Bill C-423

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First Reading

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	1st Session, 37th Parliament, 49-50 Elizabeth II, 2001-2002
	House of Commons of Canada
	BILL C-423
	An Act to amend the Bankruptcy and Insolvency Act (unpaid wages to rank first in priority in distribution)
R.S., c. B-3; 1992, c. 27, s. 2	Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
	*1. Section 124 of the Bankruptcy and Insolvency Act* is amended by adding the following after subsection (1):**
Proof of claim for wages, etc.	(1.1) Notwithstanding subsection (1), the trustee shall, before distributing the proceeds realized from the property of a bankrupt, make reasonable enquiries to determine whether all proofs of claim have been submitted in respect of the matters mentioned in subsection 136(0.1).
	2. (1) Section 136 of the Act is amended by adding the following before subsection (1):
Priority of claims for wages, salaries, commissions, etc.	136. (0.1) Prior to settlement of claims of secured creditors in respect of security taken or granted after the date on which this subsection comes into force, and any claims described in subsection (1), the proceeds realized from the property of a bankrupt shall be first applied to the unpaid wages, salaries, commissions, compensation or payments in respect of pensions or other benefits of any clerk, servant, travelling salesman, labourer or workman in respect of services rendered to the bankrupt during the six months immediately preceding the bankruptcy to the extent of ten thousand dollars in each case, together with, in the case of a travelling salesman, disbursements properly incurred by that salesman in and about the bankrupt's business, to the extent of an additional four thousand dollars in each case, during the same period, and those wages, salaries, commissions, compensation, payments and disbursements are deemed to be a first charge on every realizable asset of the bankrupt.
When payments deemed due	(0.2) For the purposes of subsection (0.1),
	(a) commissions payable when goods are shipped, delivered or paid for, if shipped, delivered or paid for within the six month period, shall be deemed to have been earned therein; and
	(b) notwithstanding any provision of any contract or agreement under which a person is employed, wages, salaries, other compensation and payments in respect of pension and other benefits are deemed to have been earned hour by hour, and the trustee shall, with the approval of the court, determine the portion of any compensation normally calculated by or payable on the expiry of a week, month, year or any other period exceeding an hour, that had been earned at the time of bankruptcy.
Wage priority notwithstand- ing other Acts	(0.3) Subsection (0.1) operates notwithstanding any other provision of this or any other Act of Parliament or of the legislature of a province, and no secured creditor shall take or disburse the proceeds of realization of any property on which the creditor holds security unless the creditor first sets aside, in the manner satisfactory to the trustee and approved by the court,
	(a) such proportion that the trustee orders and the court approves of the total of all amounts that are proven in respect of the matters mentioned in subsection (0.1); or
	(b) a sum that the trustee has estimated, and the court has approved, as sufficient to pay claims that are likely to be proven under subsection (0.1).
Renewed security	(0.4) Security that is renewed and that, but for the renewal, would expire, is deemed for the purposes of subsection (0.1) to have been taken or granted on the date of its renewal.
	(2) The portion of subsection 136(1) of the Act before paragraph (a) is replaced by the following:
Priority of claims	(1) Subject to subsections (0.1) to (0.4) and the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:
	(3) Paragraph 136(1)(d) of the Act is repealed.