Bill C-624: An Act to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act (providing protection for beneficiaries of long term disability benefits plans)

C-624 Third Session, Fortieth Parliament, 59-60 Elizabeth II, 2010-2011 HOUSE OF COMMONS OF CANADA BILL C-624 An Act to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act (providing protection for beneficiaries of long term disability benefits plans) first reading, February 11, 2011 Mr. Eyking 403321 SUMMARY This enactment amends the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act in order that, in bankruptcy proceedings, the status of a preferred claim be conferred to the liabilities of the fund established for the purpose of a long term disability benefits plan and that such fund be used to continue the payment of benefits to the beneficiaries. Also available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca .vis1 {position: absolute;display:block;} .vis2 {position: static;} 3rd Session, 40th Parliament, 59-60 Elizabeth II, 2010-2011 house of commons of canada BILL C-624 An Act to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act (providing protection for beneficiaries of long term disability benefits plans) Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: SHORT TITLE Short title 1. This Act may be cited as the Protection of Beneficiaries of Long Term Disability Benefits Plans Act. R.S., c. B-3; 1992, c. 27, s. 2 BANKRUPTCY AND INSOLVENCY ACT 2. Section 2 of the Bankruptcy and Insolvency Act is amended by adding the following in alphabetical order: “disability plan”« régime d'invalidité » “disability plan” means a self-insured long term disability benefits plan or long term disability insurance plan — whether or not regulated by an Act of Parliament or of the legislature of a province — in which an employer participated or participates for the benefit of the employer's employees; “disability plan beneficiaries”« prestataires du régime d'invalidité » “disability plan beneficiaries” means the employees who benefit from a disability plan and who are in receipt of long term disability benefits on the date of bankruptcy of their employer; “disability plan liabilities”« passif du régime d'invalidité » “disability plan liabilities” means an amount equal to the value — determined using the standards of practice adopted by the Canadian Institute of Actuaries — of (a) the long term disability benefits to be paid to the disability plan beneficiaries; and (b) the health related benefits to be paid to the disability plan beneficiaries; 3. Section 60 of the Act is amended by adding the following after subsection (1.5): Proposals by employers — disability plans (1.51) No proposal in respect of an employer who participated or participates in a disability plan shall be approved by the court unless (a) the proposal provides for the payment of an amount equal to the disability plan liabilities that are unpaid to the fund established for the purpose of the disability plan; and (b) the court is satisfied that the employer can and will make the payments as required under paragraph (a). 4. Subsection 136(1) of the Act is amended by adding the following after paragraph (d.01): (d.011) in the case of an employer subject to a receivership or of a bankrupt employer who participated or participates in a disability plan, such portion of the disability plan liabilities that is unpaid to the fund established for the purpose of that plan; 5. The Act is amended by adding the following after section 147: Disability Plan Continuation through a financial institution 147.1 (1) The receiver or the trustee appointed in relation to the assets of an employer subject to a receivership or of a bankrupt employer having participated or participating in a disability plan shall continue the disability plan until the date on which the disability plan beneficiaries reach the age of 65 by the assignment to a financial institution — authorized to establish group disability plans — of the following amounts (a) the amounts already paid into the fund established for the purpose of the disability plan; and (b) the amount equal to the portion of the disability plan liabilities paid into the fund by the application of paragraph 136(1)(d.011). Creation of a sinking fund (2) Where the amounts referred to in subsection (1) are insufficient to continue a disability plan in accordance with the terms and conditions set out in that subsection, the receiver or the trustee shall deposit such amounts in a bank in order to create a sinking fund to pay benefits to the disability plan beneficiaries until the sinking fund is empty. R.S., c. C-36 COMPANIES' CREDITORS ARRANGEMENT ACT 6. Subsection 2(1) of the Companies' Creditors Arrangement Act is amended by adding the following in alphabetical order: “disability plan”« régime d'invalidité » “disability plan” means a self-insured long term disability benefits plan or long term disability insurance plan — whether or not regulated by an Act of Parliament or of the legislature of a province — in which an employer participated or participates for the benefit of the employer's employees; “disability plan liabilities”« passif du régime d'invalidité » “disability plan liabilities” means an amount equal to the value — determined using the standards of practice adopted by the Canadian Institute of Actuaries — of (a) the long term disability benefits to be paid to the disability plan beneficiaries; and (b) the health related benefits to be paid to the disability plan beneficiaries; 7. Section 6 of the Act is amended by adding the following after subsection (7): Restriction — disability plan (7.1) If the company participated or participates in a disability plan for its employees, the court may sanction a compromise or an arrangement in respect of the company only if (a) the compromise or arrangement provides for the payment of an amount equal to the disability plan liabilities that are unpaid to the fund established for the purpose of the disability plan; and (b) the court is satisfied that the company can and will make the payments as required under paragraph (a). TRANSITIONAL PROVISION Application 8. For greater certainty and despite any agreement or court decision or order to the contrary, this Act applies to a debtor in respect of whom proceedings under the Bankruptcy and Insolvency Act or under the Companies' Creditors Arrangement Act have commenced before the coming into force of this section. Published under authority of the Speaker of the House of CommonsAvailable from:Publishing and Depository ServicesPublic Works and Government Services Canada