Mr. Speaker, it is a pleasure to rise in debate on this bill. I listened to the comments of the member opposite, who has done a significant amount of work trying to ensure that the bill is amended in a way that meets the needs of those who find themselves in financial difficulty, be they individuals or corporations, as well as outlining the clear responsibilities which those individuals or corporations that are debtors must assume in a system that is fair and reasonable.
It is a bit of déja vu for me because back in 1992 I was the consumer and corporate affairs critic when Bill C-22 was before the House. At that time the then minister of consumer and corporate affairs, Mr. Blais, did something very innovative. He knew that this was very complex legislation and that many attempts had been made since the late 1940s to amend it. Each and every time, because of the various interest groups, every valiant effort to amend the act was met with failure and had to be withdrawn.
There were instances in the past when this legislation was introduced in the Senate to try to take it away from the public's attention. Even over in that place some of the special interest groups rose up and each and every attempt hit the shoals and the act was not amended.
One of the few good things the Conservative government did in the last Parliament was to allow very open and vigorous debate in committee to try to get a bill that addressed all of the various concerns. It did that in a wholesome way which allowed the full input of members of Parliament. Since I gave that government credit back in 1992 I will do it again today in the House and, by extension, to the former minister, Mr. Blais, who is now practising law in Quebec City. He did the right thing. It showed that Parliament can work when committees are allowed to have real input on technical bills which can have a very real effect on the lives of Canadians.
I was pleased to hear from my Reform colleague that a private member's bill which he put forward in this place has been incorporated into this bill. It is very healthy for democracy when we allow members, no matter what their political stripe, to input to the fullness of their capability as legislation goes through this place.
I will make another pitch for more bills of this kind, hopefully from the government side, to be referred to committee after first reading, before they are approved in principle, or if they go after second reading to ensure that we allow the huge wealth of knowledge and ability that we have in this place, regardless of the political stripe, to be used to come up with better legislation for Canadians.
I am very pleased to see that there have been a number of amendments. When we worked on this legislation back in 1992 it took us well over a year to get it done. It was a very complex piece of work. We paid attention to detail. There were various opinions as to what we should be doing. The Speaker knows well because at that time he was the associate critic for consumer and corporate affairs. He knows the hours of debate and the work that went into that bill.
However, a number of pieces were left unfinished. Sometimes we have to go with a cake that is three-quarters baked rather than leaving the cake in the oven. That is what we did the last time.
We set a process in place whereby the bill had to be reviewed by a parliamentary committee, which is what is happening here. We also made sure that there would be an advisory committee put in place to go over the technical aspects of the bill, as well as some of the practical applications of what we had done when we amended the act with Bill C-22.
Back then I had a number of concerns. Some of them have been addressed. The fine tuning absolutely had to be done. I am pleased to see that the work has proceeded. We were worried about the last bill about having two competing pieces of legislation as a remedy for companies that got into financial difficulty. The CCAA, which has been in place for years, was used many times almost as a chapter 11 in Canada. Because of what we did in Bill C-22, with the reorganization provisions that we put in place, we had sort of a Canadian version of a chapter 11 which encouraged reorganization instead of liquidation.
It encouraged companies and individuals who got into difficulty financially, instead of having the banks which always had the priority to pull the rug out from underneath, to put some structures in place. It took the gun away from the head of the business or the individual and facilitated some discussion and dialogue to try to get over the debt problem.
Rather than laying waste to Canadian companies and individuals because of debt problems, we wanted to see if there was some way the debts could be rehabilitated and put over a longer period of time. In this way, Canadians could maintain their dignity. It is not a dignified thing for many Canadians to be forced into personal bankruptcy. Indeed, we need to assist companies that find themselves in some financial difficulty so they do not go belly up, as we say back home, and that the employees are found without a job and on the government dole.
A number of those changes that were put in the last bill have been built upon. I understand the CCAA is in this bill. We sort of anticipated that perhaps during the review there may not be a
necessity to keep the CCAA. I am pleased to see that it is there after careful review by the committee of industry. However, it is only to be used with firms whose sales are in excess of $10 million. I think that is a good starting point.
I am very pleased to see that there are some amendments in this piece of legislation dealing with environmental costs, remediation and rehabilitation of environmental sites. We spent a considerable amount of time on this in 1992 and there was generally no consensus at the end of the day on how we proceeded with it. We were concerned because we did not want companies to be able to walk away because of environmental liabilities and leave effectively the crown or the trustee or the municipality with the burden.
I am very pleased to see that basically there is a type of super priority given to environmental clean-up of these orphaned sites.
I am also pleased to see that there have been some changes in this legislation dealing with potential actions against directors and officers of companies during periods of reorganization. Clearly we have to understand that when companies get into financial difficulty we are perpetrating an even greater challenge to the company if the directors feel that they are going to be challenged during a period of reorganization because then they will leave. Therefore the very people needed to hang in to make sure that the reorganization proposal is implemented are the people who are forced out because they are concerned about potential liabilities through the legal system. I commend the committee for the work it has done in bringing these challenges in.
I can remember when this happened a few years ago. Canadian airlines was in financial difficulty and because of potential directors liability we saw some of the directors jumping ship from that airline. That clearly is not in the best interest of the rehabilitation of companies such as that. Therefore I was very pleased to see that those amendments came forward.
On farmers and fishermen we argued heavily back in 1992 that there had to be some changes in the old bankruptcy legislation to recognize that agricultural and fishery products were different than other commodities. What we did in the last bill was pretty innovative and kind of risky. The banks did not like it at the time but accepted it after we did it. We put in provisions for revindication which was key to stopping the destruction that happens many times and splashes all over the place from bankruptcy or insolvency proceedings.
At that point in time we made it very clear that if the supplier of goods, which supplied goods to a company, went bankrupt within a 30 day period of receipt of the goods and the goods were not paid for, we wanted to make very sure the banks or whoever was financing did not then run in and cause a secondary problem by seizing and liquidating the goods to put against the loans that the company had to do its operations.
What was happening in many cases is that the small business would be under the financial hammer and the crunch would be on. The banker would call and say: "You are $20,000 over your credit line. What we really have to do is apply for a higher credit line for you but you are overdue and you will have to pay down your credit line". The small businessman or woman may then be compelled to take additional stock on their own credit line back from their suppliers, sell it at a discount to try to get that liquid, to get the cash, give it to the bank. The bank would get it paid down and then say: "Sorry, our head office has looked at this and we are going to have to foreclose". That did not happen just once or twice. That was a pattern we heard from businesses, trustees in bankruptcies and accountants in our hearings.
We said that from now on the banks are not going to be able to seize. If the goods are sold within 30 days then they have the right to take them back before anybody realizes the liquidity of the assets.
However, there was a problem with farmers and fishermen because the act as it was proposed in 1992 said that they had to be able to identify their goods. What happens to a fisherman who just picked up some halibut and dropped it off to the fish dealer, along with the halibut of 30 other fishermen? Unless he can identify his particular fish, barley, oats or wheat, if one happened to be a farmer, he could not get them back.
At the 11th hour in 1992 there was agreement that this had to be done differently and changes were made. I am very pleased to see that the committee has gone further and made other changes. As the act stood after 1992, it still did not recognize the changes with respect to encouraging rehabilitation. But this bill does. It recognizes that if farmers and fishermen opt for seasonal work, which is what we are trying to encourage them to do so they can increase their income, that in and of itself would not be a reason for somebody to petition them into bankruptcy during a reorganization. In other words, the fact that they worked and made additional income to apply against their debt through reoganization is very positive.
I would like to reference a couple more things. There have been some very positive amendments to the bill. There are responsibilities that the debtor must assume and they have been outlined and highlighted in some of the amendments.
I am very pleased to see that individuals will not be able to avail themselves of provisions of the legislation in order to skirt their court ordered responsibilities with respect to support payments or restitution to victims of crime. I applaud the member for putting those proposals forward. Constantly in this place we have to review
legislation because many times it is used in a way for which it was not intended when it was debated here or examined by committee.
Clearly the amendments from 1992 never anticipated that somebody who had a court ordered restitution to a victim of crime or was ordered to pay support payments would be able to make application to effectively have them wiped out even though because of their earning potential they still had the ability to pay.
I applaud the member opposite for keeping up the fight on that. He has truly made this a better piece of legislation because of his actions. I am encouraged that every one of the amendments continues to work toward the goal of reorganization versus liquidation of assets.
However, I am slightly discouraged about the role of the crown. In 1992 we argued at length about the role of the crown when dealing with a crown debt. A crown debt is effectively treated as a super priority. In 1992, I remember specifically grilling officials from the Department of National Revenue and the Department of Industry and the members of the Superintendent of Bankruptcies' office about the role of, let us say, Revenue Canada. If a company or an individual decides to apply under the reorganization provisions to try to order their debt in such a way to have it reduced and then pay off when they can to keep from going bankrupt, I was worried that the crown because it had super priority would sit back, twiddle its thumbs and after the exhaustive and difficult process say "that is all well and good, but I want 100 per cent of my debt paid back". I wanted the crown to be treated the same way as others in the same class of secured creditor.
At the time we were told not to worry, that the minister had indicated to department of revenue officials that they were to work in these cases of reorganization and that they should be silent unless the proposals under reorganization treated them in a harsher fashion than other secured creditors.
I am dismayed that over the last four years I have had to deal with at least three cases where the crown through Revenue Canada has simply not done that.
We have a case that I am currently pursuing through the regional director of an individual who went under a reorganization three years ago under the provisions of this act. He had a debt owed to Revenue Canada but he had a lot of other debts as well. All the creditors got together and said it is better if we reduce this individual's debt and we have an orderly payment of the agreed upon debt afterwards to allow the individual to go on plying a living, making some money and rehabilitate his debtor situation.
They did that. Everybody agreed. Three years later after he sold his house, he sold all of his properties, he liquidated all of his retirement annuities and all that type of thing, he felt good about himself. He was able to pay off 60 per cent of his debt. After he has gone through three years literally of hell to pay off these debts because of the reorganization provision, he could claim that he had never had to go bankrupt, that he did what he thought he should do and that he had the financial capability of doing it. Three years later a notice comes from Revenue Canada which says: "Please be informed that you owe Revenue Canada X number of dollars plus interest over the last three years".
Somebody might ask did he pay Revenue Canada. Yes, he did. Under the terms of the reorganization provision he paid it the same as other secured creditors. I think it was 60 per cent of the debt. Revenue Canada lay in the bushes, as it were, for three years until his reorganization was completed and was discharged and then sent him a bill for the balance with interest accrued, effectively forcing this individual who had gone through the very good provisions of Bill C-22, had gone through the very positive provisions of rehabilitating his debt of now having to face a bankruptcy proceeding.
It is not the first case. It is the fourth case. Over the last number of years each time I heard of one of these cases I would call the Superintendent of Bankruptcies who agreed there was potentially a problem. It was kind of regional in nature because a lot of it was to do with the head of collections in each of the regions with Revenue Canada.
I am dismayed that this aspect of crown priority has not been fully addressed. However, I encourage members with constituents having similar problems to raise those at the appropriate level and at the political level with the Minister of Industry, who is responsible for the administration of this act, as well as with the Minister of National Revenue, where it seems in my experience at least the problem still lies in various regions of the country.
The last thing I want to say on this bill is that there is still a piece of unfinished business. Back in 1992 in order to get this bill completed I and Mr. Rodriguez, the former member for Nickel Belt who was the NDP critic, knew this file well. He had a couple of private member's bills dealing with wage earner protection: what happens when a company goes belly up which has a lot of employees, and what happens to the wages owed and the benefits owed to those employees? Under the old act there was a major problem. There was a very low limit that had not been updated in about 20 years. The new bill, Bill C-22 in 1992, made some movement in the right direction.
However, there was still a major problem that in many cases the wage earners, the people who by the sweat of their brow or the grey matter in the brain, through their inputs to the business were a key component of the business, were not treated in as fair a fashion as
the banks or the suppliers of goods or other services. The labour component was never treated fairly.
We came up with a number of proposals, none of which was acceptable to the government of the day, but at the end of the day we had made an agreement with Mr. Blais, the minister at the time, that we would look at various options for wage earner protection. Indeed, part of the agreement was to set up some type of all-party committee to look at the best ways to deal with in many cases a very major loss of wages to individuals who work in corporations that go bankrupt. They are always left at the bottom of the heap and that is unfair. That has not happened today. The agreement was not something that officially was done on the floor of the House.
However, I will jog all of my colleagues' memories who were on the committee in the last Parliament that indeed that was the commitment. As a result of that commitment we amended the entire section dealing with wage earner protection out of Bill C-22. That was a key operative component of that bill and we amended the whole thing at report stage because we were going to put a process in place to examine it.
I encourage members who have an interest in the industry committee to look at a few of those shortfalls, to take credit for the good work that has been done and further modernizing this very important piece of legislation.
Continue to ask the questions that must be asked over the next few years as to whether the wage earner protection clause are sufficient, whether further work has to be done and whether somebody has to keep a closer eye on the role of the crown and crown agents in discussions leading up to reorganization, whether they are living up to the spirit of the debate and the legislation of 1992 and 1996.
In conclusion, I appreciate having had the time to relive some history. Members are very familiar with most of what I said. I also commend the current members of the industry committee for doing a bang up job.