If your company is both the sponsor and administrator of a
pension plan you should take note of the recent Ontario Court of
Appeal decision in Re Indalex. Although the case deals
with competing claims in insolvency and deficits in wound up
pension plans, it highlights the need for a well articulated
governance structure making it clear whether the organization acts
as employer, as administrator, or as both. Although the case has
many issues, this article focuses on high level implications for
sponsors of ongoing pension plans.
Indalex Pension Plans
The facts in the case are quite complicated. Indalex was the
sponsor and administrator of two defined benefit pension plans. It
started winding up one of the plans prior to insolvency proceedings
under the Companies Creditors Arrangements Act
("CCAA"). The other plan was wound up after CCAA
proceedings started. With court approval, Indalex borrowed funds on
a "debtor in possession" or "DIP" basis to
allow it to
