Who gets the pension surplus

In June 2023, the actuary of an Ontario pension plan contacted KSV Restructuring Inc. to report that all of the plan's members had received their basic entitlements at the 100% funded level and that a surplus remained, and to ask what KSV, as former trustee in bankruptcy of the plan's sponsor, wished to do with it. The latest trustee statement put the surplus at $2,016,103.17 as at July 31, 2023, and the actuary counted 30 members or beneficiaries, per KSV's Report re Reappointment of Trustee, July 25, 2024, s. 4.0, paras. 3–4. The sponsor's trustee had been discharged on October 26, 2016, when, KSV told the court, it "was unaware of any other assets of SKD," per the same report, s. 2.0, para. 7; s. 4.0, para. 2.

The sponsor was SKD Company, a partnership of NMC Canada, Inc. and 2515080 Nova Scotia Company and part of a group that its monitor described in 2009 as primarily a tier one supplier of stampings and welded assemblies to the North American auto industry. It had about 661 employees when it obtained CCAA protection on January 21, 2009, per the Second Report of the Monitor, Feb. 13, 2009, s. 2, p. 3. That April, Justice Morawetz approved the sale of what the order calls the Honda, Ford and Chrysler Assets to two Martinrea companies, per the Approval and Vesting Order, Apr. 3, 2009, paras. 2, 5. A receivership and three bankruptcies later, the trustee distributed about $9.97 million on proven unsecured claims of about $51.76 million, per the KSV Report, s. 2.0, paras. 2–6.

The plan had come with an acquisition. SKD acquired the assets of S.K.D. Technologies Inc. in 1985 and moved those employees into another SKD plan; accruals in the Technologies plan ended that December, and annuities were bought for the benefits already earned. SKD wound the plan up effective April 15, 2009, after its CCAA filing, per the KSV Report, s. 4.0, paras. 1–2 and the trustee's Notice of Motion, July 20, 2026, paras. 11–12.

Reopening the estate

Under Ontario's Pension Benefits Act, KSV explained, the chief executive of the Financial Services Regulatory Authority of Ontario must consent before a surplus is paid to a sponsor, and may do so where the sponsor proves its entitlement from the plan's documents or reaches a surplus sharing arrangement with the affected members. KSV had advice from Goodmans LLP, the court officer's counsel since the CCAA, supporting the view that the estate was entitled to 100% of the surplus. KSV proposed a sharing agreement instead: seeking the full amount would be "lengthy and costly," it understood, and sharing "a far quicker and less expensive option to recover a significant portion of the Surplus." Unsecured creditors had recovered about 18.6% of their proven claims, it noted, with about $40 million unpaid, per the KSV Report, s. 4.0, paras. 5–8.

On August 13, 2024, Associate Justice Ilchenko, as Registrar in Bankruptcy, reappointed KSV as trustee under s. 41(11) of the BIA, per the Order (Appointment of Trustee), Aug. 13, 2024, para. 2. The surplus, the endorsement on the motion record reads, was "Property" of the bankrupts "which has not been administered to date," and the bankrupts did not oppose, per the Endorsement of Associate Justice Ilchenko, Aug. 13, 2024, p. 1.

The agreement KSV negotiated with the beneficiaries, assisted by Goodmans and the plan's administrator, TELUS Health, gave them 20% of the surplus and the trustee 80%, measured at the date of FSRA's consent and subject to administrative expenses, per the Second Report of the Trustee, July 15, 2026, s. 1.0, para. 11. By May 28, 2025, enough of the affected persons had signed for the trustee to apply, per its Notice of Motion, para. 18. FSRA's notice of intended decision of November 3, 2025 recorded the surplus, less expenses, at $1,702,200 as at June 30, 2025, as the application stated, and proposed to consent to paying KSV $1,361,760; none of those served requested a hearing, and the consent issued on December 9, per the Second Report of the Trustee, Apps. E (paras. 4–6), F. The members' $345,095 was paid in January 2026, and the trustee received about $1,380,379 on February 2, per the Notice of Motion, paras. 21–22.

On July 30, 2026, Associate Justice Ilchenko approved the process of the trustee, by then named AlixPartners Restructuring, Inc., for distributing $1,043,525, which its report put at an additional dividend of about 2.02% on the proven claims of about 340 claimants, some 165 of them SKD employees, per the Second Report of the Trustee, s. 1.0, para. 9; s. 5.0, para. 2; s. 7.0, para. 1 and the Dividend Distribution and Discharge Order, July 30, 2026, paras. 3–8. "This is a windfall to the creditors and particularly the former employees, that is completely unexpected," the endorsement reads. Finding under s. 187(12) of the BIA that the ordinary distribution and discharge processes were "unjustified in the circumstances of a 17 year old Bankruptcy," the court approved a notice in The Globe and Mail, 45 days for creditors to correct addresses held since 2016, and the transfer to the Superintendent of Bankruptcy's unclaimed dividend fund of any cheque not cleared within six months, per the Endorsement of Associate Justice Ilchenko, July 30, 2026, p. 2 and the Order, paras. 4–7. Any opposition, the endorsement adds, "would be highly unlikely after two decades, and in the context of purely found money," per the Endorsement, p. 3.

Who decides

SKD is one of three Ontario insolvency files, compared below, in which the question of who takes what is left in a wound-up defined benefit plan was answered within the past year. The estate's shares came out at 80%, 55% and nothing. Justice Osborne set out the statutory frame in DCL Corporation's CCAA: under s. 79(3)(b) of the Pension Benefits Act, FSRA's chief executive may consent to paying surplus to an employer only where the payment is authorized by a court order under s. 77.11, and s. 77.11 contemplates either an FSRA determination from the plan documents or an agreement reached by, among others, at least two-thirds of the members, per In Re DCL Corporation, 2025 ONSC 4976, paras. 17–18. The three records show four things deciding the route and the result: what the plan text said, and whether it could still be found; what proving it would cost against the size of the surplus; who spoke for the members; and FSRA's consent, which each file needed.