Liable in contract

Trustee in bankruptcy not entitled to disallow claims made by former employees
|Canadian Employment Law Today

Prior to the bankruptcy of the T. Eaton Company, various attempts were made to restructure and save the company in the 1990s. Included in these attempts was an arrangement between the company and some of its employees to share in a surplus distribution of an employees’ pension fund.

The result was a partial wind-up of an existing fund, a sharing of some of the surplus and a transfer of the balance to a new pension fund. Payments made to eligible employees at that time ranged from a few hundred dollars to as much as $100,000.

During one of its attempts to restructure and avoid bankruptcy, the T. Eaton Company closed three stores and terminated a group of employees between March 1 and June 30, 1998.