TORONTO, April 8 /CNW/ - The United Steelworkers (USW) union has won a
landmark legal decision forcing an insolvent corporation to honour
pension obligations to employees.
The Court of Appeal for Ontario ruled Thursday that Indalex Limited did
not fulfill its fiduciary duties to employees - including United
Steelworkers members - when the company filed for protection from
creditors under the Companies' Creditors Arrangement Act in 2009.
The ruling, which will benefit USW members who worked at a former
Indalex operation in Quebec, sets a precedent for providing greater
benefits to pension plan members in cases of corporate insolvency. In
many past cases, employees and pensioners have suffered drastic
reductions in their pensions, as corporate assets were distributed
first to creditors ranked ahead of pension plans.
"This is a remarkable victory for these workers and pensioners," said
Ken Neumann, the USW's National Director for Canada.
"We hope this ruling sets a precedent to help protect the pensions of
many other Canadians and convince our federal government to finally
pass legislation to enhance the rights of pension plan members in
bankruptcy cases," Neumann said.
"This decision sends a message that companies must hear very clearly,"
said Daniel Roy, United Steelworkers' Quebec Director. "They cannot
disregard or be indifferent to the commitments they have to their
workers and pensioners."
Toronto-based Indalex Limited, an aluminum extrusions manufacturer,
wound up its employee pension plan on Dec. 31, 2006. At that time, the
plan was underfunded.
In 2009, Indalex filed for CCAA protection and obtained interim
financing to continue operations while it sought to sell its assets.
Indalex sold substantially all of its assets in a court-approved sale
on July 20, 2009.
At the hearing that approved the 2009 sale, the United Steelworkers
argued the company should use proceeds of the sale to satisfy pension
plan deficiencies. The CCAA judge rejected those arguments, prompting
the appeal by the USW and other pension plan members.
In a unanimous ruling issued Thursday, a three-judge panel of the Court
of Appeal upheld the USW's appeal.
"Indalex knew that the plans were under-funded and that unless more
funds were put into the plans, pensions would have to be reduced,"
Madam Justice Eileen Gillese stated in the court's decision.
"The decisions that Indalex was unilaterally making had the potential to
affect the plans' beneficiaries' rights, at a time when they were
SOURCE United Steelworkers (USW)
For further information:
Ken Neumann, USW National Director for Canada, 416-544-5950;
Paula Turtle, USW Canadian Counsel, 416-544-5980;
Denis St. Pierre, USW Communications, 416-544-5990, 647-522-1630.