The Supreme Court of Canada has granted leave to appeal the decision of the Ontario Court of Appeal in Re Indalex.
In its April 2011 ruling, the Court of Appeal held that the entire amount an employer is required to contribute to fund a pension plan wind-up deficiency under the Ontario Pension Benefits Act (PBA) is subject to the deemed trust provisions of the PBA and, in the circumstances, should be paid in priority to outstanding secured creditor claims. A detailed account of the facts is available in a previous Osler Update relating to the Ontario Court of Appeal decision.
In 2009, Indalex Limited (Indalex) obtained creditor protection under the Companies’ Creditors Arrangement Act (CCAA) and debtor-in-possession (DIP) financing pursuant to a CCAA court order which granted super priority status to its DIP loan ahead of other creditors. A sale of Indalex’s assets was approved by the CCAA court, and the monitor was directed to make a distribution to repay the DIP loan from the proceeds of the sale. The sale of the assets was opposed by pension claimants who argued that assets equal to the entire amount of the funding deficiencies under the company’s pension plans were deemed to be held in trust and should be remitted to the plans in priority to the DIP loan repayment.
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