A retired executive director of a small Alberta non-profit society held a contractual entitlement to monthly payments for the remainder of her life. The arrangement had been negotiated years earlier as part of a retirement package, memorialized in a written agreement that obligated the society to continue payments regardless of changes in leadership, funding, or organizational direction. The society had honoured this commitment without interruption for more than a decade, and the retired executive director had structured her financial affairs around the expectation that the payments would continue as promised.
The society itself had operated in the community services sector for over 30 years, governed by a volunteer board of directors that turned over periodically as members rotated through their terms. In recent years, the organization had struggled with declining revenues and shifting program priorities. The board eventually concluded that the society could no longer sustain its operations and that dissolution was the most responsible course of action. A formal resolution to wind up the society was passed at a duly convened board meeting, committing the organization to the legal process of voluntary dissolution under Alberta's legislative framework governing societies.
What followed the wind-up resolution was a period of approximately 6 months during which the board took various steps to address the society's affairs but did not communicate with the retired executive director about the impending dissolution or its implications for her lifetime payment entitlement. The monthly payments continued during this interval, but no notice was given that the society intended to cease operations, that its assets would be distributed according to wind-up procedures, or that the creditor's claim would need to be addressed within a compressed timeframe. The retired executive director learned of the dissolution only when she received formal notification after the board had already advanced significantly through the wind-up process, leaving limited time to understand her position, seek advice, or engage meaningfully with the board about how her entitlement would be treated.
The board now faces scrutiny over whether its handling of the wind-up process met the governance standards expected of directors during dissolution, particularly with respect to a creditor whose claim was both known and documented. The 6-month gap between the resolution and the notification, the nature of the lifetime obligation, and the decisions the board made about asset distribution during that period all bear on the question of whether the directors fulfilled their duties or fell short of what the law and sound governance practice require.