Steel Mills
USSC Pensioners Lose Appeal on Creditor Claims
Written by Sandy Williams
September 12, 2016
Pensioners at US Steel Canada lost another court battle to put their pension claims ahead of US Steel’s debt claims.
A ruling by the Ontario Court of Appeals on Friday, upheld a decision made by Justice Herman Wilton-Siegel in March. Pensioners, provincial government, and former Stelco president Bob Milbourne claimed that US Steel, the largest creditor of USSC, had acted unfairly, running US Steel Canada into insolvency to further its own interest. During the court proceedings earlier this year, the issue of “equitable subordination” arose in which unfair behavior by the company could push lower ranked claims ahead of those of senior creditors. Justice Siegel ruled that an equitable subordination principle, a U.S. legal doctrine, could not be applied in a CCAA restructuring and that he had no jurisdiction to do so.
In Friday’s decision, Ontario Chief Justice George Strathey upheld Siegel’s decision and dismissed the appeal because nowhere in the words of the CCAA is there authority to apply the doctrine of equitable subordination. Judges have the ability to “fashion creative solution” within the jurisdiction of the CCAA but that “the court’s powers are not limitless,” said Strathey.
The decision was a blow to pensioners who fear that if US Steel’s claims are paid first USSC may go out of business and their pensions will be reduced between 15 to 30 percent. The current pension shortfall totals $830 million.
Gary Howe, president of United Steelworkers Local 1005 in Hamilton told the Hamilton Spectator, “It is once again disappointing for workers that have mostly worked their whole life to be placed behind (the) USS claim. It reinforced the immediate need for a public inquiry into this matter as we have called for.”
Sandy Williams
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