June 5, 2003 (37th Parliament, 2nd Session)


Gerald Keddy

Progressive Conservative

Mr. Gerald Keddy (South Shore, PC)

Mr. Speaker, it is an honour to speak to the private member's motion put forth by the member for Churchill. This is another example of this member's considerate and compassionate attitude toward her fellow workers and fellow Canadians. It is a good way to bring this particular issue before the House.
I am not expecting that we will be very successful in getting it passed. It raises the issue, highlights it, and enables all Canadians to look at it perhaps in a different way and make up their own minds as to whether they would like to see this type of legislation in place or not.
The Progressive Conservative Party certainly agrees with the main thrust of the motion. We understand that thrust to be mainly looking after and paying certain unsecured creditors. The motion reads:

That, in the opinion of this House, the government should amend bankruptcy legislation to ensure that wages and pensions owed to employees are the first debts repaid when a bankruptcy occurs.

I do not think that we should look at workers and the moneys owed to workers by their employers and the moneys owed to their pension funds which most of the time are the workers' own money any differently than we would look at unsecured creditors. That is the basis of this motion.
As bankruptcy legislation works now, we look to pay the unsecured creditors first. I see no reason why we should not look to pay the back wages owing and the moneys sitting in pension plans to the employees who rightfully deserve to be paid. That is not saying that we should pay the unsecured creditors as well.
Quite often these employees find themselves holding out their hand in the direction of their bankrupt employer and yet they go away empty handed, not unlike Dickens' Oliver who also held out his hand and said, “Please, sir, more gruel”. In this case there is no more gruel to come.
Sometimes employees and other unsecured creditors in Canada do not even get anything to begin with. Therefore they certainly could not go to the table and ask for more. It is a difficult and dismal situation. Sometimes they do not get compensation or payment for wages and hours worked. Often they end up with nothing in the face of a bankrupt employer, while at the same time unsecured creditors, sometimes suppliers or distributors, will be entitled per legislation to recover at least some of the money owed to them. This leaves the employees with no legal or legislative avenue open to them that might enable them to recover some of their money for wages that are rightfully theirs.
However admirable the motion might be I am not suggesting that the motion is perfect. It may deserve some slight tinkering to make it correspond even more closely to the hon. member's implicit objective.
Members must not forget why bankruptcy legislation exists and how it came about. I recently made a brief reference to Charles Dickens, the great 19th century author who died in 1870. I did so because of his famous character Oliver Twist who asked for more but was denied. Some reading members in the House of Commons might know who Oliver Twist was. Just after Dickens' death, the Canadian government started to deal legislatively with bankruptcy and insolvency matters. That is why most of the reading members of the House enjoy history and biographies, and understand a bit about who we are because we know where we came from. This is an issue that has been around for quite some time.
In the 19th century Canadian bankruptcy legislation was never widely accepted as a means to distribute assets to creditors or as a way to provide a debtor with a fresh start. In 1880 Parliament repealed the Insolvent Act of 1875 and abandoned its constitutional jurisdiction over bankruptcy and insolvency until 1919.
The absence of a national market in the 1870s made a federal bankruptcy law premature. The bankruptcy discharge challenged the very nature of local credit relationships that depended upon trust and emphasized the moral obligation to repay debts. Looking at that statement alone, there is a moral obligation in a bankruptcy case to repay a debt, and part of those debts are employees' wages and certainly pension plans.
Arguments in favour of a national law focused on the advantage to creditors trading over distances. However, uniform legislation was not a widely accepted goal. A repeal in 1880 was emblematic of the weakness of the national economy. The passage of the Bankruptcy Act of 1919 can be linked to major changes to the Canadian economy.
By 1919 uniform bankruptcy legislation could no longer be delayed in an expanding national market. A new national interest group, the Canadian Credit Men's Trust Association, emerged just prior to the war and played a significant role in leading the call for reform. Credit relationships became less dependent upon matters of character and the bankruptcy discharge became more acceptable as a central feature of the legislation.
In the 1870s, the absence of a strong government department and bureaucracy inhibited the implementation of stable and lasting legislation. In 1919 bankruptcy reform coincided with an unprecedented growth of federal regulations during the war. Federalism also affected the timing of the legislation.
It has taken nearly 130 years to get to the point we are at today which is having some type of bankruptcy legislation in place that recognizes changes. We have changed the Bankruptcy Act and the bankruptcy law several times. It has evolved with the history of the country as it naturally should. It is time that we looked at it again.
Canadians would tell us that when a company goes bankrupt not only should the unsecured creditors be paid, but also its employees. Not only should they be paid their back wages, but they should also be paid any moneys they put into their pension plans.
Perhaps it is time to take a look at the same relationship with some of the unsecured creditors. Many of these are small unsecured businessmen who owe a lot of debt to a major corporation that has gone bankrupt. These businessmen find themselves in a similar situation to employees. I would not want to ignore the unsecured creditors.
Is it time to take another look at this and open it up to the employees to protect their pensions and the moneys that they have put into the company? Absolutely. Should they be paid for the hours worked? Sure they should.

Topic:   Private Members' Business
Subtopic:   Bankruptcy Legislation
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