Mr. Speaker, I am pleased to rise today to begin third reading of Bill C-5.
Hon. members will recall that the bill amends an act which was last changed in 1992. Before that, however, it had taken 40 years before legislators were able to bring bankruptcy laws in Canada up to date. That is because the laws are complex and there are many competing interests that must be taken into account.
When we debated this legislation on second reading we outlined some of the various interests that had to be considered: lenders and borrowers, businesses and consumers, insolvency practitioners and Canadian workers whose jobs may depend on effective reorganization provisions. These are just a few of the groups affected by bankruptcy law.
I remind the House that we were able to produce a piece of legislation acknowledging the needs of these competing interests because of the input we received from the Bankruptcy and Insolvency Advisory Committee.
This legislation was introduced last November during the last session as Bill C-109. In the months that have passed since then, insolvency practitioners and stakeholders have had a good opportunity to study the bill carefully and recommend ways to improve it.
One indication of the quality of their advice is that the legislation has now come back from the Standing Committee on Industry ready for third reading essentially intact. There have been many amendments designed to tighten up the legislation and clarify its intent, but in its fundamentals the bill is essentially unchanged.
The committee heard many witnesses who represented many different points of view. They provided advice on how to improve the bill, but they also agreed on the broad principles that Bill C-5 represents. The witnesses agreed that the intent of the clauses contained in the legislation was excellent, but they were able to suggest slight changes to the wording to clarify the purpose of the bill. That being said, I would be the first to acknowledge that the bill before us is a much improved version of the bill sent to committee for study.
I commend the work of the committee, chaired by the hon. member for Winnipeg North. Bankruptcy legislation is never easy. Members of the committee had to work hard to formulate the agreements and the compromises represented in the amendments before us. However, it is a tribute to the ability of all members, especially the chairman, to build consensus that the legislation has come before us in this improved form.
In that regard I would especially like to single out the contributions of the member for New Westminster-Burnaby. I think his colleagues on the committee would join me in acknowledging the role he has played in ensuring this legislation fairly addresses the issue of sexual assault judgments.
As a result, clause 105 has been changed. Awards of damages for assault are non-dischargeable in this legislation. Under the amendment proposed by the hon. member, this provision is expanded to clarify that it covers awards for intentionally inflicted bodily harm or sexual assault or wrongful death resulting from either of them.
Another important amendment concerns clause 15 respecting trustee personal liability for environmental damage. The super priority given to claims for costs of cleaning up environmental damages will be limited to crown claims. The intent of the legislation is clearer now. It will ensure that only ministries of the environment and not, for example, third parties will claim super priority for environmental clean-up costs.
Clause 42, affecting lease disclaimers, has been amended. The bill before us gives a disclaiming tenant more options in framing
his organizational proposal. He can now offer compensation based on the landlord's actual losses in all instances. This simplifies the laws considerably.
Clause 60, which involves the procedures for determining the surplus income of an undischarged bankrupt payable to his creditors, has been clarified.
Clause 87 deals with spousal support claims. It has been amended so that spousal claims provable in bankruptcy are as specified in section 178, and that they must be pursuant to orders or agreements made while the spouses were living separate and apart.
Clause 103 has been amended to clarify the responsibility on consumers to opt for reorganization rather than bankruptcy. By simply choosing bankruptcy instead of making a consumer proposal, the consumer should not be penalized when it comes time to decide whether to grant a conditional discharge. This legislation makes it clear that the option must be between bankruptcy and a viable consumer proposal.
Several provisions of clause 118 have been clarified, including the definitions of "securities firm" and "security". The provision that specifies the type of suspension of a firm authorizing a securities commission, securities exchange or customer compensation body to petition the firm into bankruptcy has also been clarified. As well, the provisions have been made more clear on which assets are to be included in the customer pool fund and on how these assets are to be distributed.
I emphasize that the amendments made by the committee do not undermine the fundamental principles of this legislation. For example, the provisions involving directors' liability remain fundamentally intact. It provides a due diligence defence for directors against civil liability. It also gives a provision whereby actions against directors may be stayed during reorganizations. Further, it provides that directors would be allowed to propose liability relief as an integral part of the reorganization plan submitted to creditors, and creditors, not governments, not the law, will accept or refuse to provide relief to directors.
Why are these provisions important? Because the thrust of the government's objectives in this framework law is to move away from liquidation in favour of preserving businesses and jobs. These provisions offer protection to board members so that they are encouraged not to leave the sinking ship. We want them to stay on to make the bold decisions to help reorganize the business.
Other elements of the legislation relate to the insolvency of farmers and fishermen. At present section 48 of the BIA provides that an individual who is solely engaged in farming or fishing cannot be petitioned into bankruptcy. Recent case law has interpreted "solely engaged in farming" quite strictly. Any revenue which is not generated by the farm will expose a farmer to petitioning.
As members of this House are well aware, to avoid insolvency most farmers and fishermen will turn to other means of employment in the off season. This is a responsible action on their part. The amendment in Bill C-5 restores the situation intended in the original legislation to protect farmers and fishermen from being petitioned into bankruptcy during the off season. Both the Minister of Agriculture and Agri-Food and the Minister of Fisheries and Oceans supported this proposed amendment.
Bill C-5 also addresses consumer bankruptcy. It provides an opportunity for debtor consumers to be rehabilitated quickly and to act responsibly. I believe the vast majority of consumers who run into major financial difficulties want to fulfil their obligations. I am sure we all know of stories where someone has run up their debts and regard bankruptcy as an easy way to discharge their responsibility, easier that is than taking the rough measures necessary to pay back creditors over time.
The legislation before us puts more pressure on debtors to rehabilitate. It encourages consumer debtors to act more responsibly by repaying at least a portion of their debts where they can.
The fundamental objectives of Bill C-5 remain. We have reformed both corporate and consumer bankruptcy law in Canada. Thanks to the work of the industry committee, the bill has been strengthened by several technical amendments. This is good legislation and it deserves the support of this House. I urge all members to vote for it.