporation that goes into CCAA protection. CCAA is intended to ultimately benefit creditors, management and the workers.

In any event, here is what I wrote to Chris:

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"Chris, You have my sympathies. Other readers have written me on this same topic. Unfortunately, there is nothing I can do about the problem of how bankruptcies are handled in this country.

As a shareholder resident in Ontario (per your IP address), you, and everybody like you, ought to be writing to (i) the Ontario Securities Commission, and (ii) your Member of Provincial Parliament, whose government is responsible for the securities laws and their regulation in this province.

As to Algoma Steel, at the time of their bankruptcy there had been a two or three-year depression in global steel prices, partly caused by dumping from foreign steel companies located in countries like Argentina that were then having economic crises. Then 9/11 made things worse. Algoma Steel was not alone; Bethlehem Steel in the U.S. also went bankrupt. And, when Argentina defaulted on its massive international loans, there were problems in the capital markets on a global basis. Algoma Steel got caught up in all of that. It happens.

My complaint is that the Algoma Steel restructuring officer, Hap Stephen, went in to represent the bondholders (under the protection of CCAA) and nobody (including the OSC) was in place to protect the shareholders. Consequently the shareholders got screwed out of 100 pct of their investment in Algoma Steel, while everybody else I think eventually gained from the bankruptcy, including the lawyers, the court (Justice Farley), the accountants, Hap Stephen, the bondholders, bankers, company management, and the workers.

So shareholders like you in the old Algoma Steel shares must be pissed that the new Algoma Steel shares have been trading at $30 recently. I understand your dilemma. It seems patently unfair to value an insolvent or financially distressed (steel) company at anything other than on a going-concern basis if survival is the ongoing intention of all the parties.

But that is an accounting trick used by those who are brought in by creditors and management to salvage what they can for themselves. Accounting principles are in effect exploited, and there is no provision under existing corporate securities law to protect all the stakeholders who are involved at the time.

So, Algoma Steel was not an international scam; it was a fraud on you and other shareholders perpetrated by people right here in your province. That is something you, and others, have to complain about to the right people.

All I can do is rant about it in my blog.

Regards,

Bill"

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What particularly irks me is that private equity firms lurk in the shadows of these insolvency situations, prepared to buy up debt for a few cents on the dollar. They are basically equity players who have much less at risk than the typical shareholder, and yet they are there to exploit ridiculous creditor protection laws in order to make a capital gain, which in many of these cases is truly extraordinary.

In fact the more capital that good people like Chris lose, as we can see with Algoma Steel, the more these money-sucking parasites make.

And where is the social equity in that?

I say that if we want a fair society, the rights and interests of those who take the greatest financial risk " the shareholders, and most especially Mom & Pop " ought to be protected much more than they are today.

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P.S. 10:40am: I have no idea why Algoma Steel dropped -20.0 pct after the open this morning. I hope nobody misinterpreted my article.

What happened to Algoma Steel happened four years ago. I rant on this CCAA subject because it is being used today (for 18 months now) by the same players (restructuring officer and bankruptcy judge), to do the same things to Stelco, which is another major Ontario steel company. It's an outrage.