Top Court takes ‘pragmatic’ approach in Indalex

Andrew Harrison

Andrew Harrison

As befits the McLachlin court’s current reputation, the Supreme Court has taken a pragmatic approach in today’s Indalex decision and overturned the Ontario Court of Appeal decision that set off alarm bells for many in the bankruptcy and pensions Bar. And although the decision is said to have dealt a “blow to pensioners in insolvency cases,” the decision will no doubt be greeted with enthusiasm from DIP lenders.

Andrew Harrison, partner and the national leader of the Pension and Benefits Group at Borden Ladner Gervais LLP, gave his views of of the judgement to Lexpert:

The decision is pragmatic. The Court was able to agree unanimously on two key issues, namely, the issue on priority of the DIP loan and the issue of fiduciary duty. The fact that the Court was unanimous in declining to give the pension plan members priority over the DIP lenders provides comfort for lenders because they know their secured claims will remain in priority. For pension plan members, although this decision may not be exactly what they were hoping for, the court makes it clear that recognizing the conflicts of interests faced by the sponsor and administrator of the plan is important and that companies must address these conflicting duties when making a decision that would affect the pension plan members.

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