The Supreme Court of Canada overturned the Ontario Court of Appeal today in what is one of the most highly-anticipated cases for the pension and insolvency bars pending before the courts. In Indalex (Re) 2013 SCC 6, the court provided clarity regarding some key questions relating to the governance of an employer-administered pension plan during a proceeding under the Companies’ Creditors Arrangement Act (CCAA). The judges split on some of the issues, but here is our brief round-up:

Introduction
Receivership and OSC proceeding
Production by court-appointed receivers
Not the right forum
Comment

Introduction

In Re Sino-Forest Corporation¹, the Ontario Court of Appeal upheld the interpretation of “equity claims” employed by Justice Morawetz of the Ontario Superior Court of Justice (Commercial List).

In the recent decision in the CCAA Proceedings of Timminco Ltd. et al.[¹], the Ontario Court of Appeal has affirmed the CCAA Court’s jurisdiction to grant super-priority status to DIP financing charges (including over provincial deemed trusts) and, effectively, confirmed that a supervising CCAA Court has a broad discretion to do so.

In Re Crystallex, the Ontario Court of Appeal (“Court of Appeal”) unanimously upheld three orders of the Ontario Superior Court of Justice (“OSCJ”) that (1) authorized bridge financing, (2) authorized interim financing

In Re Crystallex, 2012 ONCA 404, the Ontario Court of Appeal unanimously upheld unusually broad DIP financing arrangements granted pursuant to section 11.2 of the Canadian Companies' Creditors Arrangement Act (CCAA) despite the vociferous objections of substantially all of Crystallex’s creditors.  By dismissing the appeal, the Court endorsed the supervising CCAA judge’s approval of:

In a decision issued on April 20th, 2012, Justice Robert Mongeon of the Superior Court of Quebec gave a decisive answer to one of the most troubling questions facing debtors and DIP lenders in reorganizations under the Companies' Creditors Arrangement Act(CCAA).

In April 2011, the Ontario Court of Appeal rendered a unanimous judgment in Re Indalex Limited which ordered that the amount the debtor was required to contribute towards its pension plan wind up deficiency be paid in higher priority to repayments to its DIP lender. This judgment was a surprise to the legal community. Leave to appeal has since been granted by the Supreme Court of Canada. In November 2011, groups of White Birch employees and retirees (referred to below as employees) filed motions seeking the application of the legal findings of Indalex to White Birch.

On April 6, 2011, the Ontario Superior Court of Justice released its decision in the priority disputes between the lessors and aviation authorities resulting from the Skyservice receivership. The Court, in interpreting and applying the decisions in Canada 3000 and Zoom, raised the bar for lessors to defeat the seizure and detention rights of the aviation authorities in Canada.

A year after the uncertainty created in the Canadian corporate debt financing world by the Ontario Court of Appeal's pensions-friendly decision in the Indalex CCAA restructuring matter², the Quebec Superior Court, in April 2012, determined in a lengthy and well-reasoned decision that the key restructuring and pensions law principles underpinning Indalex do not apply in Quebec when considering the treatment of defined benefit amortization payment and deficit claims in a restructuring.