In 2012, Catalyst Paper became insolvent and obtained court protection from its creditors under the Companies Creditors Arrangement Act. Catalyst prepared a restructuring plan that called for the wind up of the underfunded Salaried Pension Plan which would result in significant pension benefit losses to retirees. The lawyers of Koskie Glavin Gordon acted for the Catalyst Salaried Employees and Pensioners Group (CSEP) to protect Catalyst retirees’ pension benefits. The result was that Catalyst prepared a revised restructuring plan under which the Salaried Pension Plan continued to operate with no pension losses to our clients.
Catalyst’s initial CCAA Plan of Compromise was structured such that if it failed to pass a vote of creditors it would result in the immediate sale of the company and the wind-up of the underfunded Salaried Pension Plan with a $115 million deficit. The first vote failed to pass a vote of creditors, and the sale of the company and pension losses were imminent.
Through our litigation and negotiation initiatives, we were successful in persuading Catalyst to change course and prepare a second restructuring plan that avoided the sale of the company and wind up of the Salaried Pension Plan. We negotiated with Catalyst, other creditors and the B.C. government on a very tight timeframe to prepare a second revised CCAA Plan that would avoid the sale of the company and ensure the continuation of the Salaried Pension Plan. The resulting Amended Plan of Compromise passed a second creditor vote.
The Salaried Pension Plan is continuing without any pension benefit losses to the plan members. “Convincing the company and stakeholders to prepare a second Plan of Compromise is very rare in CCAA proceedings. In this case, we were successful in doing so, thus avoiding the wind up of the underfunded Salaried Plan that would have resulted in significant pension losses to Catalyst retirees.” says Andrew Hatnay.
For more information on this case, please contact Andrew Hatnay.