• It pulled the rug out from lenders and insolvency practitioners. It says that the entire amount of a pension deficit can rank ahead of all other creditors, including secured creditors, depending on the factual circumstances.
  • The result is that when an employer seeks protection under insolvency legislation such as the CCAA (Companies’ Creditors Arrangement Act) or BIA (Bankruptcy and Insolvency Act), employees and unions will be given earlier notice of the proceedings, and invited to the table where deals are done on restructurings of the employer.
  • It makes painfully clear the fact that directors and officers of a company that sponsors a pension plan must considered the interests of the pension plan members at all times. It’s no excuse to say that they had to look after the interests of shareholders, customers or lenders. Directors and officers have to be able to demonstrate that they acted reasonably, in the best interests of the plan members, to attempt to protect the pension benefits. If they don’t, they could be personally liable for pension deficits.