In a January 24, 2014 decision in the Companies'
Creditors Arrangement Act (the "CCAA")
proceedings of Timminco Limited and Bécancour Silicon Inc.
[2014 QCCS 174] ("Timminco"), the Quebec
Superior Court (the "Court") held that the
Supplemental Pension Plans Act (Quebec), in conjunction
with the Civil Code of Québec, created a deemed
trust for pension claims, including claims for special payments,
which deemed trust ranked ahead of the claims of secured creditors
in the CCAA proceedings.
Timminco stands in stark contrast to the earlier
decision, by the same judge, in White Birch Paper Holdings Co.,
Re [2012 QCCS 1679] ("White Birch") wherein
it was held that: (a) no such deemed trust existed; and (b) based
on the reasoning (somewhat aggressively interpreted) of the Supreme
Court of Canada (the "SCC") in Century Services Inc.
v. Canada (Attorney General) [2010 SCC 60] ("Century
Services" also known as Ted Leroy Trucking
Ltd.), any such deemed trust would have to be explicitly
preserved by the CCAA to maintain its priority. The Court
in Timminco reconsidered its assessment of Quebec law and
traded the interpretive guidance of Century Services for
the SCC's reasoning in Sun Indalex Finance, LLC v. United
Steelworkers [3013 SCC 6]("Indalex"),
wherein the deemed trust under the Pension Benefits Act
(Ontario) (the "PBA") was held to have
"survived" commencement of CCAA proceedings.
The relevance of Timminco is that it is the first post-
Indalex decision (and the only decision apart from
White Birch) to rule on the survival of provincial pension
deemed trust claims in CCAA proceedings, where the
proceedings are being conducted under the new CCAA. The
CCAA was amended in 2009 to include, for the first time,
relatively limited protections for pension claims in a
restructuring or a sale. These amendments came too late to be
applied by the SCC in Indalex, thus leaving a large
question mark about the impact of Indalex on non-DIP
secured lenders going forward under the new CCAA
Unfortunately, the Court in Timminco was focused
narrowly on the questions of whether a deemed trust existed under
Quebec law and what affect such a deemed trust had on the
debtor's assets. The Court's attention was, apparently, not
drawn to the issue of the impact of the 2009 amendments to the
CCAA (which issue was also left untouched in White
Birch). In my article "After Indalex: Pension Claims
under the New CCAA" (published in the May 2013 edition of
Collateral Matters and the June 2013 edition of
National Creditor Debtor Review), I argued that the
limitations to the new pension protections in the CCAA
should be read to imply that the PBA deemed trust can no
longer survive in CCAA proceedings to give additional
protection. The same logic would apply to the pension deemed trust
that the Court in Timminco found to exist under Quebec
law, which deemed trust creates protections that are, like those
under the Ontario statute, much broader than those in the new
An analogous argument was recently expressed by the Quebec
Superior Court in the CCAA proceedings of Aveos Fleet
Performance Inc. and Aero Technical US, Inc. [2013 QCCS 5762]
("Aveos") when it considered the impact of the
new CCAA pension protections on pension claims under the
federal Pension Benefits Standard Act, 1985 (the
"PBSA"). There the Court held that the limited
scope of the protections in the new CCAA suggested that
Parliament did not intend that the broader protections of the
PBSA deemed trust should survive. In making that finding,
the Court applied a more nuanced understanding of the principles of
CCAA statutory interpretation utilized by the SCC in
Unfortunately, the Court in Timminco did not consider
the application of the reasoning in Aveos, as the
Timminco hearing took place six months before the
Aveos decision was released. If this Timminco decision is
appealed, attention will hopefully be paid to Aveos and
its application of Century Services interpretive rules to the new
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