Superior Court Of Québec Refuses To Apply Indalex

In April 2011, the Ontario Court of Appeal rendered a unanimous judgment in Re Indalex Limited ¹ which ordered that the amount the debtor was required to contribute towards its pension plan wind up deficiency be paid in higher priority to repayments to its interim (DIP) lender. This judgment was a departure from prior law and a surprise to the legal community. Leave to appeal has since been granted by the Supreme Court of Canada. In November 2011, groups of White Birch employees and retirees (referred to below as employees) filed motions seeking the application of the legal findings of Indalex to White Birch. Justice Mongeon categorically held that the main legal principles arising out of Indalex cannot be applied in Québec. This judgment could still be appealed by the employees. In any event, stakeholders in the restructuring community will be closely watching the Supreme Court's decision in Indalex and any hints as to its consequences in Québec.