A Pension Plan Deficit Can Put Your Corporate Reorganization Under The Spotlight

The Superior Court recently authorized a class action in a case that could have a major impact on the way deficits in defined benefit pension plans are dealt with in the context of corporate reorganizations¹. The Court allowed a group of pension plan members to commence a class action against a company affiliated with their former employer and its directors personally for an amount in excess of $65 million, which represents the aggregate amount of their pension plan termination deficiency and the amount of their loss of post-retirement benefits.

The facts date back to a corporate reorganization carried out in the fall of 2011 by an international conglomerate with plants in 15 countries. This reorganization of the conglomerate involved its Canadian operations in the home appliance business. Until then, the main economic activity was carried out by a single company whose production employees were unionized. In addition to unionized employees, there was also a group of