Supreme Court Indalex decision latest attack on pensioners
OTTAWA -- “Retirees have once again been told to go to the back of the line so that banks and hedge funds can collect their winnings,” says Communications, Energy and Paperworkers Union President Dave Coles.
“It’s almost criminal that Canada’s bankruptcy laws continue to force pensioners into poverty,” says Coles, referring to the recent Supreme Court decision that 170 former employees of Indalex Limited would be stripped of the $6.7 million to cover their pensions that had been awarded earlier by the Ontario Court of Appeal.
On Feb.1, the Supreme of Court of Canada rejected an Ontario Court of Appeal decision that gave the underfunded pension plan primary access to money from assets sold during bankruptcy restructuring. Though the Supreme Court agreed that the aluminum company breached its fiduciary responsibility to the pensioners, it said CCAA rules, which define pensioners as unsecured creditors, override provincial pension laws.
Indalex Limited sought Companies’ Creditors Arrangement Act (CCAA) protection in 2009 and as a result 170 of its former employees saw their pensions slashed in half.
“Over the past few years, tens of thousands of retirees, many in the forest industry, have seen their pensions wiped out by this biased legislation,” adds Coles. Enough is enough. Legislators must act to stop this crime against pensioners.”
He pointed to the 800 retirees of Fraser Papers, CEP members, who lost between 30% and 40% of their pensions when the company filed for protection under CCAA four years ago. The company’s secured creditors, including Brookfield Asset Management, CIT Bank, CIBC and the Government of New Brunswick, were paid the $110 million owed to them. The unsecured creditors, which included $219 million owed to the pension plans, received little.
“To rub salt in the wound, the principal shareholder that took Fraser Papers into CCAA, Brookfield Asset Management, maintained a dominant ownership position in the restructured company. This $150 billion corporate behemoth used bankruptcy protection to wipe out its pension obligations.
“Pensions should be legally considered as deferred wages with priority over other creditors,” says Coles, adding that Canada Pension Plan coverage should also be expanded.
CEP is the largest union in several key sectors of the economy, including forestry, energy, communications and media.