Pension drama, insurance drama, and a judge who tried to referee both.
A Nova Scotia court just told an insolvency judge that insurance coverage fights aren't his to referee.
On October 2, 2026, the Nova Scotia Court of Appeal ruled that Justice John Keith overstepped when he ordered an insurer, Newline Canada Insurance Limited, to start covering the legal bills of three former directors and officers of The Halifax Herald Limited. Justice Keith had been overseeing the Herald's restructuring under the Companies' Creditors Arrangement Act, or CCAA - the law that lets a struggling company negotiate with creditors instead of shutting its doors.
Here's how the fight started. The Herald, owned by Brace Holdings Limited, missed required payments into its employee pension plan in 2018 and 2019. When the company sought court protection from its creditors in 2024, Eckler Admin Corp. Ltd. was brought in to run the pension plan and promptly sued the Herald and its three former directors and officers. Eckler's claim: while juggling a conflict of interest, they routed pension money into the Herald's digital strategy instead, used the pension fund itself to pay for the legal fight over the missing contributions, and broke both Nova Scotia's pension law and their duty to act in the plan members' best interests.
Before that lawsuit could even get going, Eckler asked Justice Keith to settle a side question: who pays the legal bills? Two insurers were on the hook - AIG Insurance Company of Canada, which covered the Herald itself, and Newline, which covered the three individuals personally. On January 30, 2026, Justice Keith ruled that AIG had to defend both the Herald and its former directors, and that Newline had to start fronting the directors' legal costs too. He stopped short of deciding whether either insurer would ultimately have to pay out on a judgment.
Newline pushed back, and the Court of Appeal agreed with it. The CCAA gives a restructuring judge wide powers, Justice Farrar wrote for the panel, but only to help put a failing company back on its feet - and by the time this coverage question came up, the Herald's assets were already sold off and the business was done. As the court put it plainly: “The Eckler D&O Action has nothing to do with the CCAA proceedings.” In other words, that fight belonged in its own lawsuit, not tucked inside the insolvency file.
Because the CCAA judge never had the authority to weigh in, the Court of Appeal said it had no business ruling on what Newline's policy actually covers either. So the real question - does Newline have to pay the directors' legal bills - is still wide open, just in a different courtroom. AIG's side of things is untouched, since AIG never appealed.
There's a tidy postscript: the Court of Appeal ordered Eckler to hand back the $25,000 it had been awarded at the lower court, and tacked on another $10,000 for the cost of the appeal itself.
The takeaway for wealth and insurance professionals: if your firm ever ends up restructuring under the CCAA, don't expect the insolvency judge to also sort out who your insurer has to pay. That's a separate fight, in a separate courtroom.
