The Stel Salaried
Pensioners Organization wishes to thank The Hamilton Spectator for permission
to post the following article by Reporter Steve Arnold published in the April
6, 2005 edition
|
Apr. 6, 2005. 12:48 AM |
|
Reinstating directors jeopardizes
goodwill at Stelco |
|
By Steve Arnold |
|
The judge known as "Mr. Bankruptcy" for his domination of corporate restructuring law in Ontario suffered a rare reversal last week when the Ontario Court of Appeal overturned one of his Stelco decisions. A three-judge appeals panel ruled Thursday that Justice James Farley was wrong to remove two Stelco directors from the board simply on the fear they might put their interests ahead of everyone else who depends on the struggling company. That's a solid reason with a good base in Canadian law -- but the decision could threaten the delicate balance of goodwill that will be the basis for reshaping Stelco. At the heart of the controversy was Stelco's decision in February to appoint investors Roland Keiper and Michael Woollcombe to the board of directors. The company said the appointments were necessary for two reasons: the board was severely understaffed -- between April 2003 and November 2004 it lost four of its 11 members -- and more than 40 per cent of shareholders demanded they have a voice on the board and its critical restructuring committee. The appointments caused howls of protest from retirees and unionized workers who felt shareholders were getting privileged access to information about the company's plans for the future. They quickly filed a motion with Farley asking him to strip the men of their seats. Justice Robert Blair, writing the appeal court's unanimous decision, rejected the entire basis of Farley's argument, ruling Farley was simply wrong to remove the men before they'd done anything wrong and to substitute his opinion for the "business judgment" of Stelco's directors. Appeals courts have only rarely been asked to review judgments in corporate restructuring cases, Blair noted, concluding the law gives corporate boards acting in good faith a wide degree of freedom. In one of the few cases it has been asked to decide in this area, the Court of Appeal ruled: "Business decisions, honestly made, should not be subjected to microscopic examination. There should be no interference simply because a decision is unpopular with the minority." sarnold@thespec.com 905-526-3496 |