Call Us Now

Blog

Pension-Plan Case Heads to Supreme Court

Posted On: January, 21 2015

On December 1, 2011, the Supreme Court of Canada granted leave to appeal of a decision of the Ontario Court of Appeal regarding the right of pension-plan members to claim priority over the assets of their bankrupt company to cover a shortfall in their pension plan: Sun Indalex Finance, LLC v. United Steal Workers, [2011] SCCA No. 274.

The major issue that the Ontario Court of Appeal had to decide was who had a priority claim to money held in a Reserve Fund: was it the members of the two registered pension plans or the parent company that guaranteed the loans?

Indalex was a Canadian company that became insolvent and its U.S. parent company had filed for bankruptcy.  Indalex obtained protection from its creditors under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36.  Indalex also received a court order enabling it to borrow funds under a debtor-in-possession (DIP) credit agreement, and the U.S. parent company guaranteed this loan. The court further approved the sale of Indalex, but the proceeds did not cover the loans made to it by the DIP creditors and the parent company covered the difference.  A portion of the sale proceeds was put into a reserve fund that was controlled by the CCAA monitor.

Justice Gillese decided in this case that Indalex, as the administrator of the pension plans, breached its fiduciary duty to the plan members.  Specifically, the Court decided that both a deemed trust and constructive trust arose which gave priority to the plan members to the funds in the Reserve Fund.

This case raises a similar issue to that in the recent Nortel bankruptcy, which left hundreds of employees on long-term disability without money in the reserve fund to cover their benefits.

The Indalex case will likely be the first case of its kind to be decided by our Supreme Court and may have far-reaching ramifications for both companies and pension plan members. Stay tuned…

 

Contact Us

RECENT NEWS & EVENTS

5 STAR REVIEWS

  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by SB

    I just wanted to let you know how happy I am with the outcome and how very grateful I am for the guidance and support that you and your team provided.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Google user

    Patrick James is really a great lawyer who is smart and great to deal with. He's been our litigation counsel for over 5 years on several different matters. Patrick recently gave our company great strategic advice that resulted in a big commercial litigation win for our company. He's fierce, tenacious, and really cares about getting the best outcome for his clients.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Google user

    Patrick is a very good lawyer. He recently successfully defended a lawsuit against my company and has pursued several litigation claims for us in the past. All claims settled input favour. Mr. James is smart and quickly gives you great strategic advice. Patrick has been a real asset to our business.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Sandra L.

    Andrew Wray and Patrick James recently helped settle a difficult situation for me and my family. The results were exactly what we were hoping for. They are honest, strategic and will provide you with the best advice for you and your financial situation. I highly recommend them to everyone I know.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Mark C.

    Their team is highly focused and incredibly professional - from our experience it would be difficult not to believe that Pinto Wray James are one of Ontario's leading Firms in Labor and Employment law. The mindful client care and complete understanding of the case eased fears and the stress that comes with any legal dispute. Expect to find high level smartly crafted legal solutions at Pinto Wray James LLP - couldn't recommend more.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Sherry C.

    Patrick is knowledgeable, strategic, supportive, and patient. His guidance and advice helped me to maintain focus and to keep things in perspective. His experience and keen perception provides him with an edge that allows him to assess the situation, the people involved, and to offer a strategic resolution that works best for all involved. If you ever require legal advice and assistance, I highly recommend him and his team. They will be there 100% for you.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Christian V.

    Patrick is a fearless advocate for diverse clients. His strategic approach, and his empathy, are what set him apart as a litigator, and champion of the underdog.
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by A Google User

    I have no hesitation recommending Andrew Wray of Pinto Wray James LLP. He provided me with legal advice regarding an employment law issue and his council was practical and honest. Andrew's approach is very much one of blending legal excellence with good common sense. An excellent lawyer!
  • Rating: 5 Lawyer Toronto - 5 Star Reviews
    Pinto Wray James Reviewed by Larry S.

    Patrick listens to his clients and shows compassion, empathy and professionalism. He cares deeply that the individual that has been wrongfully terminated gets the best judgment available to him. I would not hesitate in recommending him to friends or family.
Submit