As you know I have been up in arms watching this judge screw with the Canada Business Corporations Act and the well established practices of the capital markets of Canada.

And I'm not alone. Surely the Stelco case has been held up in mockery by some of Canada's leading business journalists at the Toronto Star and Globe & Mail, and by some of Bay Street's financial community.

Soon to be retired, Judge Farley's legacy to the bench is obviously one that is appreciated and admired by the money-grubbing suits who work in legal and accounting firms, but shareholders despise the man.

Why? It's because nowhere more than in the cases of two steel companies (Algoma Steel and Stelco) has one judge done more to exploit the difference between book value and fair market value, and in doing so help so-called "private equity" destroy the legitimate capital interests of the rest of us.

Under the Farley Rules, a going concern is now really a bankrupt if one's debts are greater than book value.

Well, if that's the case, there are presently millions of legal bankrupts masquerading as legitimate businesses. If you happen to be one, beware; Farley's Gang is on the way, and they intend to steal your assets.

So I advise everybody in this position to sell those Canadian assets today " before they get taken from you.

And under the Farley Rules, there is no currency given to either goodwill or intellectual capital, which are notions that are seemingly foreign to lawyers and judges anyway.

At the end of the day, Stelco has been a shameless piece of engineered fraud.

How this judge and his friends in the so-called professions of law and accounting could get away with deeming a successful going-concern a bankrupt is beyond me.

And how other judges, lawyers and accountants, politicians and regulators went along with the scam is also beyond me. But either by ignorance or devious motivation, these gutless wonders became, in a manner of speaking, co-conspirators in this fraud.

This week, the Stelco officers and directors have formally requested that the Toronto Stock Exchange join the fraud by delisting the shares of Stelco on March 10. As proof of argument they can point to the ruling of a single friendly judge. But that judge is supposed to base his decision in the existing law " not his own -- and the law requires that there be a Plan of Arrangement in these CCAA cases prior to removing the rights of the former investors of debt and equity.

But there is no Plan of Arrangement in the case of Stelco. The parties are still fighting amongst themselves. So the judge's ruling in law was premature.

What we have here now " if these shares are struck with no Plan of Arrangement -- is a simple case of fraudulent conveyance, and the Toronto Stock Exchange, that bastion of Canadian capitalism, is being asked to assist in the screwing of Stelco's shareholders.

Isn't that ducky? But what happened to the rule of law? And what happened to shareholder rights? Does anybody in Canada care anymore?

I don't wish to rehash the whole Stelco matter, but I'd like to leave one thought in people's minds about the concept of bankruptcy. The new people in control of Stelco have made it obvious, and I have pointed it out before.

If the individual parts of an entity are not bankrupt, how can the consolidated total be?

It's because going concerns can be put into bankruptcy and accounted for under the accounting concept of book value, and then come out of bankruptcy under the concept of fair market value.

Let's see what happened at Stelco. It used to be a supposedly bankrupt single entity going into CCAA, but coming out it, with zero new equity invested, it will be a supposedly healthy entity with nine separate parts.

Under the Asset Backed Loan (ABL) agreements, Stelco was forced to keep those bank loans in good standing during the more than two years of CCAA protection. There was no other bank debt.

Stelco debentures, which have a book value at par, were "protected" under CCAA in that the Company was allowed to stop paying the interest on them even though it had been paying properly before CCAA and had the funds throughout to keep paying.

The total book value of all of the bonds and convertible debentures is $365 million. Interest over the last 27 months at 10%, compounded is about $90 million.

So the debentures went into default and their market value fell to pennies. Then Tricap (the Brascan/Brookfield Bandits who are the new owners) went around to the old bondholders offering to buy them up, which in many cases they managed to do.

So the former legit owners of those bonds have been shafted and have written off millions of dollars in principal and interest. I know they are pissed because several wrote to tell me so.

Then there is an infamous computer loan (just under $50 million) that was bought by Tricap just moments after it was accepted by the Monitor (after the Monitor had been disputing the claim for almost 2 years). God only knows the default interest terms under that deal.

These debts were then presented to the court as legitimate claims valued at book value.

But the Bandits then told the court that out of the kindness of their heart (even though they were making a capital gain on those debenture purchases), they would accept just 50 cents on the dollar for them in a restructuring. That was done in order to help their friendly judge rule that the Company could not meet its financial obligations.

They did that because these Bandits always had their eye on the bigger prize, which was the true value of the equity in Stelco.

But could Stelco have continued to meet its financial obligations " if managed by a legit group of officers and directors rather than by a CEO and VP who were career senior executives of (drum roll please) the Brascan/Brookfield Bandits, parachuted into Stelco right before the CCAA filing?

You bet Stelco could pay its debts. It could then, and it can today.

The latest cash position is disclosed in the 52nd monitor's report. It shows that Stelco's borrowing on Jan. 29, 2004 was $280 million, and on Feb. 17, 2006, it was $296 million, which is just $16 million more. In addition, the trade creditors are owed $132 million, which was withheld from them under CCAA in order to browbeat them into accepting pennies on the dollar.

We should add the unpaid bond interest, that will take the total to $222 million. Having adjusted for this, no where in the cash report can I identify the cash from the proceeds of the sale of assets that were supposed to come to $120 million. This $120 million amount was contained in the Monitor's report of late November.

This will probably be the last cash report that anyone sees.

As you are aware, there are a number of ways to make it say what one likes. Has Stelco been as diligent as it normally would in collecting receivables? Have any customers received verbal extension of payment terms? Have any payables been "paid" earlier than usual? Has the capex spending been accelerated?

Let's not forget that this is a large amount of capex in relation to what has been spent in the past. It is very easy to confuse the average person by saying I have no cash because I spent it on capex.

So Stelco increased its net debt by $222 million, and the Company states that it could not have paid. They lied.

During this time period, Stelco officers and directors paid out (i) at least $125 million on CCAA costs (remember, they put the Company into bankruptcy -- it was not petitioned by any other party), (ii) $61 million on "Special Project Enterprise Funding" (mainly relating to the Z line), and (iii) $328 million for "Capital, Repairs and Maintenance," of which, just to add insult to injury, $64.3 million was spent in the last three months.

But here, to me, is the killer.

All through this time period, Stelco had valuable mining and land assets on the books that could and should have been properly valued by the Court Monitor (Ernst & Young), rather than accounted for on the basis of book value.

I have not done a Discounted Cash Flow (DCF) analysis on the Stelco iron ore mining assets, but, while of considerable value in the real world, they are on the books at a ridiculously low cost base.

If, due to the volatility of base metal prices today, we capitalize at 16-pct, these mining assets are worth six times expected royalty flow, which means that as a going concern they are easily worth $1 billion dollars. No value was given to this in the liquidation scenario.

The liquidation scenario that was presented to Judge Farley only valued the entire company at about sixteen cents on the dollar. A spin-out of mining royalties on their own was a recovery of 200-pct.

In addition, the Monitor gave no value to the land. Last week, the sale of land around Stelco's Welland plant was approved, but the sale price was sealed. Value is hard to predict. The land at Lake Erie may be too far away to be valuable for anything other than farmland and cottages. Without more info, I can't say.

But the Hamilton land, which is on the books at extremely low book value, has in fact become quite valuable in recent years. That's because the only industry left on the Hamilton waterfront today are the two steel plants, Stelco and Dofasco. The end of Hamilton Harbour near James Street is now prime residential land, and there are salmon, trout and many other species of fish in the water.

But the Monitor (Ernst & Young) knows all this " about the value of the land and the mining royalties " because it is the auditor of Dofasco. These are not stupid people.

And although I may refer to him as such, Judge Farley is no idiot. He too clearly understands the real world value of these assets.

In order to pull off this fraud, Stelco management two years ago also had to place unreasonably low estimates on future steel pricing, claiming the Company's top line revenue would be insufficient to meet its financial obligations. That was just a deception " the facts subsequently proved it. But it was enough to have the Farley Rules apply.

And as auditor of Dofasco, the Stelco Monitor had access to Dofasco's steel pricing models. So Ernst & Young knew what was going down here " just like they knew the true value of Stelco's land and mining assets.

Hypothetically, how much would Dofasco be worth in CCAA so-called "protection"? Would it be worth say a billion or the six billion dollars that Arcelor bid in cash? That's the difference between fair market value and book value.

So Ernst & Young says that equal sized steel companies in the same City harbour are valued at six billion dollars apart because one is to be valued by market value and the other by book value.

As an independent and objective but reasonably intelligent observer, this CCAA has been, as I see it, a fraud from the get-go. The RCMP commercial crime unit should be knocking on Stelco's doors, and those of their friends.

If I were a honest politician, judge or regulator, I'd be demanding it.

Two questions you might be asking: (i) Wasn't this supposed to be an issue of under-funded pension liability? (ii) Why has no other steel company made a fair market bid?

When Stelco is released from Judge Farley's "protection", there will be no change in the under-funded pension liability.

I'm just surprised the Brascan/Brookfield Bandits didn't go to the union and offer to buy up that debt for pennies on the dollar, and put the last nail in the coffin.

But then, maybe they did. I wouldn't know.

With respect to the other matter, other steel companies are probably interested in Stelco, but they need to see what's left of the prey after the vultures get through eating.

Think of it this way, if you were looking to purchase a house, and you found all kinds of problems with the title and the present occupants, and there were other houses to buy on the street and in the area, would you continue to show interest in the first one?

As a matter of personal interest only, I put a lot of time and thought into Stelco. I did it initially because it was a comforting way to get through a life's experience with a dying father. But then I got annoyed, and saw that the public should see the inside of these social inequities " how the Little People are used and abused by persons we should be respecting " judges, lawyers, accountants, politicians, and regulators.

Life isn't always a pretty picture. Stelco proves it.

It's been a slice " but I have to let it go.