What happened: The Nova Scotia Court of Appeal ruled a bankruptcy judge had no authority to decide whether two insurers must cover claims against a newspaper company's former leadership
Who's involved: Newline Canada Insurance Limited, AIG Insurance Company of Canada, and pension administrator Eckler Admin Corp. Ltd
What's at stake: $35,000 in costs, and whether a coverage dispute can be settled before anyone's liability is proven
Why it matters: Draws a line around how far an insolvency court can reach into a D&O or fiduciary liability coverage fight
Where it stands: Decided - the Court of Appeal allowed the appeal and set aside the lower order on October 2, 2026
A pension administrator tried to get a bankruptcy court to settle an insurance fight before anyone proved a single director did anything wrong.
The Nova Scotia Court of Appeal says that call belonged somewhere else entirely. The ruling, released October 2, closes a chapter in the insolvency of The Halifax Herald Ltd., publisher of the nearly 200-year-old Chronicle Herald, which filed for creditor protection - a bankruptcy process known as the CCAA - back in March 2024.
At the heart of it all: an underfunded staff pension. In 2018 and 2019, the Herald skipped required contributions to its retirement plan. Eckler Admin Corp. Ltd., brought in to administer the plan once the insolvency began, sued both the Herald and its three former directors and officers over the shortfall.
The claims accuse them of diverting pension money into the Herald's digital strategy instead, and of billing the pension fund for legal costs from the fight over those missing contributions - all, the filing says, while in a conflict of interest. None of it has been proven.
Two insurance policies sit behind those claims. AIG wrote a fiduciary liability policy for the Herald's parent, Brace Holdings Limited. Newline wrote the directors and officers policy covering the same leadership.
The bankruptcy judge overseeing the insolvency had already ruled that AIG owed a duty to defend both lawsuits, and that Newline owed a duty to front the directors' legal bills - though he stopped short of ordering either insurer to actually pay out, since nobody's liability had been proven yet. AIG didn't appeal. Newline did.
Eckler's own lawyer explained the urgency at the hearing: pursuing directors who might not even be insured risked "throwing good money after bad." As counsel put it to the judge: "At this point, we just want to know is the gate closed or is the gate open?"
The Court of Appeal agreed the question needed answering - just not in that courtroom. A bankruptcy judge's powers are wide, the panel said, but they only stretch to helping restructure a company that's actually being restructured. Once the Herald's assets were sold, there was nothing left to fix, and a fight between an insurer and the directors it covers had nothing to do with that job.
The judges called Eckler's push for an early ruling "a pre-emptive strike" - an attempt to lock down coverage before any judgment even existed against the directors it was meant to protect. Canada's insurance law already has a route for this: win a judgment first, then go after the insurer for what the policy owes. Nova Scotia's version of that rule was sitting right there the whole time.
The panel wouldn't touch what Newline's policy actually covers, either - including two exclusions the insurer wanted to use. That call, the judges said, belongs to a different court entirely, with the directors themselves in the room. They weren't even part of this appeal.
Eckler can still chase the underlying claims against the Herald and its former leadership. Win that, and the insurance question comes back - just somewhere else. For now, Eckler owes Newline the $25,000 it already collected, plus $10,000 more for losing the appeal. The gate, for now, stays shut.
Coverage lawyers watching CCAA files just got a cleaner test for when an insolvency court can rule on a policy dispute itself, and when the claimant needs a judgment in hand first.
None of the underlying claims against the Herald or its former directors and officers - that pension money went to fund a digital push, that legal bills were wrongly billed to the plan - have been tested in court. This ruling settled only which court gets to decide the coverage question, not whether anyone did anything wrong.
