May 22, 2017
Latham & Watkins partners Bradd Williamson and Mitchell Seider discuss the recent Canadian court decision that dismisses ERISA controlled group claims and its potential impact on lenders and other creditors in restructuring situations.
The Supreme Court of British Columbia recently decided Walter Energy case, the very first published decision of a foreign court addressing whether US pension plans and multiemployer plans can use ERISA to assert claims against non-US affiliates of a US debtor.
“The Supreme Court ruled two things that were important. First, it held that ERISA is a United States statute and cannot be used in Canada. Second, it held that as a matter of the laws of Canada, Jim Walter Resources and Walter Energy Canada were separate and distinct corporate entities. And in the absence of a contractual obligation to be liable for one another’s debts they could not be held liable for one another’s debts,” said Mitchell Seider, Global Co-Chair of Latham & Watkins’ Restructuring, Insolvency & Workouts Practice and partner in the firm’s New York office.
Bradd Williamson, Global Co-Chair of Latham & Watkins’ Benefits, Compensation & Employment Practice and a partner in the firm’s New York office , added: “The decision calls into question the ability of the PBGC and multiemployer pension plan funds to assert control group liabilities under ERISA on non-US affiliates in Canada and potentially other jurisdictions.”
Williamson and Seider examine the key takeaways from this landmark case in the above video.
For more on general pension and OPEB issues in connection with bankruptcies in the US, read Latham’s white paper covering 40-plus FAQs that has been updated in the wake of the Walter Energy case.