Skip to main content

Pensioners' claims in corporate insolvency cases were given a boost in a precedent-setting decision by a Canadian appellate court:

The United Steelworkers (USW) union has won a landmark legal decision forcing an insolvent corporation to honour pension obligations to employees.

The Court of Appeal for Ontario ruled last Thursday that Indalex Limited did not fulfill its fiduciary duties to employees when the company filed for protection from creditors under the Companies' Creditors Arrangement Act (CCAA) in 2009.

The ruling, which will benefit United Steelworkers (USW) members who worked at a former Indalex operation in Quebec, sets a precedent for providing greater benefits to pension plan members in cases of corporate insolvency.  In many past cases, employees and pensioners have suffered drastic reductions in their pensions, as corporate assets were distributed first to creditors ranked ahead of pension plans.

The ruling may help turn the tide against a long history of corporate pension fund raids:

A government report into the Robert Maxwell affair has severely criticised both Kevin Maxwell and the Goldman Sachs merchant bank over their involvement in the pensions scandal.

The Department of Trade and Industry investigation into the flotation of Mirror Group Newspapers in 1991 said Goldman Sachs bears a "substantial responsibility"...

Maxwell's media empire collapsed soon after his death in 1991, when it was discovered that more than £450m had disappeared from Mirror Group pension funds.

Other pensioners are paying close attention to the decision:

The group representing former Nortel Networks Corp. employees is hopeful that a recent Ontario court decision could help pensioners of the bankrupt company recover their retirement nest egg...

Anne Clark-Stewart, a spokeswoman for the NRPC (Nortel retirees and former employees protection, Canada), said the group is studying the ruling to see if there is any relevance to their case. Ex-Nortel workers have had their pension payments slashed after the former tech giant went bankrupt in 2009 with an estimated $2.5 billion or more in pension deficit...

David Vincent, a senior partner at Ogilvy Renault a law firm specializing in pension issues, said the ruling in favour of Indalex workers “breathed new life” into provincial pension laws, which often get thrown on the backburner.

“It could be a sign of things to come,” he said.

Some commentators, including Liberal foreign affairs critic Bob Rae, say former Nortel employees have a moral right to a cut of the proceeds from asset sales, including the most recent $900 million patent sale to Google.

Originally posted to The Anomaly on Mon Apr 18, 2011 at 04:32 PM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement and In Support of Labor and Unions.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site