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Bill C-270

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C-270
First Session, Thirty-ninth Parliament,
55 Elizabeth II, 2006
HOUSE OF COMMONS OF CANADA
BILL C-270
An Act to amend the Bankruptcy and Insolvency Act, the Canada Business Corporations Act, the Employment Insurance Act and the Employment Insurance Regulations
first reading, May 9, 2006
Ms. Charlton

391260

SUMMARY
This enactment amends the Bankruptcy and Insolvency Act to provide that amounts owed to workers or that are for the benefit of workers will be given first priority in the distribution of proceeds realized from the property of a bankrupt.
The enactment amends the Canada Business Corporations Act to provide an efficacious procedure by which former employees of a bankrupt corporation who are owed wages by the corporation can proceed with claims against its directors.
The enactment amends the Employment Insurance Act to specify that payments made to a claimant out of the proceeds realized from the property of a bankrupt or by a government in the event of bankruptcy will not be deducted from benefits payable to an employment insurance claimant. Related amendments are made to the Employment Insurance Regulations.

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1st Session, 39th Parliament,
55 Elizabeth II, 2006
house of commons of canada
BILL C-270
An Act to amend the Bankruptcy and Insolvency Act, the Canada Business Corporations Act, the Employment Insurance Act and the Employment Insurance Regulations
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
R.S., c. B-3; 1992, c. 27, s. 2
BANKRUPTCY AND INSOLVENCY ACT
1. Section 2 of the Bankruptcy and Insolvency Act is amended by adding the following in alphabetical order:
“worker”
« travailleur »
“worker” includes an employee, clerk, servant, travelling salesperson, labourer and workman.
2. Paragraph 60(1.3)(a) of the Act is replaced by the following:
(a) it provides for payment to the workers and former workers, immediately after court approval of the proposal, of amounts equal to the amounts that they would be qualified to receive under subsection 136(0.1) if the employer became bankrupt on the date of the filing of the notice of intention, or proposal if no notice of intention was filed, as well as wages, salaries, payments in the form of severance or termination pay arising under a collective agreement or legislation, commissions, payments required to eliminate any unfunded liabilities of pension plans or compensation for services rendered after that date and before the court approval of the proposal, together with, in the case of travelling salespersons, disbursements properly incurred by those salespersons in and about the bankrupt’s business during the same period; and
3. Section 124 of the Act is amended by adding the following after subsection (1):
Proof of claim for wages, etc.
(1.1) Despite 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).
4. (1) Section 136 of the Act is amended by adding the following before subsection (1):
Priority of claims for wages, etc.
136. (0.1) Before the settlement of any claims of secured creditors in respect of any security taken or granted and any claims described in subsection (1), the proceeds realized from the property of a bankrupt shall be applied to amounts owed to workers or to other recipients for the benefit of workers, including wages, salaries, payments in the form of severance or termination pay arising under a collective agreement or legislation, commissions, compensation, benefits and other payments, including payments required to eliminate any unfunded liabilities of pension plans that provide benefits to workers. These amounts are deemed to be a first charge on every realizable asset of the bankrupt, despite any security taken or granted to any other person.
Priority of claims for wages, etc.
(0.2) For the purposes of subsection (0.1),
(a) despite any provision of any contract or agreement under which a worker is employed, any amounts referred to in subsection (0.1) owed to the worker or to any other recipient for the benefit of workers are deemed to have accrued as of the date of bankruptcy, and the trustee shall, with the approval of the court, determine the portion of those amounts that had been earned at the time of the bankruptcy; and
(b) the trustee shall make any payments owed by a bankrupt to a pension plan that provides benefits to workers so as to eliminate all unfunded liabilities of the pension plan and allow the pension plan to immediately satisfy all of its obligations to every member of the plan in accordance with the terms of the plan.
Requirement to set funds aside
(0.3) Subsection (0.1) operates despite 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 realized from any property on which the creditor holds security unless the creditor first sets aside, in a manner satisfactory to the trustee and approved by the court,
(a) such proportion that the trustee has ordered and the court has approved of the total of all amounts referred to in subsection (0.1) that are proven; or
(b) a sum that the trustee has estimated, and the court has approved, as sufficient to pay any claims that are likely to be proven under subsection (0.1).
(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 (0.3) 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.
(4) Paragraph 136(1)(i) of the Act is replaced by the following:
(i) claims resulting from injuries to workers of the bankrupt in respect of which the provisions of any Act respecting workers’ compensation do not apply, but only to the extent of moneys received from persons guaranteeing the bankrupt against damages resulting from those injuries; and
(5) Subsection 136(2) of the Act is replaced by the following:
Payments to be made immediately
(2) Despite section 151, the trustee shall, immediately after the bankruptcy, make payment of the amounts referred to in subsection (0.1) that are owed to workers or to other recipients for the benefit of workers provided that the trustee shall retain sufficient funds to provide for administrative costs.
R.S., c. C-44; 1994, c. 24, s. 1(F)
CANADA BUSINESS CORPORATIONS ACT
5. The Canada Business Corporations Act is amended by adding the following after section 119:
Claims against directors of corporation
119.1 (1) Any former employee of a bankrupt corporation, or a trade union acting on behalf of such an employee, may file a claim with the Minister of Labour in accordance with this section against the directors of the corporation for recovery of all debts referred to in subsection 119(1).
Appointment of adjudicator
(2) The Minister of Labour shall, upon receipt of a claim referred to in subsection (1), appoint any person that the Minister considers appropriate as an adjudicator to hear and adjudicate the claim.
Powers of adjudicator
(3) The adjudicator may, in relation to any claim before the adjudicator,
(a) summon and enforce the attendance of witnesses and compel them to give oral or written evidence on oath and to produce such documents and things as the adjudicator deems requisite to the full investigation and consideration of any claim;
(b) administer oaths and solemn affirmations; and
(c) receive and accept such evidence and information on oath, affidavit or otherwise as the adjudicator sees fit, whether or not it would be admissible in a court of law.
Functions of adjudicator
(4) The adjudicator shall
(a) hear the claim within 30 days after the claim is filed;
(b) determine the procedure to be followed, while giving full opportunity to the parties to present evidence and make submissions;
(c) consider all information relating to the claim;
(d) decide, on a balance of probabilities, whether the claim is valid; and
(e) within 30 days after hearing the claim, send a copy of the decision with the reasons for the decision to each party and to the Minister of Labour.
Order of adjudicator
(5) Where an adjudicator decides in accord­ance with paragraph (4)(d) that a former employee has a valid claim against the director or directors of a corporation, the adjudicator shall, by order, require the director or directors to
(a) pay the former employee compensation not exceeding the amount of money that would, but for the bankruptcy, have been owed by the corporation to the former employee; and
(b) do any other like thing that it is equitable in order to remedy or counteract the consequences of the bankruptcy for the former employee.
Decisions not reviewable
(6) Every order of an adjudicator made under this section is final and shall not be questioned or reviewed in any court.
No review by certiorari, etc.
(7) No order shall be made, process entered or proceeding taken in any court, whether by way of injunction, certiorari, prohibition, quo warranto or otherwise, to question, review, prohibit or restrain an adjudicator in any proceedings of the adjudicator under this section.
Enforcement of orders
(8) Any person affected by an order of an adjudicator under subsection (5), or the Minister of Labour on the request of any such person, may, after fourteen days from the date on which the order is made, or from the date specified in the order for compliance, whichever is the later date, file in the Federal Court a copy of the order, exclusive of the reasons for the order.
Registration in Court
(9) On filing in the Federal Court under subsection (8), an order of an adjudicator shall be registered in the Court and, when registered, has the same force and effect, and all proceedings may be taken thereon, as if the order were a judgment obtained in that Court.
1996, c. 23
EMPLOYMENT INSURANCE ACT
6. Section 19 of the Employment Insurance Act is amended by adding the following after subsection (4):
Proceeds from property of bankrupt
(5) Payments made to a claimant out of proceeds realized from the property of a bankrupt or by the government of Canada or of a province in the event of a bankruptcy shall not be deducted under this section.
SOR/96-332
EMPLOYMENT INSURANCE REGULATIONS
7. (1) The definition “income” in subsec-tion 35(1) of the Employment Insurance Regulations is replaced by the following:
“income” means any pecuniary or non-pecuniary income that is or will be received by a claimant from an employer or any other person, but does not include income received from a trustee in bankruptcy or from the government of Canada or of a province in the event of a bankruptcy. (revenu)
(2) Paragraph 35(2)(a) of the Regulations is repealed.
Published under authority of the Speaker of the House of Commons
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