“When a business becomes insolvent, many interests are at risk.  Creditors may not be able to recover their debts, investors may lose their investments and employees may lose their jobs. If the business is the sponsor of an employee pension plan, the benefits promised by the plan are not immune from that risk. The circumstances leading to these appeals show how that risk can materialize. Pension plans and creditors find themselves in a zero-sum game with not enough money to go around.

The Supreme Court of Canada’s decision in the case of Re Indalex Ltd. [2013] SCC 6 (the “Decision”) does not, as one national newspaper put it place “creditors before pensioners”. The Decision which overturned the Ontario Court of Appeal’s decision in Re Indalex Ltd. [2011] O.J. No.

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 Supreme Court of Canada released its highly anticipated decision in Indalex Limited (Re) this morning.  The ruling stemmed from an appeal of an Ontario Court of Appeal decision that had created commercial uncertainty among many participants in the financial services, pensions and restructuring industries.

Pension and insolvency lawyers have been waiting with great anticipation for the Supreme Court of Canada to rule in Indalex.  The decision was released on February 1, 2013 and represents a major statement by Canada’s top court on the intersection of pension and insolvency law.

“Insolvency can trigger catastrophic consequences”.

So begins the epic decision released this morning by the Supreme Court of Canada in Sun Indalex Finance, LLC v United Steelworkers, 2013 SCC 6 – a case that considers the impact of insolvency on the employee beneficiaries to a pension plan.

In (Re) Indalex, the Supreme Court of Canada (SCC) affirmed the super-priority of the security granted to a debtor-in-possession (DIP) lender, over a deemed trust created under provincial pension legislation, in the context of a Companies’ Creditors Arrangement Act (CCAA) proceeding. The SCC’s analysis leaves open further issues.

On February 1, 2013, the Supreme Court of Canada (SCC) released its long-awaited decision in Sun Indalex Finance, LLC, et al. v. United Steelworkers, et al., 2013 SCC 6.

The SCC has affirmed that priority charges created by courts in insolvency proceedings supersede provincial statutory deemed trusts for pension claims.

The SCC decision is welcome news for “debtor-in-possession” (DIP) lenders, who questioned their priority position in the face of the Ontario Court of Appeal judgment in this proceeding, which reached the opposite conclusion.

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).

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: