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ARTICLE · 21 MARCH 2007

No Need For Bankrupt Company To Recognize Pension Plan Priority

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In its recent decision in Ivaco Inc., Re [2006] O.J. No. 4152, the Ontario Court of Appeal dealt with the challenging interplay between pension law and insolvency law. The decision deals with a restructuring in which one of the dominant issues is the treatment of a debtor’s unfunded pension liabilities.

CanadaEmployment and HR
Mitch Frazer
Mitch Frazer
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Originally published in The Lawyers Weekly, March 2, 2007.

In its recent decision in Ivaco Inc., Re [2006] O.J. No. 4152, the Ontario Court of Appeal dealt with the challenging interplay between pension law and insolvency law. The decision deals with a restructuring in which one of the dominant issues is the treatment of a debtor’s unfunded pension liabilities. Ivaco highlights the importance of dealing with pension issues early in the restructuring process.

Ivaco Inc. and its related companies became insolvent in 2003 and were granted protection under the federal Companies’ Creditors Arrangement Act (CCAA). As part of the CCAA proceedings, Ivaco was granted a pension stay order, which temporarily relieved the company of the obligation to make past service contributions and special payments to the pension plan. The order was unopposed because it was expected to assist Ivaco’s restructuring effort.

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