Michael Kainer

The Royal Crest Lifecare Group Inc. was petitioned into bankruptcy and Ernst & Young was appointed as trustee.

The trustee sought an order that it not be bound by the collective agreements and not be deemed a successor employer.

The unions brought a cross-motion seeking leave under s. 215 of the Bankruptcy and Insolvency Act to pursue an application before the Ontario Labour Relations Board to designate the trustee as a successor employer.

The bankruptcy judge dismissed both motions as premature.

The unions appealed the dismissal of their cross-motion.

The Court of Appeal dismissed the appeal, finding that the bankruptcy judge did not err in the exercise of his discretion by deciding that the cross-motion was premature.

The appellant unions appealed an order dismissing their motion to vary an earlier order that appointed an interim receiver for Royal Oak Mines Inc. The original order explicitly directed the interim receiver not to make contributions to any employee pension plan without court authority.

The unions argued this was illegal as it undermined the collective agreement.

The Court of Appeal dismissed the appeal, finding that the interim receiver was not the employer and had no funds to pay the benefits, and that the court had jurisdiction under s. 47(2) of the Bankruptcy and Insolvency Act to make the order.

The court also rejected the unions' claim that the interim receiver was liable for termination pay under the Employment Standards Act.