The Surpreme Court of Canada will hear Bell Canada’s appeal of a lower court’s decision to block the Providence Equity private-equity driven buyout of BCE’s.

The go ahead sets the stage for Bell Canada to argue that the proposed $51 billion deal should go forward. Last month, in a surprise decision, a Quebec appeals court blocked the deal in a 5-0 ruling. The court sided with bondholders who argued that the $34 billion in new debt was detrimental to their holdings.

Bell Canada has less than a week to present its appeal argument and the case may be schedualed to start court testimony by June 17th.

The deal started to hit rocks two weeks ago when a group of banks financing the deal sought to change the terms of the arrangement in light of the ongoing credit crunch. The higher interest rates and more strict credit guidelines would likely serve to trim the value of the deal, say analysts. Days later, the bondholders won their appeal to block the deal.