Wabush Mines

• May 25, 2018

  We are pleased to report that we reached two favourable settlements regarding‎ two proceedings, that in combination will translate into meaningful improvements to the pension benefits of the Wabush Salaried employees and retirees as well as a payment toward the terminated OPEBs. The two settlements are described below.

  1. The CCAA Plan of Compromise settlement

  Generally, a “Plan of Compromise” in a CCAA proceeding is an agreement reached between the company and its creditors for the treatment of creditors’ claims for amounts owing to them by the company. For a CCAA Plan of Compromise to pass, it must be voted on by creditors and approved (also known as sanctioned) by the CCAA Court.

  On April 13, 2018, the Bloom Lake CCAA Parties and the Wabush Mines CCAA Parties (the “CCAA Parties“) brought forward a motion to the court to file a draft Plan of Compromise (the “Initial CCAA Plan“). The Initial CCAA Plan was a proposed deal struck between the CCAA Parties and certain other stakeholders to settle certain claims and provide for some distributions.

  Along with the Initial CCAA Plan, the CCAA Parties also brought a motion for court approval to hold meetings for creditors to vote on the Initial Plan. The Initial CCAA Plan also contained a mechanism that required Salaried Members to individually vote on the CCAA Plan or submit a proxy form designating the Monitor or another individual to vote on their behalf.

  Under the Initial CCAA Plan, the Monitor estimated that contributions to the underfunded Salaried Plan (and USW Plan) would be in the range of $4-$6 million if the pension claims were held to be unsecured claims. We did not agree with the Initial CCAA Plan, which we believe did not provide sufficient benefits for the Salaried Members and because we were not involved in the negotiations. We also objected to the concept that the individual voting of the Salaried Members would be required to vote at a creditors’ meeting, rather than voting through their Representative Counsel.

  The Voting Issue

  The issue of the procedure of voting for the employees and retirees was brought before the CCAA Judge at a contested hearing.  Our Montreal co-Representative Counsel, Mark E. Meland of FFMP, argued that Representative Counsel should vote the claims of the employees and retirees to ensure that the votes of all of the Salaried Members would be counted and that our group would have greater ability to negotiate an improved Plan of Compromise. On April 20, 2018, the CCAA Judge released his decision and granted Representative Counsel and USW a “deemed proxy” to vote the claims of the Salaried Members (and USW members). This decision was the first time that a CCAA court has granted representative counsel a discretionary deemed proxy to vote for or against a proposed CCAA plan. The CCAA Court also gave the parties one more month to discuss the Initial Plan and negotiate changes to it. To view copy of the decision please click here.

  Negotiations for an improved Plan of Compromise

  Our firm and FFMP engaged in discussions with the Wabush CCAA Parties and the Monitor for improvements to the Initial Plan. As a result of these negotiations, we are pleased to report that a guaranteed $11 million contribution will be made to the fund of the Salaried Plan (an increase from a range of $4-6 million under the Initial Plan). Claims for terminated health and life insurance benefits (collectively, “OPEBs“) will also receive a small distribution in the estimated amount of $2.36 million.

  2. Settlement of the Class Action

  While the negotiations mentioned above were occurring, we also engaged in negotiations with Cleveland-Cliffs Inc. (formerly, Cliffs Natural Resources or “CNR“) on the Class Action that we filed in May 2017.

  Given the uncertain recoveries for the Salaried Members in the CCAA proceeding, and the lengthy time for proceedings to be resolved, we separately filed a class action against CNR, Cliffs Mining Company (“CMC“), and their directors for the amounts that are owing to the Salaried Plan and the OPEB losses. The plaintiffs were the same Representatives appointed in the CCAA proceeding: Neil Johnson, Michael Keeper, Damien Lebel, and Terence Watt. We provided a copy of our claim to the USW, who filed a similar claim the following month. To view a copy of our claim, please click here.

  On May 10, 2018, our firm, two of the retiree plaintiffs (Mike Keeper and Terry Watt), the USW, and Cleveland-Cliffs Inc. engaged in a mediation in Toronto which resulted in a settlement for an additional contribution of $7 million to be paid to the Salaried Plan (and $7 million for the USW Plan).

  The two negotiations were reflected in an Amended Plan of Compromise (the “Amended CCAA Plan“), which is discussed in greater detail below. In total, the Salaried Plan will receive $18 million from both settlements (or a recovery of approximately 67% of the pension plan deficit amount). This will significantly improve the funded ratio of the Salaried Plan from its current 75% (at the wind-up date) to approximately 91%, which will translate into increases to your current monthly pensions.

  The two settlements provide a combined total recovery for both Salaried and USW employees and retirees in the amount of $36 million in respect of the pension claims and approximately $13.27 million in respect of the OPEB claims. In total, for Salaried and Unionized employees and retirees, approximately $49 million will be distributed.

  The Amended and Restated Plan of Compromise

  On May 18, 2018, the CCAA Parties filed the Amended CCAA Plan with the CCAA Court reflecting the settlements that have been reached and for authorization to hold meetings of creditors to vote on the Amended CCAA Plan. The creditors’ meetings are currently scheduled for June 18, 2018 in Montréal.

  If the Amended CCAA Plan passes the required vote of creditors at the creditors’ meetings, it must then be approved (known as sanctioned) by the CCAA Court as being fair and reasonable in order to become effective. The date of the approval hearing for the Amended CCAA Plan (known as the “sanction” hearing) is currently scheduled for June 29, 2018 before the CCAA Court in Montréal.

  Summary of the Amended CCAA Plan and payments for Salaried Members

  The terms of the Amended CCAA Plan and the related agreements are complicated and involve the different Wabush and Bloom Lake companies, different classes of creditors and different payment streams. We summarize some of the terms that are relevant to the Salaried Members below.

  a) Pension Settlement

  Morneau Shepell, as the pension plan administrator (the “Plan Administrator”) of the Salaried Plan and the Union Plan (collectively, the “Pension Plans“), filed claims for the amounts owing for both the Salaried Plan and USW Plan as at December 16, 2015, in the following amounts:

  • Salaried Pension Plan wind-up deficit – $27,341,000
  • Union Pension Plan wind-up deficit – $28,681,492

  Under the Amended CCAA Plan, separate cash pools will be created exclusively for the Salaried and Union pension claims to ensure that the Pension Plans each receive a guaranteed payment of $18 million.

  b) OPEB Settlement

  As noted above, in June 2015, the Wabush CCAA Parties terminated the payment of OPEBs payable to retirees. We filed claims on behalf of the Salaried Members for your OPEB losses against Wabush Mines in the CCAA proceedings. Under current law, an OPEB claim is an unsecured claim.

  Pursuant to the settlement reached in the Amended CCAA Plan, OPEB claims for the Salaried Members will be allowed by the Monitor in the claim amount of $26,090,100.

  Based on estimates provided by the Monitor, we expect that distributions on account of OPEB and other employee claims could be in the order of approximately $2.3 million (subject to adjustment). This amount is subject to other elements that are still ongoing in the CCAA file, including potential future realizations and the resolution of non-employee claims and that are not in relation to ex-employees and that remain in dispute. The final amount of the distribution associated with OPEB and other employee claims will not be known with certainty for some time, but the Representatives are satisfied that this amount will be significantly larger than without the proposed Amended CCAA Plan. We will provide further information about the timing of distributions in respect of OPEB claims in the future as soon as more information is available.

  c) Discontinuance of the Litigation

   i. Appeal of the Pension Priority Motion before the Quebec Court of Appeal

  At the outset of these CCAA proceedings, we asserted a priority claim in favour of the Salaried Plan members for the amounts owing by Wabush Mines to the Salaried Plan. This priority claim is based on the deemed trust priority provisions in section 32 of the Newfoundland and Labrador Pension Benefits Act (“NLPBA“) and the 2013 decision of the Supreme Court of Canada in the case of Indalex.

  In September, 2016, the Monitor filed a motion for directions with questions it sought to have the CCAA Court resolve relating to the NLPBA deemed trust priority claim. In September 2017, the CCAA Court released its decision and held, among other things, that the NLPBA deemed trust priority was not effective in these CCAA proceedings. We and other pension parties obtained leave to appeal the CCAA Court’s decision to the Quebec Court of Appeal. The appeal hearing is scheduled to be heard from June 11-13, 2018 but, as a result of the settlements reached, this appeal will be discontinued under the Amended CCAA Plan.

  ii. Discontinuance of the Monitor’s appeal to the Supreme Court of Canada of the Newfoundland Reference Decision       

  On March 27, 2017, the government of Newfoundland & Labrador directed that a Reference be brought before the Newfoundland Court of Appeal for interpretations of the deemed trust provisions in section 32 of the NLPBA. Graham Letto, M.H.A. was instrumental in bringing the Reference proceedings forward and provided assistance and support for the Wabush retirees throughout this process, including attending before the CCAA Court to make submissions in support of the Wabush employees and retirees.

  We appeared before the Court of Appeal in September 2017 on the contested Reference hearing involving the Monitor, CCAA Parties, and other stakeholders.

  As we previously reported, on January 15, 2018, the Court of Appeal released its Reference decision and made two important interpretations which in our view are favourable to the Salaried Members:

  a) The deemed trusts in section 32 of the NLPBA extend to cover the entire wind-up deficit amount owing by the employer to the  pension plan; and

  b) The pension plan administrator’s “lien and charge” in section 32(4) of the NLPBA is a valid secured claim in favour of the pension plan administrator over the same amounts that are subject to the deemed trusts, and operates as a back-up remedy to the deemed trust for same amounts owing by an employer to a pension plan.

  To view a copy of the Reference decision, please click here.

  The Monitor and the City of Sept-Iles appealed the Reference decision to the Supreme Court of Canada. The hearing of the appeal is scheduled to be heard on October 18, 2018. As a result of the settlements reached, the Supreme Court of Canada appeal will also be discontinued.

  d) Releases to CNR, CMC, and their directors

  Generally, a “release” in a CCAA Plan of Compromise operates to protect a party from exposure to future liability.  The Amended CCAA Plan provides for an extensive release for the benefit of the CCAA Parties, the parent companies (CNR and CMC) who are also the defendants in the Class Action, and their directors and officers (collectively, the “Released Parties“). Once the Amended CCAA Plan is approved by the CCAA Court, this means that the Released Parties cannot be sued.  This is intended to protect CNR and CMC from future legal action in exchange for their contributions to the settlement funds to the Amended CCAA Plan.

  The text of the Amended CCAA Plan and the related documents and agreements are posted on the Monitor’s website, and can also be accessed under the ‘Documents’ tab below.

  The creditor voting process on the Amended CCAA Plan

   i)         Voting in respect of the Pension Deficit Claim

  As noted above, the current pension plan administrator of the Salaried Plan (and the Union Plan) is Morneau Shepell. Under the voting protocol in the Amended CCAA Plan, Morneau Shepell, as the administrator, is entitled to one vote (as it is one creditor) in the amount of the wind-up deficit in respect of each pension plan. As required under the settlements, Morneau Shepell is required to vote in favour of the Amended CCAA Plan.

  As noted above, Representative Counsel (our firm and FFMP) is deemed to be the proxy for all the Salaried Members, and is authorized to vote these claims on your behalf. You are not required to attend the creditors’ meeting in respect of your OPEB claims, nor do you have to complete any form to vote. We will vote the above claims in favour of the Amended CCAA Plan.

  However, if you have a claim for the loss of OPEBs and you wish to vote against the Amended CCAA Plan, you may attend the meeting in person to cast your vote against it. If you wish to vote against the Amended CCAA Plan but will not be attending the meeting in person, you may appoint a proxy other than Representative Counsel by notifying the Monitor in writing (including e-mail) by no later than 12:00 p.m. on Friday, June 15, 2018.

• May 14, 2018

  Representative Counsel will be attending the meetings in Sept-Iles and Wabush organized by Morneau Shepell on Monday May 14, 2018 and May 15, 2018 to provide an update on the CCAA proceedings.

  The location and times of the meetings are as follows:

  Sept-Iles – Monday, May 14^th, 2018 at the Centre des congrès de Sept-Îles

  • Retirees in the morning and early afternoon
    • Bargaining 10:00 AM Morneau general session
    • Bargaining 11:00 AM Retraite Quebec session
    • Salaried 1:00 PM Morneau general session
    • Salaried 2:00 PM Retraite Quebec session
    • 3:00 PM Koskie Minsky LLP Session on CCAA Matters
  • Deferred members in the afternoon
  • • Bargaining 4:00 PM Morneau general session
    • Salaried 5:30 PM Morneau general session

  Wabush – Tuesday, May 15^th, 2018 at Our Lady of Assumption Catholic Church

  • Retirees in the early afternoon
  • • Bargaining and Salaried 1:00 PM Morneau general session
    • 2:00 PM Koskie Minsky LLP Session on CCAA Matters
  • Deferred members in the afternoon
    • Bargaining and Salaried 4:00 PM Morneau general session

  Copies of the PowerPoint presentations will be posted on our website after the meetings are held.

   

• April 28, 2018

  Post-filing Claims Process

  On March 26, 2018, the CCAA Court approved the motion by the Monitor to commence a Post-Filing Claims Procedure. The materials can be viewed here. This claims process is in addition to the existing Restructuring Claims Process, where claims have already been filed, and is designed to capture any amounts that a creditor claims to be owed that arose in the period after the CCAA filing (hence the title, “post-filing”). The deadline to file a post-filing claim is 5:00 PM EST, May 21, 2018.

  As part of the order authorizing the Post-Filing Claims Procedure, our firm as Representative Counsel was authorized to file claims on behalf of affected represented employees, on an individual or group basis.

  If you believe you are owed a post-filing claim, please contact us immediately and we can assist you with filing a post-filing claim. If you do not have a post-filing amount owing to you, you do not need to do anything.

   

• January 30, 2018

  On January 15, 2018, the Newfoundland Court of Appeal released its Reference decision on the interpretation of the “deemed trust” provisions in the Newfoundland Pension Benefits Act (“NLPBA”).

  As we previously reported, the Newfoundland and Labrador government referred certain legal questions relating to the interpretation of the NLPBA to the Court of Appeal after certain issues from the insolvency of Wabush Mines in Labrador and its on-going proceedings under the Companies’ Creditors Arrangement Act (“CCAA”) were brought to the attention of the government. The Reference was heard over the course of two days and involved many intervenors, including Koskie Minsky LLP as Representative Counsel of all Salaried Retirees and Employees of Wabush Mines. We made submissions on behalf of the Salaried Retirees and Employees and filed a supplemental submission on the Administrator’s lien and charge.

  In their Reference decision, the Newfoundland Court of Appeal has stated two important conclusions that we believe are helpful to pension plan members in an underfunded pension plan:

  1. The NLPBA “deemed trusts” operate to create a trust (a priority claim) over all the amounts that an employer owes to a pension plan that it has not paid and thereby leave the plan underfunded and cause pension benefit reductions; and
  2. The pension plan administrator’s lien and charge operates as a back up protection to the deemed trusts, and creates a secured claim (i.e., also a priority claim) in favour of the administrator also for all of the amounts that an employer owes to a pension plan that it has not paid.

  We are hopeful the legal conclusions in the  Reference decision will be of assistance to the Wabush Mines retirees in the upcoming hearing before the Quebec Court of Appeal, which is tentatively scheduled for June 11 and 12, 2018.

  To view the Newfoundland Court of Appeal Reference Decision, please click here.

• November 22, 2017

  We, as Representative Counsel to the Salaried Retirees of Wabush Mines, appeared before the Quebec Court of Appeal on Tuesday, October 31, 2017 to seek Leave to Appeal the September 11, 2017 decision by Justice Hamilton in these CCAA proceedings.

  In his decision, Justice Hamilton held, among other things, that the statutory deemed trusts under the Newfoundland PBA, the Quebec Supplemental Pension Plans Act (the “SPPA”), and the Federal Pension Benefits Standards Act (the “PBSA”) were not effective in the CCAA proceedings of Wabush Mines.

  To view our Application for Leave to Appeal along with our Notice of Appeal, please click here.

  The Quebec Court of Appeal has granted leave, and the appeal is tentatively scheduled to be heard on June 11 and 12, 2018. We will continue to provide updates as more information becomes available.

• April 12, 2017

  In September 2016, the Monitor filed a motion for directions with respect to several pension funding and priority issues (the “Pension Direction Motion“), including certain questions relating to the deemed trust under the Newfoundland and Labrador Pension Benefits Act, 1997 (the “NLPBA“). As we previously reported to you, we attended before the CCAA Court in Montreal and made submissions that the interpretation of the NLPBA deemed trust should be transferred to the Supreme Court of Newfoundland and Labrador for determination. In its January 30, 2017 decision, the CCAA Court denied our request.

  In early March 2017, the Province of Newfoundland and Labrador announced that it will be bringing a Reference before the Newfoundland and Labrador Court of Appeal to interpret the deemed trust provisions in the NLPBA. On March 27, 2017, Newfoundland and Labrador officially confirmed the Reference and the questions to be posed to the Newfoundland and Labrador Court of Appeal. We anticipate that the Reference will be heard sometime in Fall 2017.

  In the meantime, the Pension Direction Motion is scheduled to be heard by the CCAA Court on June 28 and 29, 2017. The CCAA Court, as well as the other parties, are aware of the Reference brought by the Newfoundland and Labrador Government. We are currently in discussions to finalize the timetable for submissions on the Pension Direction Motion and will advise further as more information is available.

• January 26, 2017

  A letter was recently mailed to all salaried employees and retirees of Wabush Mines, providing an update on the CCAA proceedings. To view a copy of the letter dated January 13th please click here.

• July 26, 2016

  Personal Information Statements

  On July 5, 2016, we sent Personal Information Statements (PIS) forms to all employees and retirees as part of the process for the calculation of each person’s claim for their terminated non-pension post-employment benefits (OPEB) for filing in the Wabush CCAA claims process. The PIS is necessary to ensure that the calculation of your  OPEBs are correct. Representative Counsel received information from the company about your health, life insurance and other benefits and needs to verify that this data is correct before your OPEB claim calculation can proceed. Once calculated we will provide you with your  OPEB claim.

  Please review your PIS and return it to Koskie Minsky by July 31, 2016 at 5 pm EST in order to ensure that we have your correct information. We will then send any data corrections to our actuary who will then calculate each person’s OPEB claim. We will send you the calculation in the future, as soon as it is prepared.

  The PIS form can be sent to the following contact:

  Fax: 416-204-2897

  Email: wabushrepcounsel@kmlaw.ca

  Address:
  Koskie Minsky LLP
  Court-appointed Representative Counsel to Salaried Employees and Retirees of Wabush Mines
  20 Queen Street West, Suite 900
  Toronto, ON  M5H 3R3

  Attention: Wabush CCAA

  If we do not receive a form from you we will assume ‎the information contained in the PIS is correct.

  In preparing the mailing of PIS forms it has come to our attention that as a result of an error in merging the Personal Information Statement (“PIS”) for translation from English to French there was a paragraph that was inadvertently included in the French PIS. The paragraph provided that the information was also being forwarded to the attention of M. Gilles Ayotte of the USW. We confirm that this is not the case and that your information has remained confidential with Representative Counsel to salaried employees.

  Please call us at 1-800-965-6636 if you would like to receive a corrected version and we will send one to you for your records.

  Meetings in Wabush and Sept-Iles:

  Morneau Shepell, the administrator of the Contributory Pension Plans for Salaried Employees of Wabush Mines, Cliffs Mining Company, Managing Agent, Arnaud Railway Company, and Wabush Railway Company, Limited (the Salaried Plan) will be holding meetings in Wabush and Sept-Iles on July 26 and July 27^th as follows:

  Tuesday July 26 6:00-8:00 (English) – Our Lady of Assumption Catholic Church (Basement) Wabush, NL

  Wednesday July 27 12:30-2:30 (French) – hateau Arnaud – 403, avenue Arnaud, Sept-Iles, QC

  Representative Counsel will be in attendance at these meetings and will be able to answer any questions you may have regarding the PIS or any other CCAA issue.

  If you are not able to attend and would like more information, Morneau Shepell has advised they will be posting their presentation online. You can also call Representative Counsel at 1-800-965-6636.

• April 20, 2016

  Members of the Wabush pension plans can now get in touch with the new administrator, Morneau Shepell, at the following toll free lines:

  • Wabush Salaried: 1 855 465-5266
  • Wabush Bargaining: 1 855 649-8648

  Questions for the plans can also be emailed to:

  • Wabush Salaried –  WabushSalaried@morneaushepell.com
  • Wabush Bargaining –  WabushBargaining@morneaushepell.com

  Members have the option of English or French language service.

• April 14, 2016

  A webinar was held on Thursday, April 7, 2016 to provide an update on the status of the Wabush CCAA. To access a recording of the webinar please click here: http://bell.media-server.com/m/p/ginqsf5e

• March 30, 2016

  UPCOMING WEBINAR – April 7, 2016 at 2 pm

  Further to the meetings we held in Sept-Îles, Québec and Wabush, Newfoundland and Labrador on March 10 and 11, 2016 for salaried employees and retirees of the Wabush CCAA entities we understand that a number of you, particularly in the Wabush area, were not able to attend due to various reasons such as not living within driving distance of the two meeting locations. At the request of our Client Committee, we are setting up an information Webinar for Thursday, April 7, 2016 at 2:00 p.m. EDT which you can access via a computer with an internet connection.

  To access the webinar, please register at the following website:

  http://bell.media-server.com/m/p/ginqsf5e

  A dial-in audio-only option will be available for individuals who do not have internet access and wish to listen to the Webinar by telephone. If you do not have internet access and would like to listen to the Webinar, please leave a message on our firm’s toll free hotline for Wabush retirees at 1-800-965-6636 with your name, telephone number and that you wish to participate in the Webinar by telephone. A Koskie Minsky representative will call you back to provide you with information about how to dial in. Please ensure you register for the Webinar by 5:00 pm EDT on April 6, 2016.

  This Webinar will be provided in English.

  If you are not able to attend the Webinar or listen on the telephone, the Webinar will be available for repeat viewing on our website within 2 business days after the Webinar.

  Letters from Representative Counsel

  Following our return from the Sept- Îles and Wabush meetings, we sent two letters which we attach for your reference:

  1. Letter to Labrador West MHA Graham Letto dated March 14, 2016; and
  2. Letter to the Newfoundland Superintendent of Pensions, Michael Delaney dated March 14, 2016.

  On March 24, 2016 we were copied on a letter from counsel to the Bloom Lake CCAA Parties which can be viewed by clicking here.

  We responded on March 28, 2016 reiterating our demand for Cliffs Mining Company to make all the payments to the Salaried Plan as required by law so that the pension reductions of the Salaried Plan members can be revoked and the payment of full pension benefits to the Salaried Plan members can resume as soon as possible. To see a copy of this correspondence please click here.

  We will advise of any further developments at the Webinar.

  A letter dated March 21, 2016 has been mailed to you with this information as well as the two letters referenced above.  To view a copy please click here.

• March 4, 2016

  We have sent a reporting letter to all Wabush retirees reporting on the status of the CCAA proceeding . To view a copy of our letter, please click here.

• March 4, 2016

  Representative Counsel is preparing a letter to all members providing an update on the status including the upcoming town hall meeting in Wabush and Sept-Îles.

  Town hall meetings have been confirmed as follows:

  • Thursday March 10, 2016 in Sept-Îles at 7 pm at the Hotel Château Arnaud (403 Avenue Arnaud)
  • Friday March 11, 2016 in Wabush at 7 pm at the Catholic Church (Our Lady of Assumption at 48 Bowater Dr, Wabush)
• February 16, 2016

  Representative Counsel is planning a town hall meeting in Wabush to provide an update on the status and answer questions. The town hall meeting is tentatively scheduled for March 12, 2016. We will provide confirmation of the date as well as location and time as information becomes available. Please continue to check back for updates.

• December 21, 2015

  Calculation of claim amounts for terminated health, life, and other benefits

  As you are aware, soon after obtaining CCAA protection on May 20, 2015, the Wabush CCAA Parties terminated the payment of health, life insurance, and other benefits to employees and retirees.  The termination of those amounts generate claims for the losses to each individual in the claims process for creditors of Wabush in its CCAA proceeding.  Given the nature of these types of benefits, an actuary is required to calculate the lump sum amount that reflects the loss of the future payment of these benefits to each individual. We have had discussions with the Monitor with respect to the calculation of these claims.  In accordance with the procedure of the Claims Procedure Order, the actuary for the company, Towers Watson (“TW”) prepared a preliminary calculation of the claim amounts and sent those to us for review.  Our actuary (Segal Company) reviewed those amounts and raised a number of concerns with the TW calculation methodology. On December 18, 2015, we sent a letter to the Monitor setting out the concerns of our actuary with respect to the TW calculations.  To view a copy of our letter, please click here. We also filed a Notice of Dispute in the claims process in the CCAA proceedings with respect to the initial calculation of these claims by TW.  To view a copy of our Notice of Dispute, please click here. 

  We expect to have continued discussions with the company, Monitor and the actuaries in an effort to settle the actuarial assumptions and methodology for these claim calculations.  If an agreement cannot be reached, then the issue(s) in dispute will go before a Claims Officer for adjudication. Once the claim calculations are settled, we will send the claim amounts to each affected employee and retiree for review.

• December 17, 2015

  On December 17, 2015, we were informed that the Newfoundland Superintendent of Pensions (the “Newfoundland Regulator”) and the federal Superintendent of Financial Institution (“OSFI”) made a joint decision to order the wind up of the Wabush Salaried Pension Plan and the Wabush Union Pension Plan. A copy of the letter sent by the Newfoundland Regulator to the company dated December 16, 2015 can be viewed here.

  We spoke with the Newfoundland Regulator on December 17, 2015 and they advised that they reached their decision to wind up the plan at this time for a number of reasons, including the following:

  1. Wabush has been an inactive company for an extended period of time even before entering into CCAA protection in May, 2015. The Newfoundland Regulator believes that it is unlikely Wabush will restructure and emerge from CCAA as a functioning company and as such, it will not be able to continue administering the pension plans;
  2. The Newfoundland Regulator wishes to make the record clear that the pension plans are wound up prior to that CCAA Claims Bar Date of December 18, 2015, which is the date for the filing of creditor claims against the company; and
  3. In May, 2015, the CCAA Judge of the Québec Superior Court of Justice had previously approved the suspension of special payments by the company to the pension plans and the non-payment of these amounts is contributing to the underfunding in the pension plan assets.

  The Newfoundland Regulator advised that due to the underfunding in the pension plans it is expected there will be a reduction to the amount of monthly pension benefits being paid to retirees commencing in February or March, 2016. Currently, the pension plans are approximately 75% to 80% funded, which would result in a monthly pension benefit reduction in the range to 20% to 25%.

  Please note that the pension benefit reduction mentioned above does not take into account any amounts that can be recovered for the pension plans from the cash in the estate of the company in the CCAA proceedings in the future.  As we previously indicated, we have asserted a first priority claim (payable after the CCAA-ordered priorities) against the assets of Wabush Mines on behalf of the Salaried Pension Plan members based on the statutory deemed trust priority provisions in the Newfoundland Pension Benefits Act. This priority claim has not yet been settled and is expected to be addressed further in the ensuing months.

  The Newfoundland Regulator has published an advisory dated December 17, 2015 relating to the declaration of the wind up of the Wabush Mines pension plans, which can be found in the link below:

  http://www.releases.gov.nl.ca/releases/2015/servicenl/1217n02.aspx

• November 5, 2015

  Six motions were heard by the court for various requested court orders. In addition to the motion materials, the Monitor filed five Reports to address the various motions.  We attended in court before Mr. Justice Hamilton in Montreal on the motions. Copies of the motion materials and Monitor’s Reports can be accessed on the website of the Monitor (FTI Consulting) available here: http://cfcanada.fticonsulting.com/bloomlake/. The following is a summary of the court hearing for each motion.

  1. Motion by Wabush for an Approval and Vesting Order with respect to the Sale of Certain Assets;
     The sale of a quantity of Bunker C Oil was approved to a purchaser and the judge issued the order.
  2. Motion by Wabush to Obtain the Release of Escrowed Funds to Bloom Lake;
     This motion was adjourned and a further hearing date will be set.
  3. Motion by Wabush for the Issuance of an Order Approving an Agreement and Granting The Bloom Lake Iron Ore Mine Limited Partnership Authorization to Dispose of an Asset;
     This motion was granted regarding the transfer of the bucket to a creditor called SMS in exchange for the release of SMS’s claim in the bucket. SMS apparently has other lien-type claims over certain other assets that remain to be resolved.
  4. Motion by Wabush for the Issuance of a Claims Procedure Order (“CPO”);
     The CPO sets out a detailed process by which creditors can submit claims for amounts owing to them from Wabush. There were two objections filed to this motion. One by the USW and another by Quebec North Shore and Labrador Railway Company Inc.. There was much debate among the parties and the company over the terms of the CPO. We had been negotiating with the Monitor the week before the court hearing to make many changes to the order, as had other parties, and many changes were made to the original draft. In the end, the judge issued the order with changes. In this motion we made two key points to the judge in court which he noted: 1.) that the Monitor would not refer any dispute over the priority over the Newfoundland Pension Benefits Act (“Nfld. PBA”) deemed trust to a claims officer and thus confine the claim in the claims process in the CPO. Instead, the Monitor agreed to refer a dispute on the deemed trust to the court directly, and 2.) When a dispute over the priority over the Nfld. PBA deemed trust is back in court, we intend to request that the issue of the validity of the Nfld. PBA deemed trust priority in favour of pension plan beneficiaries be referred to the Newfoundland court for determination as that is an issue of Newfoundland law. The judge made note of our transfer request (although it was not to be decided at the time).  We will be corresponding further with non-union employees and retirees about the CPO shortly.
  5. Motion by Wabush for the Issuance of an Order declaring that the Stay Period applies in respect of certain Proceedings;
     This motion was adjourned and a further hearing date has been set for December 4, 2015.
  6. Motion by Wabush for the Issuance of an Order Extending the CCAA Stay Period;
     There was an objection to the extension of the stay of proceedings filed by a creditor called MFC Industrial due to disputes this creditor had with the Monitor over the sale of the Wabush Mine.  MFC wants more information but refuses to keep it confidential. The Monitor is willing to provide the information but only if it is kept confidential. There is a “deadlock” as the judge commented. The judge wants the deadlock broken and has asked for another Monitor’s report in one month reporting on the status. We submitted that we also have an interest in having the mine sold (as opposed to a possible abandonment) and offered the suggestion of appointing a mediator between the two parties. Often the mere suggestion will motivate the disputing parties to settle. There is also a theory that MFC has ulterior motives regarding the Wabush Mine and for that reason is refusing to agree to confidentiality.Despite the objection by MFC, the judge granted the stay extension, keeping the company in CCAA protection.
  7. Motion by a creditor regarding more Information and/or Documentation
     This motion was withdrawn.
• August 28, 2015

  Letter from Representative Counsel to Blakes LLP regarding deemed trust priority. Letter from Blakes LLP to Representative Counsel regarding the deemed trust priority.

• August 18, 2015

  Decision of the Quebec Court of Appeal dismissing the motion for leave to appeal to the Quebec Court of Appeal.

• August 14, 2015

  Letter from Representative Counsel to company regarding deemed trust priority for Salaried Pension Plan members of Wabush Mines

• August 5, 2015

  Motion for leave to appeal hearing

  On August 5, 2015, our Motion for Leave to Appeal proceeded before Mr. Justice Kasirer of the Québec Court of Appeal. The USW and OSFI also sought leave to appeal.  The motion was opposed by the company, DIP lender, Monitor, and another creditor. As of this writing, the decision of Mr. Justice Kasirer is under reserve, meaning that he is writing his decision.  We will report on the decision as soon as it is released by the court.

• July 20, 2015

  Motion by Company for extension of CCAA stay of proceedings

  On July 20, 2015, the Company brought a motion before the CCAA Judge for an order to extend the stay of proceedings.  The stay of proceedings operates to prohibit any person from bringing or continuing proceedings against Wabush while it is under CCAA protection. Mr. Justice Hamilton granted the motion and extended the stay of proceedings until November 6, 2015.  There were two objections to the motion for extension of the stay of proceedings.  One was by a creditor called MFC Industrial who objected on the basis that they were not being given sufficient information by the Company with respect to their property and other related issues.  Second, there was an objection by the USW which included a request to extend the time for the USW to file a notice of motion for leave to appeal with the Québec Court of Appeal.  In his decision, Mr. Justice Hamilton dismissed both objections and granted the extension of time to USW to file a Notice of Motion for Leave to Appeal.  A copy of the Endorsement of Mr. Justice Hamilton can be found here.

• July 17, 2015

  Notice of motion for leave to appeal regarding: a) health benefit termination, and b) non-application of PBSA

  On July 17, 2015, we filed a Notice of Motion for Leave to Appeal (i.e., permission to appeal) to the Québec Court of Appeal with respect to two discrete issues in the decision of Mr. Justice Hamilton dated June 26, 2015. First, we sought leave to appeal with respect to his decision to approve the termination by Wabush of health benefits for employees and retirees without prior notice, which we argued was in contravention of section 32 of the CCAA.  Second, we sought leave to appeal with respect to the judge’s finding that the deemed trust pension priority in the federal Pension Benefits Standard Act (“PBSA”) has no application in the CCAA proceeding. The motion was scheduled to be heard before the Québec Court of Appeal on August 5, 2015.  If you wish to see a copy of our Notice of Motion for Leave to Appeal, please click here.

• July 6, 2015

  On June 22, 2015, a number of motions proceeded before Mr. Justice Hamilton as discussed below:

  a) Motion to appoint Representatives and Representative Counsel to all non-union employees and retirees of Wabush:
  As noted above, on June 22, 2015, Michael Keeper, Terence Watt, Damien Lebel, and Neil Johnson were appointed by the court as Representatives of all Non-Union Active Employees and Retiree Beneficiaries and Koskie Minsky LLP was appointed as Representative Counsel.

  b) Motion by company for approval of priority for the debtor-in-possession (“DIP”) lender:
  In order to provide funds to Wabush in the CCAA proceedings, a company called Cliffs Mining Company, which is a wholly-owned subsidiary of Cliffs Natural Resources Inc., the ultimate parent company of Wabush, agreed to loan funds to Wabush while it is under CCAA protection.  This type of loan is known as a “DIP” loan and as a condition of such a loan amounts the DIP lender sought first priority recovery for its loan ahead of all payments owing to the claims of other creditors of the company.  At the motion hearing on June 22, 2015, the DIP lender requested the court’s approval for such super-priority recovery ahead of the statutory deemed trust priorities in favour of pension plan beneficiaries contained in the Newfoundland Pension Benefits Act and the federal Pension Benefits Standards Act. Such deemed trusts operate to give priority recovery to pension beneficiaries for certain amounts owing to pension plans by an employer that the employer has not paid.

  Decision

  In a decision released on June 26, 2015, Mr. Justice Hamilton granted the requested priority to the DIP lender.

  c) Motion by company to suspend payments of certain amounts owing to the pension plans, suspend payment of supplemental pension benefits, and to suspend provision of health and life insurance benefits:
  The company also requested the court’s approval to not pay special payment amounts it is obligated to pay to the underfunded Wabush pension plans, suspend payment of supplemental pension benefits and to not pay health and life insurance premiums to Sun Life Insurance (the provider of such benefits to eligible employees and retirees).  We argued that while the amount of “special payments” owing to the Wabush pension plans can be temporarily suspended while further money is recovered by the company, there are nevertheless currently sufficient funds in the company’s account to permit the company to continue paying supplemental pension benefits and to continue to pay the premiums to Sun Life so that health and life benefits can continue.

  Decision

  Unfortunately, in his decision dated June 26, 2015, Mr. Justice Hamilton permitted the company to suspend all the payments as requested by the company.

  We are in discussions with the Client Committee with respect to next steps in this matter and will report to the non-union employees and retirees further, as soon as possible.

Show All

• May 26, 2018 Amended CCAA Plan
• January 13, 2017 Letter from Koskie Minsky to all salaried employees and retirees of Wabush Mines
• March 28, 2016 E-mail correspondence from Koskie Minsky to Blakes LLP
• March 23, 2016 Letter to Michael Delaney and Benoit Briére from Blakes LLP
• March 21, 2016 Letter from Koskie Minsky to All Clients re Webinar
• March 14, 2016 Letter from Koskie Minsky to Graham Letto
• March 14, 2016 Responding Letter from Koskie Minsky to Michael Delaney
• March 1, 2016 Letter from Blakes to Delaney
• March 4, 2016 KM Letter
• December 18, 2015 Notice of Dispute
• December 18, 2015 Letter from Koskie Minsky to the Monitor
• December 16, 2015 Letter sent by the Newfoundland Regulator to the company
• August 18, 2015 Judgment of Judge Kasirer
• August 13, 2015 Endorsement of Mr. Justice Hamilton
• August 13, 2015 Notice of Motion for Leave to Appeal
• June 26, 2015 Judgment of Justice Stephen Hamilton
• June 22, 2015 Representation Order

Koskie Minsky Tollfree: 1-800-965-6636

Koskie Minsky Email: wabushrepcounsel@kmlaw.ca

Members of the Wabush pension plans can now get in touch with the new administrator, Morneau Shepell, at the following toll free lines:

Wabush Salaried: 1 855 465-5266

Wabush Bargaining: 1 855 649-8648

Questions for the plans can also be emailed to:

Wabush Salaried –  WabushSalaried@morneaushepell.com

Wabush Bargaining –  WabushBargaining@morneaushepell.com