Brian Franklin Empey

The appellants appealed from the Court of Appeal's reversal of the CCAA court's decision regarding the priority of pension plan wind-up deficiency claims over court-ordered DIP financing charges.

The majority held that wind-up deficiencies under s. 75(1)(b) of the Pension Benefits Act were subject to a statutory deemed trust under s. 57(4), but that the deemed trust was superseded by the DIP charge by virtue of the doctrine of federal paramountcy.

The majority further held that while the employer-administrator breached its fiduciary duty by failing to ensure the pension plan beneficiaries had adequate notice and representation in the CCAA proceedings, a constructive trust was not an appropriate remedy because the breach did not result in an identifiable asset that it would be unjust for the wrongdoer to retain.

On a cross-border insolvency recognition motion under ss. 44-49 of the Companies’ Creditors Arrangement Act, the moving party sought recognition of U.S. Chapter 11 proceedings as foreign main proceedings and requested ancillary relief, including enforcement of first-day orders, appointment of an information officer, and an administration charge.

The court held that Chapter 11 proceedings qualified as foreign proceedings and accepted that the moving party was a foreign representative, subject to possible further U.S. court developments.

Applying a centre of main interests analysis that can rebut the registered-office presumption, the court found the Canadian debtors’ centre of main interests was in the United States.

Mandatory and discretionary relief under Part IV of the statute was granted, including the requested supplemental orders and a capped administration charge.