In a client update released earlier this month, we discussed the recent decision of the Ontario Court of Appeal in the CCAA proceedings of Indalex Limited. In that case, the Court decided that Indalex’s pension plan wind-up deficiency claims had priority over Indalex’s CCAA secured lender in the context of that case. Of concern is the "chill" that decision may have on secured lending in Ontario to borrowers that sponsor defined benefit pension plans.
TD Bank v. Dunn-Rite Cattle Corp. [2009] A.W.L.D. 2075; 2009 ABQB 227 (Alta. Q.B.), on hearing of issue from (2006) 26 C.B.R. (5th) 1 (Alta. C.A.)
The master granted TD priority to the subject cattle ahead of the Dunns’ lien pursuant to the since repealed Livery Stable Keepers Act. The Dunns appealed to the Alberta Court of Appeal, which allowed the appeal and because of sparse evidence, directed the matter of priority be heard by the Court of Queen’s Bench.
Radius Credit Union Limited v. Royal Bank of Canada [2009] S.J. No. 148, 2009 SKCA 36, on appeal from
2007 SKQB 472
1992: Farmer Wayne Hingtgen (“Debtor”) granted a general security agreement to Radius
Credit Union Limited (“CU”) granting a security interest on all his present and after
acquired assets.
Innovation Credit Union v. Bank of Montreal [2009] S.J. No. 147; 2009 SKCA 35, on appeal from 2007 SKQB 471
October 1991: Saskatchewan farmer James Buist (“Debtor”) granted a general security agreement to Innovation Credit Union (“CU”). The general security agreement was not perfected under the Saskatchewan Personal Property Security Act (“PPSA”) by registration.
Prudent lenders should monitor their corporate debtors’ pension plan liabilities and pension plan deficits because they may have a significant impact on the priority of the lender’s security and on the amount the lender will recover if the lender enforces its security.
Priority with respect to Lender’s Security
Prudent lenders should monitor their corporate debtors’ pension plan liabilities and pension plan deficits because they may have a significant impact on the priority of the lender’s security and on the amount the lender will recover if the lender enforces its security.
Priority with respect to Lender’s Security