March 1, 2010
Nick Garbutt, CEP Local M1-Hamilton
There has been an important development today concerning the outstanding CH Employees pension claim and grievance against CanWest-Global. With the authority and permission of CEP National President, Dave Coles, our lawyer(s) CaleyWray have settled with the Company CMI (CanWest Mediaworks Inc.) prior to a CCAA Court hearing scheduled for Thursday, March 4, 2010. On behalf of the CH Retirees; deferred members and survivors of retirees, legal counsel Hugh O’Reilly has agreed to the same settlement. The settlement is in principle only and is subject to the final wording of the settlement documents.
The policy grievance followed Global’s decision to wind up the pension plan June 30, 2009 and the claims made by CEP and the retirees against CMI arose out of the Company’s filing for CCAA protection on October 6, 2009. A wind up report has been prepared by Mercer, the Company’s actuary, which will be submitted to the Superintendent of Financial Institutions (OFSI) for acceptance and approval. The report apparently shows that the solvency shortfall is approximately 17% or around $8-million dollars as at August 31, 2009. Put another way the pension plan is approximately 83% funded. Our lawyers have not seen the wind up report, this information is coming from CMI’s legal counsel.
The settlement arrived at today means that the grievance will be settled and so will the claims. Global’s right to wind up the plan will no longer be an issue and the settlement deals with the unfunded portion of the Pension Plan. The settlement is $350,000. If this money is deposited into the Pension Plan it is our lawyer understands that it will raise the solvency ratio to approximately 83.5%. As you know the Pension Plan belongs to the former employees of CH Television who contributed to the plan. This sum represents about 3 ½ cents on the dollar given that the shortfall is approximately $8-million dollars.
Why has our President decided to settle?
Anyone who has followed the news of recent CCAA proceedings in Canada will know that the commercial courts have made brutal decisions to protect the interests of the Companies over the interests of the workers. Nortel’s bankruptcy, as well as Fraser Paper’s CCAA proceeding, has taught us that if we don’t settle for something the chances are we will get nothing. Just last week Fraser Paper which operates in Quebec, the Maritimes and North Eastern U.S. was allowed to walk away from a $185-million pension shortfall. In our case CMI asked the CCAA court to dismiss the grievance and claims, and the court appointed monitor was supporting CMI’s request, which would be heard by the Judge on Thursday. Our lawyers who have been involved in these other CCAA proceedings have informed us that it was highly likely that the CCAA Court would dismiss our grievance and the claims. This would mean an arbitrator would never hear our grievance.
Even if the CCAA court allowed the claims to continue our lawyers tell us that there was a very good chance there would be no money left at the end of the proceedings to pay the claims. As unsecured creditors workers and retirees are last in line. At the end of the process there would be no comfort that a compromised claim would be worth even 3 ½ cents on the dollar. The only reason why CMI was interested to settle at all was because we threatened further legal action when the Court ruled against us. CMI’s legal costs are substantial and by settling the grievance and claims they save on legal costs. The bond holders who control the assets of the company were motivated to settle in this respect.
That is a basic overview of the decision made today and why the decision was made. I am sure that you, your executive, and members will have other questions. As always I will be happy assist you in providing any information that our members request.
Regards,
Dave Lewington
National Representative
CEP, CLC