By: Julius Melnitzer | October 8, 2024
A recent Quebec Superior Court decision has unleashed uncertainty over the liabilities of companies and their directors when a pension deficit appears in the context of a reorganization.
The court authorized a group of defined benefit pension plan members to proceed with a $65 million class action against companies involved in a 2011 reorganization. The class claimed that the reorganization, followed by a 2014 bankruptcy, was a sham that deprived them of the assets required to honour their pensions.
“The decision could have widespread repercussions in the sense that corporate reorganizations are common, whether by way of mergers, creating subsidiaries or transferring assets and employees, because it suggests that caution is necessary if a pension deficit is on the table,” says Dominque Monet, a labour and employment lawyer at Fasken Martineau DuMoulin LLP, who wasn’t involved in the case. MORE . . .
Julius Melnitzer is a Toronto-based legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at [email protected] or https://legalwriter.net/contact.
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