No other group is more deeply affected emotionally, financially, and psychologically by a bankruptcy than the employees of that company. I doubt you can fathom the heart-wrenching fear and panic that employees undergo at the moment they hear their employer has filed for creditor protection or bankruptcy. Their thoughts jump to the clear and resonating fact that they immediately have no income, benefits, or job to go to. Their job is the cornerstone of their financial security, and it is now gone. This comes to reality later that day when they find their office doors are locked. At that point, they are, by all means, thrown out onto the street. In most cases, this is without warning, planning, or compassion.
With many Canadian workers within two paycheques or less of dire financial distress, this terrifying path of discovery, disappointment, and growing disillusionment begins. As an employee of Nortel Networks for nearly 15 years, I have lived through this nightmare and can speak to every facet of this nightmare in detail.
Many severed employees will never recover from this process. With little or no money to retrain and next to nothing in EI income, many will take the first job they find and never recover financially or emotionally over the remainder of their working careers. Severance is a critical monetary payout that must be protected to allow an employee to transition during the huge upset a bankruptcy places on their lives. This is not the same as a layoff or other job loss event, as those events are legislated to provide a gentle transition to a new job or career. In a bankruptcy it is far from gentle, and it is extremely traumatizing to anyone who must go through it.
I am here to tell you that the bankruptcy process is being abused in Canada, and it needs to be fixed. This bill is a critical step in resolving this abuse and in making a safe future for Canadian workers. In Nortel's case, how can a company with over $2.4 billion in cash be led into bankruptcy? Bankruptcy and creditor protection are now tools used by lawyers and banking institutions to dispose of employee liabilities in the interests of larger gains for commercial creditors and shareholders. In Nortel's case these devices are also a means of making bondholders a substantial profit at the expense of those same employees. A new instrument, the credit default swap, is being used to make substantial profits from the downfall of this great institution and many more.
Left unchecked, this could be a disaster for our economy and for workers in the future. I am told the bankruptcy process has been carefully designed to ensure that all creditors are treated equally. I'm here to tell you that this is the heart of the law, but it is seldom followed in practice. I've been told as an employee that I have ranking equal with every other creditor of Nortel, but this is not true. As employees we have no one representing us, even in proxy, on the creditor committees. This is apparently reserved for people who have the most expensive legal representation. I also note that key suppliers had sufficient leverage with this process to ensure that their debts were completely paid as they held hostage the production of Nortel's products in their factories.
How many commercial creditors have only one client? Most are diversified and can readily survive the bankruptcy of a client. It is quite common in the business world to accumulate a bad debt; the debt can be then written off as a tax writeoff to minimize impact to that company. An investor can write off a bad investment against other gains as well. How many employees have more than one employer and can write off the nonpayment of their severance during their income tax filing? None.
This being said, I hope you can see that all creditors are not equal, and we as employees are honestly the very last in line at the trough. An employee has more to lose than any other creditor and has the least ability to recover from that loss, not to mention the fact that these employees are so focused on trying to recover their lives at this point that they are far from focused on trying to recover payout funds that may not appear for three or more years.
All other creditors hire a lawyer to represent their interests; legal counsel representing us was appointed and paid by Nortel. Given a choice, would you select that option? Also of note is that legal means are being used to ensure we receive the lowest possible recovery payout in comparison to any other creditor group within Nortel. Debts have been artificially built into the Canadian estate for global restructuring to ensure less money is available for employee claims. Sales proceeds of R and D divisions based in Canada have been deemed property of the global estate and not the Canadian estate. Note also that all commercial creditors have the right to file their claims in the U.S. and Canada, but employees cannot.
Since ethics and common decency do not appear to apply or can be legally justified away in any of these processes, we feel we must stand up and fight to ensure our bankruptcy laws are amended to protect us and all Canadian workers.
I personally don't want my children to grow up in a Canada that can allow their futures to be pillaged in the pursuit of profit by investment interests. It's time for Bill C-501's reforms to be enacted into law to ensure that these loopholes in the heart and soul of our Canadian bankruptcy process are no longer left open for abuse and for profit.
I implore you to make the decent choice and ensure that Canadian workers and their families are protected.
Thank you.