Summary

37284

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, USW Local 8782, et al. v. U.S. Steel Canada Inc., et al.

(Ontario) (Civil) (By Leave)

Keywords

None.

Summary

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Bankruptcy and insolvency – Jurisdiction – Determination that a judge supervising reorganization has no jurisdiction to apply the doctrine of equitable subordination – Whether the Court of Appeal erred by dismissing the Union’s appeal – Whether the Court of Appeal erred by holding that there is no authority under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (CCAA) for the court to apply the doctrine of equitable subordination – Whether the Court of Appeal’s decision narrows the scope of court’s authority under the CCAA, contrary to this Court’s jurisprudence – Whether the Court of Appeal’s decision has created uncertainty about the court’s jurisdiction under Canada’s different insolvency statutes and incentives for creditors to initiate insolvency proceedings – Whether the status of equitable subordination in Canadian insolvency law remains unsettled after thirty years of jurisprudence, and requires this Court’s guidance.

U.S. Steel Canada Inc. is in CCAA protection. Its American parent is United States Steel Corporation. After U.S. Steel Canada obtained a CCAA protection order in the Superior Court of Justice, the supervising judge made a claims process order, establishing a procedure for filing, reviewing and resolving creditors’ claims against U.S. Steel Canada. One of the claims involved approximately $2.2 billion of debt against U.S. Steel Canada by its American parent company. The applicant Union and a number of other stakeholders advanced various objections to these claims.

The CCAA judge had to decide which objections should be dealt with within the CCAA process, outside it, or not at all. One such objection before the judge was based on the doctrine of equitable subordination, developed in American insolvency law and now codified in the U.S. Bankruptcy Code. The Union sought, among other things, an order subordinating U.S. Steel claims in whole or in part to its claims, based on the conduct of U.S. Steel in relation to the Canadian plants, pensioners, pension plan members and beneficiaries.

Lower Court Rulings

August 13, 2015
Ontario Superior Court of Justice

2015 ONSC 5103
Determination that a CCAA judge has no jurisdiction to apply the doctrine of equitable subordination
September 9, 2016
Court of Appeal for Ontario

C61331, 2016 ONCA 662
Appeal Dismissed