Chapter 11
and CCAA
» A Cross-Border Comparison

On November 12, 2013, the Alberta government issued EPPA Update 13-01, in response to recent developments in the actuarial profession affecting defined benefit pension (DB) plans.

A couple of myths dispelled…..

”It’s the company’s problem, not mine.”

Wrong: It’s a surprisingly common misconception that because your business is contained in a limited company, its demise will not affect you. This is simply not correct.

“I work for the shareholders, not the creditors”

On February 1, 2013, the Supreme Court of Canada (SCC) released its decision in Sun Indalex Finance, LLC v. United Steelworkers (Re Indalex). With respect to one critical issue,the SCC confirmed that a court-ordered debtor-in-possession (DIP) charge had priority over a deemed trust (akin to a statutory security interest) securing the debtor's obligation to fund a pension wind-up deficiency on the wind-up of a defined benefit (DB) pension plan.

On February 1, 2013, the Supreme Court of Canada rendered its much-anticipated decision in Sun Indalex Finance, LLC v. United Steelworkers et al. (Indalex). This bulletin focuses on pension plan administration issues arising from the Indalex case.

Facts

The long-awaited and highly anticipated decision of the Supreme Court of Canada in the Indalex case was released today. The decision stems from an appeal of an Ontario Court of Appeal decision dealing with a priority dispute between a court-ordered debtor-in-possession (DIP) charge granted under the Companies’ Creditors Arrangement Act (Canada) (CCAA) and a deemed trust for a wind-up pension deficiency asserted under the Pension Benefits Act (Ontario)(PBA).

This bulletin is a cross-country update presented by the national Restructuring & Insolvency Group. It discusses the key cases across the country involving debtor-inpossession (DIP) financing, court-ordered charges and other priority claims and disputes in recent Canadian insolvency proceedings.

Introduction

One of a business’s greatest concerns with data storage and backup is security, that is, how can you make sure your data is safe both internally and externally if using cloud solutions? Many businesses do not use cloud based solutions because of the perceived security risks. 

Section 8 of the Interest Act (Canada) (the Act) was considered by the Ontario Superior Court of Justice in Grant Forest Products Inc. (Re) in the context of an inter-creditor dispute.

Following a case known as Goldacre, it was held that if an administrator is in occupation of a leasehold property, which is being retained for the purposes of the administration, and rent falls due (monthly or quarterly) during his / her occupation, then such rent is to be treated as an expense of the administration (and therefore paid in priority to unsecured creditors). This remains the case even if the administrator occupies only part of the property and whether or not he / she occupies the property for the whole quarter.