Quebec court rules successor forestry company not liable for additional pension contributions under 2010 CCAA arrangement
September 30, 2024
The successor company of a restructured forestry business is not liable for additional contributions after the termination of several pension plans.
A Quebec judge held that any claims for additional pension contributions were extinguished by a 2010 court order that approved the debtor's plan of arrangement under the Companies' Creditors Arrangement Act (CCAA).
AbitibiBowater Inc., a multibillion-dollar forestry company that reorganized as Resolute PF Canada Inc. (Resolute), made its initial application under the CCAA in 2009, a few months after closing its plants in New Brunswick and Newfoundland and Labrador. The employees at the New Brunswick and Newfoundland and Labrador plants were members of one or more of four defined benefit pension plans, each registered in Quebec.
Under ‘normal’ circumstances, the partial termination of the registered pension plans for members employed in New Brunswick and Newfoundland and Labrador would have accelerated the repayment of the pension plan's deficits, resulting in a cost for the restructuring company and a negative impact on cash flow. However, the Superintendent of Pensions of both New Brunswick and Newfoundland and Labrador repeated their intentions to declare a partial termination of the plans associated with the plant closures.
Resolute brought a motion for directions. The judge held that any claim for payment of additional pension contributions arising from the partial termination order is extinguished by the 2010 court order and that the filing of a claim for additional pension contributions as a result of a partial termination that occurred prior to the date of the initial CCAA application is contrary to the 2010 court order. The judge noted that, if partial terminations of the plans were ordered, the benefits received by members in New Brunswick and Newfoundland and Labrador would have come at a cost to the other members. Although neither Superintendent of Pensions ever exercised their right to declare the partial termination, the judge also found that they should not be allowed to “play both sides”.
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