High court rules against pension holders
The Canadian PressFriday, February 01, 2013
OTTAWA - The Supreme Court of Canada has ruled against the pension plan members of a bankrupt Ontario company, saying they do not have priority over secured creditors.
The landmark pension ruling comes in the case of Indalex, a Toronto-based aluminum company that sought bankruptcy protection in 2009 with shortfalls in its two pension plans.
The ruling has major implications for companies with pension obligations that face tough restructuring issues.
Pensioners are usually at the end of the line to be paid when the assets of a failed company are sold, but the Ontario Court of Appeal changed that in a 2011 ruling on the Indalex case.
The Supreme Court ruling overturns that decision.
When the company entered creditor protection, it was ordered to borrow money to pay lenders, leaving the pension members further down the payout line.