Ontario court approves Settlement Agreement to share wind-up pension surplus between company and plan members in CCAA proceedings
October 22, 2025
In the context of Companies' Creditors Arrangement Act proceedings, an Ontario Superior Court judge has approved a Settlement Agreement between a company and legal counsel representing members of its defined benefit pension plans to share the surplus in the wound-up plans.
The Financial Services Regulatory Authority of Ontario (“FSRA”) issued wind-up orders in respect to the company’s two defined benefit pension plans in 2023.
Absent any agreement or court order regarding surplus ownership, entitlement to any surplus would be adjudicated by FSRA and any distribution of surplus would in any case be subject to the oversight and consent of FSRA. For efficiency, the court-appointed monitor intended to bring a motion regarding surplus entitlement and, accordingly, the Court appointed Representative Counsel to represent the interests of all plan members with respect to surplus entitlement.
The parties negotiated and ultimately agreed to a Settlement Agreement to share the net surplus, with 45% being paid to the plan members and 55% being paid to the monitor on behalf of the company.
The Settlement Agreement required the monitor to bring a motion before the Court for approval of the Settlement Agreement. The relief sought in the Court was unopposed, and the judge hearing the motion for approval concluded that the proposed settlement was fair and reasonable in the circumstances, adding that the Settlement Agreement was a product of good faith negotiations and “properly balances the interests of all parties and treats them equitably.”
The ruling leaves approximately $2.5 million for claimants and clears the way for FSRA to implement the Settlement Agreement by consenting to the surplus pay-outs.
Click ‘More Information’ below to review the decision:
