Madam Speaker, I thank my colleague for her bill and what she proposed earlier. I invite her to listen to my comments to clarify the situation and what amendments will be made to legislation.

Earlier, she spoke about the workers at Sears. I really empathize with Sears pensioners because a Sears store located in my riding shut down. That affects all members. Everyone here is very attuned to this issue.

All Canadians deserve peace of mind when it comes to their retirement security. Our government recognizes this, which is why it has taken a number of significant steps during its mandate to enhance Canada's retirement income system, including enhancements to the old age security program and the Canada pension plan.

At the same time, our government recognizes that recent corporate insolvencies, such as those mentioned earlier, have created challenges for workers, pensioners and even small and medium-sized businesses, such as contractors and suppliers. For this reason, our government committed in budget 2018 to undertake a whole-of-government, evidence-based approach to improve retirement security.

In 2018, our government held national consultations to seek comprehensive feedback on ways to enhance retirement security. We met with labour and pensioner groups, companies, lenders, experts, and more still. We also received formal submissions from many stakeholders. The public at large made its views known on these important issues as well, with more than 4,400 online submissions. People also reached out to their MPs, myself included.

After listening to Canadians, the government proposed a comprehensive package to enhance retirement security in its 2019 budget bill.

Bill C-372, however, is less ambitious in scope, proposing three changes to Canada's insolvency laws that could have disastrous and negative consequences on the Canadian marketplace and firm competitiveness.

Let us talk about Canadian insolvency laws. it is first necessary to briefly describe Canada’s effective insolvency system. Canada has two main insolvency statutes, the Bankruptcy and Insolvency Act, which governs bankruptcies and restructurings for small businesses, and the Companies’ Creditors Arrangement Act, or CCAA, which governs the restructuring of larger corporations, with over $5 million in debt.

These two laws have clear and predictable rules regarding the order of creditor payment upon firm wind up and the negotiability of credit claims in firm restructuring discussions. These rules are specifically designed to support the core objectives of Canada’s insolvency regime, which include preventing a rush to the courthouse and promoting the restructuring of financially-distressed but viable firms, where possible, with the ultimate goal of preserving good jobs and economic value within Canada.

Under the Companies’ Creditors Arrangement Act regime, for example, many insolvent companies have avoided liquidation that would have crystallized losses in underfunded pension plans and employee benefit plans and eliminated good-paying jobs. Instead, these firms were able to stay in business, preserve good middle-class jobs, and continue to fund pension and benefit plans.

In addition, our insolvency system contains certain checks and balances to protect pensions. First, pension contributions are held in trust for the sole benefit of pensioners. Second, unpaid past pension contributions are paid ahead of secured creditors. Third, all restructuring deals require both creditor and court approval to ensure fairness. What is more, courts often order the debtor company to provide at its own expense legal representation for pensioners and employees in the insolvency proceedings.

Bill C-372 proposes to change these laws in three ways that could undermine the system’s core objectives and have negative economic consequences.

First, it proposes to amend the BIA and CCAA to give unfunded pension liabilities and unpaid special payments a superpriority, meaning that these claims would be paid in full ahead of almost all other creditors in an insolvency proceeding.

An unfunded pension liability is the difference between a pension fund's current assets and future liabilities. Special payments are additional employer contributions that are sometimes ordered by pension regulators to compensate for fund deficits over time.

Second, the bill creates a preferred claim in bankruptcies to indemnify employee losses associated with group insurance benefit plans, such as life, disability, health or dental benefits, meaning that they would be paid before unsecured creditors but after secured creditors. The bill also requires these payments to be made in full in CCAA restructuring plans.

Third, the bill creates a preferred claim for unpaid severance and termination pay. I will now set out my main concerns.

The bill’s proposals would weaken companies’ ability to restructure. Pension deficits can be very large, in some cases in the billions of dollars.

An indemnity for employee benefit plans could also be very large. A superpriority that ranked such shortfalls ahead of all other claims, and a requirement that employees must be fully indemnified for benefit losses in CCAA plans, would reduce the incentives of all other creditors to support a restructuring deal. This would make a sale of the company as a going concern extremely unlikely. Companies could also lose access to interim financing, often essential to secure for a restructuring.

Instead of supporting a restructuring deal that could save the company, secured creditors faced with a pension superpriority could act strategically by reducing their exposure to these companies by requiring them to pay down their debts before the start of insolvency proceedings. Indeed, if the measures in this bill had been in place in the past, many successful restructurings under Canada’s insolvency systems would not have occurred, resulting in greater job and pensions losses.

Next, firms with defined benefit pension plans or group insurance benefits could see higher costs and lower availability of credit, as well as reduced competitiveness.

I had much more to say but I am nearly out of time. In closing, the bill before us today does not provide an evidenced-based, whole-of-government approach to enhancing retirement security. It would weaken the ability of companies to restructure to preserve jobs and pension benefits. Furthermore, it would hurt competitiveness, while at the same time not always helping workers and pensioners.

I am pleased to say, however, that the government's proposed measures will protect pensions and workers, while also supporting the central objectives of Canada's effective marketplace laws. We are ensuring that firms remain competitive and continue to employ hard-working Canadians throughout the country.

Linda Lapointe