It looked like the deal to take BCE (NYSE: BCE), the parent of Bell Canada, private would be hung up by the unwillingness of banks to take on huge amounts of debt during a credit crisis. Instead, the $35.4 billion deal will probably be killed by the Canadian courts.

Some BCE shareholders sued the company, saying the deal was unfair to them. The debt holders who brought the suit may be fools, but they won. According to Reuters, "the Quebec Court of Appeal said that BCE, Canada's largest telecommunications group, failed to prove that a buyout could have been structured to provide a satisfactory price for the company's shares while avoiding an adverse effect on the debenture holders."

If the entire deal for the BCE buyout fails, all parties who hold a piece of the company may be hurt. But, the debt holders have certainly put the stockholders in a very ugly place. The court ruling may give banks some excuses to walk away from the transaction. Providence Equity Partners, Madison Dearborn, and other institutions who put the deal together may have to watch all of those fees disappear in smoke.

And, a buyout that normally would have ended up in court because banks wanted to break their words may be killed because one class of stakeholders bested another.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 newsletter.