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Timber plantations owned by Sino-Forest are seen in Tang Kong Village, near Gaoyao, Southern China on June 28, 2011.

A $9-billion class-action launched by burned investors in Sino-Forest Corp. – the Toronto-listed Chinese forestry giant that collapsed amid fraud allegations in 2011 – has been given the green light to go to trial by an Ontario Superior Court judge.

In a ruling released on Tuesday, Justice Paul Perell also approved a move to put proceedings against the big-name Bay Street financial institutions that underwrote Sino-Forest's stock and debt offerings on hold, pending court approval of a tentative settlement.

The plaintiffs had alleged that the underwriters, among them Credit Suisse Securities (Canada) Inc., TD Securities Inc., Dundee Securities Corp., RBC Dominion Securities Inc., Scotia Capital Inc. and CIBC World Markets Inc., were negligent in promoting Sino-Forest. The defendants denied the allegations. No financial amounts or other details in the tentative settlement were disclosed in Tuesday's ruling.

The question of whether the case against the other defendants – what remains of the defunct company, a list of its former officers and directors and its former auditors, BDO Ltd. – would be given the go-ahead was left in little doubt after they dropped their opposition to the motion on eve of a Jan. 12 hearing.

Some legal experts say companies facing securities class actions are increasingly making similar moves, as the courts have established a relatively low bar for plaintiffs to secure the required certification and leave under the Ontario Securities Act for this kind of lawsuit by shareholders to proceed.

In his ruling, Justice Perell also sided with the plaintiffs in a complex dispute over whether former noteholders who sold their Sino-Forest notes could sue, or whether claims could only be made by those who bought those Sino-Forest notes. Justice Perell ruled that it was premature to answer this complex legal question, which could take "mega-millions approaching billions" out of the class-action claims.

If the settlement between the underwriters, who made millions in fees on Sino-Forest offerings, and the plaintiffs is approved, it will be the latest in a string of settlements that have removed defendants from the case.

Last year, the plaintiffs settled with former Sino-Forest chief financial officer David Horsley for $5.6-million, and a court approved a massive $117-million settlement with former Sino-Forest auditors Ernst & Young LLP in 2013.

Sino-Forest and some of its former directors and officers are currently facing a hearing before the Ontario Securities Commission, which has alleged that they committed fraud.

The company collapsed after a short-seller alleged in 2011 that it was a Ponzi scheme that could not account for its stated $3-billion in timber holdings in China.

The company and its former officers and directors have denied the allegations, which have not been proven in court.

As it faced investigations from securities regulators and lawsuits from investors, it sought bankruptcy protection. Its remaining assets were handed to its debtholders after buyers could not be found.

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