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About 1,000 pensioners from paper mills in all three provinces stand to lose up to 40% of their modest pensions when Fraser Papers goes into bankruptcy.
Ottawa (13 January 2010) – Fraser Papers which operate paper mills in three provinces Ontario, Quebec and New Brunswick) are using a restructuring plan as a deceptive scheme to get out of its financial obligations to pensioners, according to the Communications, Energy and Paperworkers Union of Canada (CEP).
CEP President Dave Coles "Fraser is using the bankruptcy process to take pensioners money to pay off investors and then continue to operate profitably under a new name."
"It is quite clear that the restructuring of Fraser Papers is in fact an inside job whereby Brookfield Asset Management, the controlling shareholder, is selling part of the company to itself and divesting itself of its pension obligations for all pensioners and employees, as well as severance and other obligations to workers at the Thurso, Quebec mill."
Though the Thurso paper mill will be sold, Fraser's mill at Edmundston NB will continue to operate.
"It is a shameful deceptive scheme that leaves pensioners on the brink of poverty," adds Coles. "This corporate shell game at the expense of pensioners could not be carried out without the cooperation of the New Brunswick government which is a secured creditor and will have its interests converted to preferred shares," Coles pointed out. "In spite of our request for assistance, New Brunswick has yet to make any proposals to help protect the pensioners with plans registered in that province."
About 1,000 pensioners from paper mills in all three provinces stand to lose up to 40% of their modest pensions when Fraser Papers goes into bankruptcy. The company owes $171 million to its pension plans. Brookfield made $649 million in profits in 2008.
Fraser Papers filed for bankruptcy protection under Companies Creditors Arrangement Act (CCAA) last June, and is seeking approval to wind up the pension plans.
CEP is fighting the company's restructuring proposal in federal bankruptcy court, at the political level, and through labour boards filings.
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