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.
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.
On Friday, the Supreme Court of Canada handed down its decision in the landmark pension/insolvency case, Sun Indalex, LLC v. United Steelworkers.
The Supreme Court of Canada’s decision in (Re) Indalex has changed the landscape for both lenders and borrowers in Canada who sponsor registered defined benefit pension plans. For lenders, carefully drafted loan documentation and effective planning can enhance the protection of a secured lender’s position in the face of the broadened scope of a deemed trust applicable to a borrower’s defined benefit pension obligations.
On February 1, 2013, the Supreme Court of Canada released its decision in Sun Indalex Finance, LLC v. United Steelworkers[1]. The ruling:
On Friday, February 1, 2013, the Supreme Court of Canada released its highly anticipated decision in Indalex Limited (Re). The ruling stemmed from an appeal of an Ontario Court of Appeal decision that had created commercial uncertainty for financing transactions. The primary issue for lenders was a priority dispute between a court ordered super-priority charge granted to a lender that had provided “debtor-in-possession” (DIP) financing under the Compan
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, the Supreme Court of Canada (the “SCC”) released its long-awaited decision in Sun Indalex Finance, LLC v. United Steel Workers. By a five to two majority, the SCC allowed the appeal from the 2011 decision of the Ontario Court of Appeal (the “OCA”) which had created so much uncertainty about the priority of pension claims in Companies’ Creditors Arrangement Act (the “CCAA”) proceedings.