The Court of Appeal for Ontario's (the "OCA") decision in Re Indalex Ltd.¹ was decried by professionals in pension, banking and insolvency practices. On February 1, 2013, the Supreme Court of Canada (the "SCC" or the "Court") overturned the OCA's decision.

INTRODUCTION 

In theory, when liquidating a succession, publication formalities must be observed so that the various creditors can present themselves and claim their due. This formality also gives the successors an overall view of the assets and liabilities of the succession before deciding whether or not to accept it.

Introduction
Summary
Facts
Supreme Court decision
Comment

Introduction

The Supreme Court of Canada’s decision inSun Indalex Finance, LLC v United Steelworkers, 2013 SCC 6, has a number of implications for employers, pension plan administrators, as well as both secured and unsecured creditors.

Following a recent ruling of the Ontario Court of Appeal, parties may need to proceed cautiously in enforcing contractual rights and remedies in circumstances where there is a risk of the counterparty subsequently becoming insolvent.

The common law has long recognized that a contractual provision which is explicitly and directly triggered by a party’s insolvency (and which thereby causes subsequent prejudice to the rights of the insolvent party’s creditors) may be unenforceable as a matter of public policy.

Justice Morawetz of the Ontario Superior Court (also a celebrity among lawyers for being the Morawetz in the trio of Houlden, Morawetz, & Sarra, authors of the Annotated Bankruptcy and Insolvency Act) announced last week (on 8 March) that the next step in the long-running Nortel insolvency proceedings would be a cross-border joint trial to carve up the rump of Nortel’s liquidated assets (app

“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 (“SCC”) recently released its much-anticipated decision in the Indalex Limited (“Indalex”) proceedings under the Companies’ Creditors Arrangement Act (the “CCAA Proceedings”). The decision is important for secured lenders in the context of an insolvency proceeding (“DIP Lenders”) or outside of an insolvency proceeding (“secured lenders”).

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.

The Supreme Court issued one judgment this week in a case of interest to Canadian businesses and professions.