The Standing Senate Committee on Banking Trade and Commerce

has the honour to present its

SIXTH REPORT

Your Committee, to which was referred Bill S-216, An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act in order to protect beneficiaries of long term disability benefits plans has, in obedience to the Order of Reference of June 17, 2010, examined the said bill and now reports as follows: 

Your Committee recommends that this Bill not be proceeded with further in the Senate for the reasons that follow. 

Your Committee notes that Bill S-216 attempts to retroactively enhance the priority of claims for unfunded long-term disability liabilities in proceedings commenced pursuant to the Bankruptcy and Insolvency Act before the coming into force of the amendments contained in the bill, which may generate claims that conflict with court-approved settlement agreements already in force, resulting in litigation that would be detrimental to the interests of long-term disability claimants including the former employees of Nortel. 

Your Committee believes that Bill S-216 would cause companies to prefer liquidation to restructuring, because it would confer preferred status on claims for unfunded long-term disability liabilities in liquidation proceedings, while conferring super-priority status on similar claims in restructuring proceedings under the Bankruptcy and Insolvency Act; and 

Your Committee notes that Bill S-216 would reduce the amount that some creditors would otherwise hope to recover in bankruptcy proceedings, increasing risk for investors and financing costs for bond-issuing companies, which your Committee believes would be detrimental to the currently fragile growth of the Canadian economy. 

This report was adopted in committee on the following vote:   

YEAS – The Honourable Senators: Ataullajhan, Dickson, Greene, Kochhar, Mockler and Plett (6). 

NAYS – The Honourable Senators: Eggleton, Harb, Hervieux-Payette, Moore and Ringuette (5). 

Respectfully submitted,  

CÉLINE HERVIEUX-PAYETTE, P.C.
Deputy Chair