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Catalyst pension plan faces shortfall if restructuring fails

If Catalyst Paper’s pension plan were liquidated right now — a distinct possibility if the restructuring plan fails and the company is sold — it would be worth only $228 million, $73.5 million short of its supposed value of $301.5…

If Catalyst Paper’s pension plan were liquidated right now — a distinct possibility if the restructuring plan fails and the company is sold — it would be worth only $228 million, $73.5 million short of its supposed value of $301.5 million, reports Graeme Hamilton in the Vancouver Sun.

Catalyst Paper is currently trying to restructure a debt of more than $800 million under the federal Companies’ Creditor Arrangement Act. All creditors must vote on Catalyst’s restructuring plan by April 23, but the two principal creditors (secured and unsecured bondholders) are fighting over some key considerations in the plan and an agreement seems “a long way off”, says the newspaper story.

If creditors do not approve the restructuring plan, Catalyst Paper will accept an already-negotiated “stalking horse bid” by its secured bondholders to buy the company. That deal specifically excludes the pension plan, leaving the pension plan to be liquidated and a shortfall that would knock about 30% off pensions for salaried employees and retirees, according to the Vancouver Sun.

Ari Kaplan, of the Toronto law firm Koskie Minsky, is representing the pensioners in B.C. Supreme Court. He told the Vancouver Sun that the pension plan has sufficient funds to pay pensioners, as long as it remains a going concern. If the plan is wound up, it would be $73.5 million short of being to maintain the current payout to retirees, he explains.