moved that Bill C-372, 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.
Madam Speaker, on October 17, 2017, when Sears Canada announced it was declaring bankruptcy, I introduced Bill C-372, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act. The 20,000 tragedies that were unfolding sadly echoed the 1,000 tragedies that Manicouagan experienced in 2015 and harshly but clearly illustrated the need for my bill.
In January 2015, Cliffs Natural Resources, an American company operating in Fermont and Sept-Îles, Quebec, and Wabush, filed for protection under the Companies' Creditors Arrangement Act.
Overnight, some 1,000 retirees lost nearly a quarter of their pensions as well as their group insurance. Through a negotiated, collective agreement, these workers agreed to forego part of their salary, to defer it to a pension fund. When Cliffs declared bankruptcy, that money was stolen from the workers. We have seen our share of tragedies back home on the North Shore.
These are human tragedies with faces and names. For nearly 30 years, Bertrand Thériault from Sept-Îles worked at the Cliffs pellet plant. For nearly 30 years, he held up his end of the contract, in the dust. Mr. Thériault and his wife were forced to sell their home. On top of that, Mr. Thériault had to come out of retirement and start repairing bikes at Canadian Tire.
The bankruptcy also affected Dolorès Chevarie and her husband, who is dealing with cancer. After Cliffs went out of business, the couple found themselves in a very tough situation when they lost their health insurance. These seniors racked up thousands of dollars in medical bills. They just wanted to be healthy. They did not have that kind of money. What are they being asked to do? Even though the multinational corporation went on turning a profit for its shareholders during and even after the bankruptcy process, it came at the expense of people like Bertrand Thériault and Dolorès Chevarie. True, our laws allow these tragedies to happen, but we, as legislators, have the power to change them. Politicians are often perceived as being powerless, but that is simply because they choose to be powerless. Today, I urge the House to demonstrate what politics can achieve by using the one thing that is at all members' disposal: our will.
What I am proposing with Bill C-372 is a fundamental change to the way our laws treat the pension funds of workers and retirees. At present, our laws define the unfunded liability of pension funds as an unsecured claim, on the same level as a phone bill or credit card debt. The same goes for funds intended to be used to compensate workers for losing their group health insurance.
Throughout their careers, workers give up a significant portion of their day-to-day wages to pay into a pension because they know this will make it possible for them to have some income when they retire. When the employer agrees to pay into a pension fund, it undertakes, under the terms of the collective agreement, which is a contract, to have workers receive what they have accrued once they have completed their years of service. Workers' wages belong to the workers. Workers' deferred wages also belong to the workers. No one would deny that.
If our laws rightfully assign a very high priority to unpaid wages as a liability, they do not assign this same priority to actuarial unfunded pension liabilities. The law is not consistent because it creates two categories of wages. We must correct this anomaly. The principle of deferred wages must be enshrined in law in a fair manner. I will repeat that a pension fund consists of deferred wages. Thus, by law, it must be returned in full to workers and pensioners.
Members will agree that this is a grave injustice. When this is acknowledged by Parliament, we as legislators will act to rectify it. What I am proposing with Bill C-372 is that we acknowledge the problem, take action and always strive for greater justice. My bill is very simple. It has five clauses that amend two acts. Clauses 1 to 4 amend the Bankruptcy and Insolvency Act and clause 5 amends the Companies' Creditors Arrangement Act.
First, my bill ensures that, in the case of bankruptcy, no proposal in respect of an employer who participates in a pension plan, regardless of its nature, will be approved by the court unless it provides for the payment of an amount equal to the sum of all special payments. In practical terms, that means that workers' pensions will no longer be cut in the case of bankruptcy or restructuring, as has happened many times.
Clause 2 of the bill would turn this unfunded liability into secured debt against the employer's assets. Those who oppose this idea claim that such a measure would lead to higher credit costs for businesses and could prompt banks to no longer give out loans. In response, I would like to quote independent financial analyst Diane Urquhart, who stated the following before the Standing Committee on Finance in 2010:
...for those that are investment grade and have pension fund deficits...the impact on the cost of capital...[would be] 0.16%. This is an amount that is easily borne, and should be borne, when you consider the social cost that comes when these companies...seek to enter bankruptcy for the purpose of double-dipping and making profit.
A single company's collapse would not put the big banks out on the street, but the inconsistency of our laws can do just that to our pensioners.
Clause 3 of the bill would ensure that, in the event of a receivership, special payments would also be guaranteed on the bankruptcy assets.
Clause 4 is innovative as it introduces the concept of protecting group insurance as a preferred claim. I think it is necessary to make group insurance a higher priority, because it is a benefit that is received through work and that deserves greater protection since, again, it is a part of the compensation package. Beyond that, our continued denial of these facts amounts to knowingly jeopardizing the security of our seniors as well as the rights that workers have fought for.
Lastly, clause 5 of the bill would amend the CCAA to ensure that, in the event of restructuring, the court could not approve a proposal that robs workers of part of their pension or fails to compensate them for the loss of their group insurance.
If passed, Bill C-372 will fix the injustice of brazen pension theft. It will protect this income for retirees so that no one else will ever go through the same ordeal as the Cliffs pensioners.
In closing, I should point out that the most-lobbied government member is the minister responsible for the CCAA. I know that all federalist parties support the report issued by the previous government, which proposed the status quo regarding the CCAA.
I know the banks will not like my bill. I know they can afford to pay a lot of lobbyists. I know they do not want Bill C-372 and they will do everything they can to kill it. I know all of that. Unfortunately, I also know that in a perhaps not too distant future, other companies will go bankrupt, since crises are bound to happen in a capitalist system. I also know that if my bill does not pass, more families will experience hardships, just like the ones in my riding did. My bill is not about taking an opportunity or having the privilege of making things better; it is about our duty to make a change.
When I vote yes on this bill, I will be thinking of the pensioners not only of Cliffs, but also Nortel, Sears, Mabe, Stelco and so many others, and I will know deep in my soul that it is the right thing to do. I hope all parliamentarians will think of them when it comes time to vote.
I hope all my colleagues will have their conscience perfectly in line with their moral principles, because after all, we were elected to represent our constituents. We must never forget that. I never forget it. I never will forget it, and I will always represent them with dignity and pride.