SCC Reverses ONCA on Major Pension Case: Lenders and Financiers Breathe a Sigh of Relief
On Friday, the Supreme Court of Canada handed down its decision in the landmark pension/insolvency case, Sun Indalex, LLC v. United Steelworkers.
A divided high court reversed the decision of the Ontario Court of Appeal, ruling that the rights of secured lenders under a C.C.A.A. arrangement trump those of provincial deemed trusts provided for in pension legislation. It was a 5:2 decision. However, the 5 in the majority were split 3:2 giving different reasons for arriving at the same conclusion.
While the decision was welcome news for lenders and financiers, the news was not all bad for beneficiary employees. Four of the seven justices agreed that deemed trusts under the Pension Benefits Act extend to wind-up deficiencies, providing some financial solace to members of underfunded pensions.
Heenan Blaikie’s Insolvency and Pensions groups will provide a detailed analysis of the Supreme Court’s decision and its possible future impact on both pensions and corporate financing in the coming days. For a history of the case before the Court of Appeal, click here.