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AbitibiBowater granted permission under the Companies’ Creditors Agreement Act (CCAA) to suspend payments on its unfunded pension liabilities.
Ottawa (8 May 2009) – Two days after the Quebec Superior Court ruled that AbitibiBowater must respect an agreement that allows its unionized employees with 20 years of service to retire at age 57, instead of 58, the same Court ruled that the company can suspend payments on its unfunded pension liabilities.
Justice Daniele Mayrand of Quebec Superior Court determined that under the Companies’ Creditors Agreement Act (CCAA), such payments represent past service, which don’t have to be paid while the insolvent company is under court creditor protection.
The company’s request had been opposed by the Communications, Energy and Paperworkers Union (CEP). The union said AbitibiBowater’s pension plans are already underfunded by $1.4 billion and will only go further in the hole during the restructuring process without the payments.
Dave Coles, President of CEP which represents workers at AbitibiBowater reacted angrily to the decision. “This decision is regrettable and profoundly unfair”, said Coles. “Failure to make pension payments will only make the company’s unfunded liability grow, setting the stage for larger pension plan deficits.”
“This is round two in what will be a long fight,” noted Coles. “We won the first round on Monday, and have many more to go.”
CEP represents about 8,000 AbitibiBowater workers in Canada.
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Court grants CEP members pension rights negotiated with AbitbiBowater