Mr. Speaker, I listened with great interest to the remarks made by the hon. member for Broadview-Greenwood about Bill C-109. This is a bill whose full-blown title is an act to amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Income Tax Act.
It is quite bulky, as my hon. colleague pointed out, and it is difficult to read, which is understandable since the 1992 reform had been 13 years in the making, that is to say from 1979 to 1992. The government finally tabled the famous bill that had taken all that
time to prepare, the act of 1992 that Bill C-109 now seeks to make substantial changes to.
I agree with the hon. member opposite when he says that bankruptcy is a problem, a complex problem. A balance must be struck between the responsibility all of us have to pay what we owe and the hope to be able, even when deep in debt, to have a decent living and perhaps manage to pull through, whether we have put ourselves in this difficult financial situation or it is the result of a business venture we started that did not do too well.
According to the minister's release, this bill contains more than 70 amendments to the Bankruptcy Act. In the little time we have had to examine this legislation, I managed to review the principles. There are three, at the beginning of the bill, relating to consumer bankruptcies. For example, debts will now be repaid from excess income, that is to say income over and above the minimum cost of living.
But nowhere in the bill is this concept of minimum cost or standard of living defined. I guess that it will be up to the Superintendent of Bankruptcy, somewhere in Canada, to determine-arbitrarily at times, I am afraid-what this minimum will be. Take Quebec for example. I do not know if the same thing applies in other provinces, but surely it must. In Quebec, we have the Code of Civil Procedure, and section 553 et seq. provide that a portion of someone's salary cannot be garnished. Therefore, if the superintendent for Quebec decided to ignore what section 553 says about part of someone's salary being exempt from seizure in Quebec, I sincerely wonder-and I am not being facetious-who would be encroaching on whose jurisdiction then?
That has not been set out in the bill. I understand that is not its role, but that is an ambiguity that is likely to create uncertainty for some people and also-and I hope this will not be the rule-to open the door to abuse, to lead to abuse.
There is another principle here, the obligation for the debtor to discharge his or her financial responsibilities relating to alimony for his or her spouse and children or relating to damages awarded by the courts to compensate for a physical or sexual assault. I cannot but commend that. Frankly, this is a provision that, in my opinion, is absolutely fundamental, and I commend the Minister of Industry for it. He is showing concern for his fellow citizens who might have been victims of some highly reprehensible acts. Otherwise, the offender could say: "It is very simple, I go bankrupt and we forget all about the harm I have done to you". I endorse without any reservation that provision in the bill.
A third point is that it will be impossible for students to get rid of their student loan debts before two years after completion of their education. Need I say I do not agree?
Not too long ago, we had before us the budget implementation bill. If memory serves, it was Bill C-76. We talked about students. We raised the level of their financial contribution to their own education by providing additional loans. The issue gave rise to a rather heated debate in the House. Some said that students would end up with debts of $28,000 or $30,000 or more.
We thought the government was not being reasonable in that bill because the students had their talents nipped in the bud in that they were being put in a state of virtual bankruptcy the moment they entered the labour market. Our remarks did not fall on deaf ears, as demonstrated by this bill in which the Minister of Industry tells us that students are actually overburdened, but they will not be allowed to file for bankruptcy, at least not before two years.
I cannot agree with this. True enough, we should always keep a proper balance between the obligation to pay one's debts and the right to lead a meaningful life. All Canadians have both this duty and this right. Fortunately, one provision in this bill makes it at least possible to have some cases examined on their merits. In some cases, students could avoid paying back their loan in full.
There are underlying social principles in this legislation. This bill also includes another provision that deals with the overall enforcement of the Bankruptcy and Insolvency Act, and I am talking about the trustees.
Since the new legislation came into force in 1992, it has not been easy in the province of Quebec. We had some quasi-fraudulent bankruptcy cases that caused a lot of stir. For example, Zoom Informatique was dealt with very harshly by the courts because of the actions of the trustees involved in the case. We also heard of a lawyer named Sirois who went bankrupt, a bankruptcy involving $1.6 million which was highly contested. Mr. Sirois was the father of the Bankruptcy Act that we are about to modify today. He was also a bankruptcy expert in Quebec.
Not surprisingly, the bankruptcy authorities really got raked over the coals on television, during some very popular and highly rated CBC television programs such as Enjeux , which examined these fraudulent bankruptcy cases.
I think that the problem will remain, even though we try to licence and regulate the trustees in this bill, because in the mind of the people the problem lies with the fact that the profession of trustee is not legally recognized as a corporate body, as is the case with the Ordre des avocats du Québec, the Canadian Bar Association, the associations of architects and professional engineers, the College of Physicians and Surgeons, all professional associations that are legally recognized and can perform peer reviews at any time in order to preserve a degree of dignity for their profession.
Unfortunately, it seems that trustees in bankruptcy do not form a profession. Recently, I noticed that, pursuant to the provisions of the Bankruptcy Act, a code of ethics for trustees had been
published in The Canada Gazette . It dealt with sections 54(30), (31), (32), (33), (34), etc.
Sure, these are great principles and I have nothing against them. Except that the enforcement of these sections of the code of ethics is never monitored unless a complaint is filed because the Superintendent of Bankruptcy is overloaded. He cannot do it on his own although this legislation is now giving him the authority to commission inquiries. If an association of trustees in bankruptcy were created, mandated primarily to protect the public interest and empowered like the other professional associations to issue licences, then we could have something valid.
This bill almost gives quasi-judicial powers to the trustee. The trustee almost becomes a public officer. According to the documents we were given, the bankrupt person must reimburse what he or she owes with his or her income considered to be in excess of the minimal cost of living. Whatever that is, as I said earlier.
This clause provides for a regular repayment schedule and encourages the bankrupt person to do everything possible to repay his or her creditors. Great! Under the supervision of the Superintendent of Bankruptcy, who is already overloaded, we can immediately see from what is happening in the bankruptcy sector that the trustees will have the power to set the rates and the terms of a conditional discharge, the power to decree or decide, that is a quasi-judicial power.
According to the Bankruptcy Act that was replaced in 1992 and to the one which is now in force, the trustee acts in the interest of the creditors. The trustee does not have to be impartial in dealing with a bankruptcy. The trustee is primarily a representative of the creditors, not the bankrupt.
Unfortunately, it is totally different in practice. Someone who is in dire financial straits decides, on the recommendation of a friend or a relative, to consult a trustee he knows well and tells him: "Look. I want to make an assignment, would you look after my case?" It is not in the interest of the trustee who has a reputation for kindness, who is an expert in public relations, to ruin his own reputation. So, unless the creditors he is supposed to represent under the authority of his legal mandate are opposed to it, the trustee will continue to be rather lenient with the bankrupt, which is fine, but unfortunately, he will do it at the expense of the creditors who, more often than not, will end up licking their wounds.
The bill adds another dimension to the treatment of bankruptcy cases. For example, in the distribution or collocation order, greater importance is now given to the environmental aspect. We can imagine a situation where a contaminated building is in the possession of a trustee; the assets would first be used to decontaminate the ground.
I have some difficulty with this clause in combination with clause 18 modifying the existing act-so it is not something new-which provides: "The trustee may, with the permission of the inspectors, divest all or any part of the trustee's right, title or interest in any real property of the bankrupt". It could be that, if the trustee becomes aware that the land has no realizable value, he will get rid of it and pass on his responsibility to decontaminate the site to someone else. It is not clear in the bill. It was just to put a damper on my pleasure at finding this provision in the bill.
Unfortunately, the government could have taken the opportunity to include, in the distribution and collocation order, the salaries of employees present at the time of the shut-down of a corporation, for example.
That was the reason behind my colleague from Portneuf's tabling of a private member's bill. The bill was passed at second reading in the House before being sent to a committee. That was the last we heard about it since. I saw the Minister of Industry of the time in a fit of ministerial pique when he realized that the bill had been passed. Maybe this is why the bill is being dragged out in committee. I do not know. Nevertheless, the bill has never come back here.
It went along the same lines and was in the same spirit as the decontamination clause, except that the last employees, thanks to whom the company had lasted so long and who had kept supporting it during a not necessarily easy winding up period, had priority over the decontamination of the site. And the moment a trustee in bankruptcy comes in and shuts the company down, he fires them all and does not owe them anything. In the priority of claims, they come far behind the banks; the seven big banks that made $4.3 billion in net profit last year.
I was listening to the hon. member for Broadview-Greenwood, and we all know how attached the Liberals are to big banks. We could see it when Liberal Party's list of contributors was made public. This bank gave $250,000, that one $250,000 and so on, all to the tune of a quarter of a million dollars. Those poor banks netted only $4.3 billion last year. Of course, it was impossible to table a bill on bankruptcy without protecting their interests first. This is what the hon. member for Broadview-Greenwood wanted us to swallow, like a candy coated pill. But basically, when we read between the lines, the security involved is that of the poor big bank which showed a net profit of only $4.3 billion last year.
And yet banks never lose. This is not a bill for the banks. Good for them if they get something out of it like any citizen. But the bill should have been written first and foremost with the protection of the general public in mind. There are seven banks for 31 million
Canadians. It seems to me that there is no comparison. Even if we take into account the hundred or so American and Canadian trust and leasing companies, there are still a lot more people than financial institutions in our society.
I really have the impression that the bill's purpose is to protect investors, that is major banks, leasing companies, rather than to try to help ordinary Canadians who are often affected by a bankruptcy, those who end up losing a few weeks' or a few months' pay if not their shirt. The government did not display much concern for these people in this legislation, despite all the enthusiasm shown by the member for Broadview-Greenwood in praising this bill.
I am also delighted to see in the bill that small businesses will no longer be forced arbitrarily to declare bankruptcy, that factors such as the possibility of recovery, job losses, etc. will have to be considered. I think it is just great.
But if the Minister of Industry wanted to be realistic and if arbitrary business closures because of bankruptcy or insolvency were his main concern, and it shows in this bill, what is he waiting for to introduce meaningful legislation based on some of the principles in the Quebec legislation on agricultural zoning?
In Quebec, we had the political will to say: "Enough is enough. Farmland will not be parcelled out any more. If you decide to buy a large piece of land, you will have to live with it. You will not be able to sell it off in small parcels". Today, corporate raiders as they are called come along and buy businesses that often play a vital role in our economy.
Take the case of Canada Packers, who had been in Canada and in Quebec for at least 125 years, more precisely in Pointe-Saint-Charles. Then comes some professional auctioneer who buys everything for $500 million. He starts by selling separately the various components of economic activity of the company: beef production, $25 or $50 million, followed by egg, poultry, milk and oil production. He sells everything, often to competitors in that same sector.
Without any scruples, he puts 1,500, 2,000 or 3,000 heads of family out of work. His net profit is made up of the equipment, capital assets, land, buildings, etc. He heads back to England and kisses us good bye. More often than not, he does not have to pay any tax, or if he does, the federal government usually finds out too late. He has already gone home and no longer has any assets in Canada, so the government can always try to collect.
You might say that this is not a case of insolvency when it actually happens. True, but it becomes one afterwards. So, the bill would deal appropriately with such situations. At least, this is the way I see it. If the minister is short of ideas, he should come to Quebec. When we had to deal with the parcelling out of businesses that were doing relatively well, we did some thinking and came up with the agricultural zoning act.
It is not easy to comment on a bill which has some 100 pages and is made up of bits and pieces, this in just three days. I could do a more thorough review if I had a week. I am convinced that this bill will not make it past the next stage, not necessarily because it is a bad bill, but because it goes too far in some cases and not far enough in others. What is being done to students here I have a hard time living with, but I agree with the provisions concerning damages to a person resulting from sexual assault or wilful negligence
There is one other clause in the bill which I shall address very quickly, the one which says more or less that the spouses must make a joint proposal if their financial relationship requires co-ordinated repayment on their part. These new provisions will make it possible to rationalize procedures and reduce costs. I am not sure I have properly understood all this. I will admit honestly to you that I could not find it in the bill, not because it is not there, but because the bill is too bulky to find it among all the cross-references and annotations that are very hard to follow.
But is it possible that a decision has been made to encroach on Quebec law? We know divorce is a federal matter, but marriage is a provincial one. Is the decision now being made to interfere in matrimonial regimes in Quebec or elsewhere, in other provinces, saying for example that if a husband is not solvent but his wife works, they will both be put in the same pot, both will go bankrupt, pay the trustee and make the major banks happy by paying off their creditors? Is that what the plan is?
If that is the intent, it is a disquieting one. This would put an end to matrimonial regimes, or at least meddle rather too seriously and perhaps somewhat too harmfully in the area of marriage in Quebec. Relationships within a marriage are sacred in our province, and we have-as the Prime Minister has been saying ad nauseam-been living with the tradition of a Napoleonic code since around 1806.
I therefore feel that the Bloc members will not be able to subscribe in any way, if such is the intent of the legislator in this case, to this encroachment I perceive in the provinces' constitutional jurisdiction over marriage.
You are signalling that my time is almost up, Mr. Speaker. I still have some time left. We go on and on, but you can see that we are well intentioned. Someone said: Hell is paved with the well-intentioned. I do not know where that comes from.