The Communications Energy and Paperworkers Union (CEP) is launching an $11.7-million lawsuit against the directors of the now closed Fraser Papers.
CEP claims the former directors are responsible for the underfunding of over 800 employees’ pensions when the paper mill went bankrupt in 2009.
"Our legal struggle on behalf of the pensioners and workers of Fraser Papers has now begun," CEP president Dave Coles said. “This is about fairness for retirees and workers who lost almost 40 per cent of their pensions. The directors of Fraser Papers must now be held to account."
Benefits for Canadian employees were cut by almost one-third in 2010 as the company's assets were sold, according to the union. South of the border, employees who worked for Fraser Papers in the U.S. had their pensions protected by a government-owned insurer of pension plans that their employer had paid premiums to.
In Canada, Fraser Papers, which is owned by Brookfield Asset Management, placed itself under the protection of the Companies’ Creditors Arrangement Act (CCAA) and was not obliged to pay into the pension plan to return it to solvency.
CEP filed the suit in Quebec Superior Court on Feb. 28 and they intend to announce further legal actions on behalf of its New Brunswick members in coming weeks.
"CEP contends that the directors of Fraser Papers were grossly negligent in their duties to our members," says CEP Quebec regional vice-president Renaud Gagne. "The company took care of its shareholders but pensioners and workers lost their retirement security. We are asking the Quebec court for justice for these retirees and workers."
Fraser Paper sold its mill in Thurso, Que., to Fortress Paper Ltd. and its specialty paper mill in Edmundston, N.B. to Twin Rivers Paper Company Inc.
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