Bill C-253 (Historical)

An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance plans)

This enactment amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to ensure that claims in respect of unfunded liabilities or solvency deficiencies of pension plans and claims relating to the cessation of an employer’s participation in group insurance plans are paid in priority in the event of bankruptcy proceedings.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you again, Madam Chair.

My question is for the member for Manicouagan.

First, thank you for your leadership on this issue. We agree that this affects people's lives in practical terms. During the deliberations in the House, you said that, in the event of a company's bankruptcy, pensioners can lose up to 25% of their deferred salary. So their quality of life is directly affected.

What would this change in concrete terms, if Bill C-253 were passed in this Parliament?

[The Clerk]

To recap, we had the original motion moved. There was debate. An amendment was moved to replace the wording “without hearing witnesses” with “after three full meetings of witness testimony”. The effect would be that there would be no other committee activities or business in between the three full meetings. The committee would then go immediately to clause-by-clause consideration.

The motion as amended, as it stands right now, would have the impact of pushing back the consideration of draft reports until the committee has completed its three full meetings of witness testimony and clause-by-clause study of Bill C-253.

If this motion were withdrawn, we would revert to the original tentative calendar of pontooning the meetings, having half a meeting to consider a draft report and half a meeting for witness testimony.

It's entirely up to the committee how it wishes to proceed.

[The Clerk of the Committee, Mr. Michael MacPherson]

Based on my reading of the motion as submitted, it would be amended so that the committee proceed immediately to the clause-by-clause consideration of Bill C-253, as referred by the House on May 12, 2021, after three full meetings of witness testimony.

If we look at our calendar that was distributed, which was tentative, we already have Bill C-253 in there for June 1, 3, 8 and 10. Therefore, it would be June 1, 3 and 8 with witnesses, and then June 10 would be clause-by-clause consideration.

[The Chair, Liberal, Sherry Romanado]

Right now, if you recall, we circulated a draft agenda for between now and the end of the session. The plan was to hold meetings regarding Bill C-253, so it's already in the books to do so. I had invited all the members to submit witnesses, which I believe some have.

We already have scheduled time in the agenda for this study.

[The Chair, Liberal, Sherry Romanado]

That's perfect. The amendment is to have three full meetings on Bill C-253 so that we can hear from witnesses.

I will turn to MP Masse.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

I will begin by responding to Mr. Dreeshen's comment by simply drawing a parallel with Bill C-208, which the Conservatives themselves introduced. They were able to prioritize that bill, which was then able to pass third reading last month. That is what happened. It was not a priority bill. Yet, it moved from 17th to 2nd in the order of priority, if memory serves. It was even prioritized again for the second hour of debate at third reading. The Conservatives changed the order of their bills so that some of them were given priority consideration during the debate time they had. These sorts of steps are taken to ensure quick passage.

I would also like to respond to Mr. Généreux's comment. If we don't fast-track Bill C-253 back to the House without delay and an election is called, the bill will be a complete failure.

Remember that a bill was passed under a gag order two weeks ago to enact rules for how elections work during a pandemic. In my view, if the government is passing reforms to the Canada Elections Act under a gag order, that sends a very alarming message to me that it wants to call an election.

This is the context in which we must operate. Based on the indicators we have, we could see a lot of bankruptcies this fall, because right now companies are being kept alive on life support. If we don't get Bill C-253 back to the House quickly, we will not be protecting workers from these bankruptcies. We are exposing them to the consequences.

That's why this motion needs to pass quickly. We need to get Bill C-253 back to the House as soon as possible, to at least give ourselves a chance to get it passed on behalf of the people we represent.

Of course, we can't know in advance who we will save from bankruptcy, which constituencies will be affected, and the circumstances in which it will happen. However, the examples we have seen, like White Birch Papers, really scare me.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks, Chair.

Sébastien mentioned that I voted in support of Bill C-253. I was glad to do so, to bring it to committee for study. It strikes me that if we were to eliminate the prospect of hearing from witnesses, I would miss out on that study, and I think, to speak to Mr. Généreux's point, that we want to get it right. I also think we want to do it as quickly as we can, and I think we can do both of those things adequately, as far as this committee work is concerned.

We should, then, make sure that we return it to the House, ideally before we rise. I think that would be quite a quick but welcome process, if we can get it done, and I think we can, but it shouldn't preclude our hearing witnesses. I think we can do both. We can hear from witnesses—a short list, of course—get the clause-by-clause study done and then return it to the House before we rise.

That would be the aim, but while I supported getting Bill C-253 to committee, I don't support moving directly to studying it clause by clause. I think we should hear from a list of witnesses to make sure we get clause-by-clause examination right.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

I'm going to take the liberty right away of introducing the motion that I previously sent out and that you all received via email. The motion is as follows:

That the Committee proceed immediately to the clause-by-clause consideration of Bill C-253 as referred by the House on May 12, 2021, without hearing witnesses.

I introduce this motion on the basis that this bill does not commit any money from the government. The bill is essentially ideological and does not involve responsible government, for example.

In the particular context of COVID-19, we know that many companies are being kept on life support, as it were. That's what the results of various surveys are showing. The government's wage subsidy and rental assistance programs are very generous. However, when those programs end, we could see a significant number of bankruptcies.

In addition, the election threat weighs heavily on us. An election campaign could be triggered as early as August. We know that if this bill is not sent to the House directly, given the time allotted for debate and consideration by the Senate, it may not receive royal assent before the House wraps up.

If these bankruptcies occur in the fall without us having passed the bill, hundreds or even thousands of workers may not be protected. That is what I'm afraid of. My colleague Marilène Gill's bill covers two areas: priority payment of preferred claims for employers, as well as compensation for the loss of group insurance.

I therefore move that we begin clause-by-clause consideration of Bill C-253 immediately, in the hope that it will be sent back to the House as soon as possible for consideration at third reading. I also hope that it will be sent to the Senate quickly so that it can be passed in the current Parliament. That will allow us to address the bankruptcies that may occur in many constituencies.

I want to point out that the motion to send the bill to committee was supported by the Bloc Québécois, of course, the NDP, the Conservative Party and 10 Liberal members, including our colleague Nathaniel Erskine-Smith. I am calling on our strategic political sense and compassion for the workers who may be affected by these bankruptcies.

[Marilène Gill, Bloc, Manicouagan, QC]

Thank you very much, Madam Chair.

My thanks to the vice-chairs, to all the members, and to the committee's entire support team.

I am pleased to be before you today. I would like to thank all the members of Parliament who have worked to bring Bill C-253 before a committee today.

I must say that it has been a long haul. In that context, I would like to thank all the members of Parliament before me who have introduced similar bills in the last 20 or so years. It really was in the 2000s that the House of Commons first took up the issue. At least a couple of decades, therefore. But amendments such as the ones I am proposing today have never really been put forward.

I also introduced a bill along the same lines in the last Parliament. Unfortunately, it was not able to make its way through. Allow me to make a quick, critical comment on the legislative process here. Under our rules, some worthwhile bills that could well be in the public interest have no chance of being debated, let alone passed. They do not get through the process if they are not priorities or if, in the case of private members' bills, they simply do not get the luck of the draw.

So, of course, I hope that the government will not be calling an election anytime soon. Then this bill might go even further and go back to the House in order to pass another stage there.

Let me return to the background and the principles that informed the bill as it was being developed. It is basically very simple, despite its title that is almost as long as the bill itself.

In terms of the background, this is a grassroots bill. As members of Parliament, you know that we want to be close to the public and we listen to them. Personally, I make it a point of honour to bring the people's requests to the House. We are conveyor belts. Whether we are in government or in opposition, we are above all representatives of our constituents, not representatives of ourselves or of any particular body.

This bill, therefore, first saw the light of day on the Côte-Nord. But it could equally well have been born in the constituency of my colleague from Newfoundland and Labrador, a constituency also affected by the bankruptcy of Cliffs Natural Resources in 2015. Because of that bankruptcy, workers who had paid into a defined benefits pension plan for their entire careers were deprived of 25% of their pension funds and their insurance when the drama, I might almost say the tragedy, occurred. I will come back to that a little later.

The basic principle, on which a majority of members of the House were in agreement when we voted, is one of deferred salary. In the negotiations between the employer and the unions representing the workers, an agreement is reached that, at a certain point in their careers, they will do without some salary, in order to ensure that they have a pension fund when they retire. Simply put, it means that the money belongs to the workers.

Put another way, to repeat myself in the negative, just like in photography, I could use as an example a worker currently earning $20 an hour. Overnight, he sees his hourly rate dropped to $15. We could not accept that. We could not imagine depriving workers of 25% of their salary. A current salary and a deferred salary should be considered in exactly the same way. It's a salary; it belongs to the workers.

That is the very concrete principle on which the bill is based. Of course, as I am the one proposing it, you might agree that I may possibly have, or appear to have, a conflict of interest. But I completely agree with myself. All joking aside, there is still a principle behind this. Depriving people of a part of their pension fund has concrete and direct consequences in a number of areas.

Those consequences might be manifested in a lot of ways, with many examples, but I will simply talk about two major consequences.

The first consequence is a social one. I am talking here about the Cliffs Natural Resources case, which is really well documented. There have been many mental health issues, such as depression or suicidal behaviour. Of course, people were deprived of a lot. We must also think about the surviving husbands and wives. Women are also affected because they receive no benefits.

We must also consider the entire economic impact, of course.

I see that I have to move a little quicker, because I only have two minutes left.

So we also have the entire economic issue. We must not forget that people buy and invest in the communities where they live. The fact that they are not receiving their full pension deprives them but it also deprives the communities of resources. Individuals are affected by the situation, but so is the surrounding society.

I will really not have the time to talk about the two points that my bill seeks to amend, but I can address them very quickly.

The first is about the priority of the creditors. I deal with this in a very balanced, even very humble, way.

The second is about compensation for insurance, because that is what retirees face in the event of restructuring or bankruptcy.

Let me end with a thought that will surely find agreement among those who have hoped for this bill and the former parliamentarians who have tried to put forward solutions such as the ones I am putting before you today. We should be making legislation for our workers, because they vote. Large companies clearly do not.

[The Chair, Liberal, Sherry Romanado]

I now call this meeting to order.

Welcome to meeting number 40 of the House of Commons Standing Committee on Industry, Science and Technology. Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website, and so you are aware, the webcast will always show the person speaking rather than the entire committee.

We will be devoting the first hour to Bill C-253 and will then move in camera for the second hour to review the report.

To ensure an orderly meeting, I'd like to outline the regular rules.

Members may speak in the official language of their choice, as interpretation services are available for this meeting. You have the choice at the bottom of your screen of “floor”, “English” or “French”.

As a reminder, all comments by members and witnesses should be addressed through the chair. Please wait until I recognize you by name. When you are not speaking your mike should be on mute. As is my normal practice, I will hold up a yellow card when you have 30 seconds left in your intervention, and I will hold up a red card when your time for questions has expired.

Pursuant to the order of reference of Wednesday, May 12, 2021, the committee is meeting to begin its study of Bill C-253, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act.

I'd like to welcome today Philippe Méla, our legislative clerk, who will be working with us on this study.

Thank you very much for being with us today.

I'd now like to welcome the bill's sponsor, Marilène Gill, MP for Manicouagan.

The floor is yours for seven minutes so that you can introduce your bill.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

That ends our third round.

First of all, I thank the witnesses for being here today. That was excellent testimony.

Thank you so much for your statements.

Mr. Leclerc, I am with you: go Habs, go!

I'll say goodbye to the witnesses and I'll ask the members to stick around because I'm going to go over what we have in the cooker for the next couple of weeks, to see if we can work out something so that we can get everything done before the House rises.

With that, thank you very much to the witnesses for being with us today. If you have anything you would like to submit, I know Mr. Dreeshen had suggested a YouTube link. If you'd like to submit it to the clerk, the clerk will then circulate it to the committee members and we'll be able to watch those videos.

Now I feel as though I failed science class and I just got a refresher course, so thank you so much.

We will let the witnesses leave and then go with our plan for the rest of the session.

Members, thank you all for sticking around. We have a few minutes. I just want to connect because we have a couple of things still outstanding, one of which is that we have some witnesses who we invited to speak at the COVID recovery meeting and they weren't able to be with us during the times we had booked.

We have some witnesses who would like to appear on May 27, which is the Thursday when we come back after the riding week, so we will allocate that meeting for those final witnesses on the green recovery study.

As you know, we also have three reports that we need to hopefully finalize and table in the House before the House rises. I've been working with the clerk on that. As we are still in public, obviously we can't talk about what's in those reports, but we're trying to make sure that we can finish the session tabling those reports but also dealing with the piece of legislation that was referred to our committee yesterday, Bill C-253.

I have a plan. This committee has been pretty good about collaborating to get us across the finish line. I'll have the clerk circulate that once we kind of agree to it.

Next week is a riding week.

The following week, on May 25, we will invite the sponsor of the bill, MP Gill, to come and present for the first hour on Bill C-253, and then we'll go in camera and look at affordability and accessibility in telecommunications, because we will be receiving the second draft of the report probably by the end of this week. It will give us some time to look at it then.

On May 27, we will have the last meeting on green recovery.

What we'll then do is spend the first hour of each of the remaining meetings dealing with Bill C-253 and the second hour finalizing any reports. We need to get those reports finished by June 10 so the analysts can do what they do to get them back to me so I can table them by June 18.

In a perfect world, and I think we can do this, we can probably get everything done before the House rises for the summer. Again, I don't know how many witnesses people will want for Bill C-253, so I want to give us a bit of wiggle room. However, I think we can actually do this.

I want to put that proposal out to the committee members, just so you know also what you have on your record, and get some feedback if you all think this is a good plan.

I see some thumbs up.

It also gives us a bit of flexibility in case we need to allocate a little more time for a specific report versus another one. I want to just lay that out. I think we can do this.

Mr. Lemire, you have the floor.

Bankruptcy and Insolvency Act

[The Speaker, Liberal, Anthony Rota]

Pursuant to order made on Monday, January 25, the House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-253 under Private Members' Business.

The House resumed from May 11 consideration of the motion that Bill C-253, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance plans), be read the second time and referred to a committee.

[Marilène Gill, Bloc, Manicouagan, QC]

Madam Speaker, it is a pleasure to be in the House tonight to conclude debate on my bill, Bill C-253, an act to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act with respect to pension plans and group insurance plans. The bill has a long name, but it is actually quite simple. I will move on to its principle.

What I want to do is protect the deferred salaries of employees, of pensioners. In other words, when people contribute to a defined benefit pension fund, they expect that when they retire, they will be able to get or have what they have earned over a lifetime of work and labour. This is a very simple principle. We do not want a company or multinational to walk away with a large chunk of the fund because it has underfunded the pension plan. In very simple terms, that is what Bill C-253 is seeking to address.

Of course, we have been told, in many different ways, about all the problems we might face with a bill like this one. While the principle is simple, the devil is obviously in the details, but I would like to remind the House that our primary goal is to work for the people.

During the debate, I heard many comments about how, in the end, the government did good things in its budget. Let us hope that is the case, but we cannot rely only on hope. What I am putting forward here is not a one-time budget measure. Rather, it is intended to be a permanent legislative measure, since we are legislators. I am therefore proposing a solution.

I would like to thank the many people who worked with me over the past few years. Things take a long time in the House. We have been working on this bill for five years with the help of many people, including workers, pensioners and unions in Quebec and the rest of Canada.

I have an extraordinary team who has believed in this bill since we began our work for one good and simple reason, and that is the fact that the people from my riding of Manicouagan asked for this bill. That is the standard by which we should always measure the work that we do here. The people of Manicouagan had a need for this bill and they made it clear even before I was elected. They made that need clear during the election campaign, when I met with them, so many people contributed to the development of this bill.

I would therefore like to thank my entire team, all the organizations, local agencies, unions, pensioners and many others. I would also like to thank all of my Bloc Québécois colleagues, who also believe in this bill and who worked on it with me. I obviously want to thank my colleagues in the House. I believe I heard that many of them will be at least voting in favour of the principle of Bill C-253 so that it can be examined in committee.

I would now like to say a few words to each party.

The official opposition indicated it would support the bill, saying that it could be improved upon—which is true of anything, in my opinion. I hope the opposition will support the bill and we can discuss it. As several colleagues have already said, we have been talking about it for many years, but no action has been taken.

With all due respect to the government, the fact that it is increasing old age security in no way responds to what I am asking here on behalf of my constituents and other Canadians. That might be a nice infomercial for the government, but it has nothing to do with what I am calling for.

The official opposition has said it will vote in favour of referring this to committee for study. At least some mental effort is being made.

As for the government, it will probably vote against it, even though I have heard several people applaud the solutions to the difficulty we are facing. Even at its own Liberal convention, several party members, including government members, tabled a resolution in favour of a bill like mine. I would expect the governing party to vote in favour of something called for by a majority of its members, possibly.

Furthermore, the bill presents a balanced position. We often hear fearmongering about how this is going to result in business closures, but no, this takes a balanced approach.

I will conclude with this example. When Cliffs Natural Resources went bankrupt, its main creditor was itself. It gave itself $400 million. That $400 million belonged to the pensioners in my riding. I would prefer that, with a bill like mine, this money be returned to the workers and pensioners, not to the multinationals that continue to turn a profit.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Madam Speaker, I am happy to join my colleagues in the debate over Bill C-253, as we consider the important issues of protecting the retirement security of Canadian employees and pensioners when an employer faces insolvency.

Our government recognizes that all Canadians deserve peace of mind when it comes to their retirement security. We have taken several major steps to strengthen all aspects of Canada's retirement income system, including enhancements to old age security and the Canada pension plan. At the same time, corporate insolvencies create a challenge for workplace pension plans, as well as for the economic security for employees who may have unpaid wages and benefits. Bill C-253, while well intentioned, takes a flawed approach to these issues.

By contrast, our government has taken important and practical steps to enhance the retirement security of all Canadians and better protect the interests of Canadian employees and pensioners in cases of employer insolvency. First, in 2019, the government made changes to insolvency corporate and pension laws to strengthen the protection for workplace pensions, taking a whole-of-government, evidence-based approach. These changes were based on feedback from national consultations with labour and pensioner groups, company lenders, experts and the public at large.

After listening to Canadians, our government enacted a comprehensive package to enhance retirement security via budget 2019, which strengthened security for pensioners and workers, but also built on the internationally recognized successes of Canada's marketplace framework laws. The changes made to our insolvency laws have made corporate restructuring fair, more transparent and more accessible for pensioners and workers. Participants in insolvency proceedings are now required to act in good faith. As well, corporate directors will have to think twice before approving excessive payments to executives at the expense of pensions or benefit plans in the lead-up to a firm's insolvency, as courts will have more powers to review these payments and find directors liable where appropriate.

In proceedings under the Companies' Creditors Arrangement Act, courts have been given greater power to order the disclosure of economic interests to enhance fairness and transparency in insolvency negotiations. The relief that a large corporation can seek on the first day of a CCAA restructuring is also now limited to what is absolutely necessary to avoid immediate liquidation. This means that pensioners and employees will have greater opportunities to participate in restructuring proceedings and make representations to the court before decisions are made on issues such as changes to employee group insurance benefit plans or pension contributions during the restructuring.

In our consultations, Canadians told us that a proactive approach to retirement security is the best and most sustainable approach. We received that message loud and clear, and that is why the government also amended federal corporate law to allow for more market oversight of corporate decision-making and worked to better align corporate incentives with the interests of workers and pensioners. Moreover, we have taken measures to restrain unreasonable executive compensation by requiring federally incorporated publicly traded corporations to hold advisory shareholder votes. Taken together, these measures will further regulate corporate behaviour and instill market discipline and oversight on corporate decision-makers.

Finally, our actions in budget 2019 also improved federally regulated pension plans by clarifying that if a pension plan is terminated, it must still provide the same benefits as when it was ongoing. Moreover, federal pension plans are permitted to transfer the responsibility to provide pensions to a regulated life insurance company to better protect pensions and pensioners from the risk of employer insolvency. In addition, our government has taken strong actions to directly support workers impacted by employer insolvency. The wage earner protection program provides financial assistance to Canadian workers who have lost their jobs and are owed wages, including termination and severance by their insolvent employer.

Since 2008, the program has paid more than $337 million in wages to nearly 129,000 Canadian workers. In 2018, this government increased the amount available to workers from four to seven weeks of insurable earnings.

In budget 2021, the government committed to further strengthening the program by eliminating a 6.82% deduction that was previously in place. Quite simply, these reforms will put more money in the pockets of Canadians who have lost their jobs and are owed wages by their employers.

The best way to protect economic and pension security is by preventing employer insolvency in the first place. This is an incredible challenge in the context of the COVID-19 pandemic, which has been so hard for so many of our businesses from coast to coast to coast. That is why an essential part of Canada's fight against COVID has been unprecedented federal financial supports for Canadians and Canadian businesses, which have helped keep insolvency levels down.

While the other side has dismissed these programs and the timely support they offer to Canadian families, businesses and workers, we made a promise to Canadians to have their backs through this pandemic for as long as it takes. In budget 2021, our government committed to extending these support measures as long as the fight against this virus requires it. The actions I just described will create better outcomes for pensioners and workers affected by the insolvency of their employer.

In contrast, Bill C-253 is coming from a good place, in terms of its intention of helping pensioners, but it takes a misguided approach in trying to do so. It would prevent some companies from restructuring, which would result in unnecessary job losses; hurt pensioners; harm small business; reduce access to credit and investment; and hurt Canadian competitiveness. Many firms are already struggling due to the pandemic. This bill would worsen, not improve, the situation.

I am pleased to say, however, that our government has taken effective action. Our insolvency and corporate law changes, our wage earner protection program improvements and support for businesses during the pandemic have all served to protect pensions and workers, while also supporting the central objectives of Canada's economic recovery. These measures help to ensure that our farms remain competitive and can continue to employ hard-working Canadians throughout the country.