USSC – Feb 23, 2015
February 23, 2015
On February 20, 2015, we filed a motion before the Ontario Court of Appeal to intervene in an ongoing CCAA case called Grant Forest Products. The objective of our motion is to protect thePension Benefits Act (“PBA”) deemed trust remedy for the non-union USSC pension plan members of the underfunded USSC pension plans in the USSC CCAA proceedings. The decision of the Court of Appeal is under reserve, meaning that the Court is preparing its written decision.
The PBA deemed trust and the priority given to the deemed trust in the Ontario Personal Property Security Act (“PPSA”) is an important remedy for pension plan members and was confirmed by the Supreme Court of Canada in the 2013 Indalex case to apply in CCAA proceedings (subject only to the doctrine of paramountcy, which in practice means it is subject only to a CCAA-ordered priority necessary for the CCAA proceedings such as, for example, a DIP lender priority).
As a result of Indalex, the PBA deemed trust and the PPSA priority operate to give priority recovery for amounts owing by an employer to an underfunded pension plan on its wind up to the pension plan beneficiaries which is to be paid ahead of the claims of all other creditors (except for a CCAA-ordered priority, as noted above). In particular, in our view, the amount subject to the deemed trust is to be paid ahead of the claims of other secured creditors over certain assets, as well as ahead of unsecured creditors. The deemed trust is therefore important for the USSC pension plan members, both in the current USSC restructuring negotiations and, if that does not succeed, in any liquidation of USSC, where the pension plan members have to make claims against the sale proceeds of USSC asset sales.
In the Grant Forest case under appeal before the Court of Appeal, we argue that the lower court CCAA judge erred where he held (among other things) that if a pension plan is not wound up “as of the CCAA filing date”, then the PBA deemed trust does not apply in the CCAA proceeding. The Ontario Superintendent of Financial Services filed an appeal of the decision. Other than our intervention, there is no employee or retiree representation before the Court of Appeal in Grant Forest. The appeal and our intervention seek to overturn the lower court decision.