Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 18 - Evidence
OTTAWA, Wednesday, May 7, 2003
The Standing Senate Committee on Banking, Trade and Commerce met this day at 4:00 p.m. to examine the administration and operation of the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act.
Senator E. Leo Kolber (Chairman) in the Chair.
[English]
The Chairman: We are here to meet with respect to the examination on the administration and operation of the Bankruptcy and Insolvency Act, BIA, and the Companies' Creditors Arrangement Act, the CCAA. Our witnesses today are from Industry Canada.
I should like to introduce Mr. Yoine Goldstein, who has agreed to become legal advisor to the Banking Committee for the purpose of this study.
Ms. Marie-Josée Thivierge, Director-General, Marketplace Framework Policy Branch, Industry Canada: Mr.Chairman and members of the committee, I trust you all have a copy of the presentation we circulated to you.
On behalf of the Minister of Industry, let me thank you for taking the time to take on this review of our insolvency system. As indicated in Minister Rock's letter of November 19, 2002, we are pleased to be here today to provide you with any assistance you may require.
As you have noted, with me today are my colleagues from Industry Canada. My colleagues and I have prepared a presentation deck, which Mr. Mayrand and I will present, following which we will look forward to any questions you may have.
Turning to the first slide, the BIA and the CCAA are important elements of the Canadian marketplace framework, which governs our commercial relationships. They serve several purposes. Credit markets and investors need to know the rules under which they advance funds and their certainty to recover. As certainty decreases, interest rates rise and availability of credit is restricted. This can particularly affect businesses that are starting out. Investors seek markets with rules that are clear and fair.
Entrepreneurship is also critical to the Canadian economy, with small and medium-sized businesses making a significant contribution to employment. If the insolvency risks are too great, it discourages business start-ups. The ability of responsible business people to move on from business failure is key. This fresh-start principle is important in consumer insolvency to allow individuals who suffer personal setbacks, such as job losses or illnesses, to recover financially.
Insolvency law is also key to economic productivity. An efficient system that allows assets to remain productive and to be returned to productivity quickly enhances overall productivity, and stronger businesses emerge.
For creditors, the insolvency system is the means by which we can ensure that their interests are protected and that fair distribution is achieved. It may not mean full recovery, but it attempts to balance the interests.
Our Canadian system is respected worldwide. Agencies such as the World Bank note favourably how our system accommodates a federal structure, the duality of both our common law and civil law heritage and the reality of the international marketplace.
The BIA deals with three types of insolvencies. The first is personal and corporate bankruptcies, when no other alternative exists. The second is consumer proposals. Those are negotiated agreements for partial payment on new terms. They may extend over five years. The key is that the recovery by creditors would be greater than if the dealer went bankrupt. The third is business reorganizations of all sizes. These are similar to consumer proposals but are for businesses.
The CCAA deals with large corporate reorganization where debt exceeds $5million. The act is short and provides a framework within which the debtor and creditors, under guidance of the court, attempt to find the means of returning the company to solvency.
[Translation]
Of these two Acts, only the Bankruptcy and Insolvency Act offers a clearly defined framework for dealing with bankruptcy cases. Although major businesses may use both Acts to reorganise, larger corporations usually opt for the CCAA. The objectives of each Act are similar: they both seek to return viable companies to financial health, while also providing their creditors with adequate protection and the possibility of obtaining a better recovery rate. However, the two Acts use different methods to achieve these objectives.
The CCAA allows companies to organize and sets out only a few rules. This enables the parties involved to develop innovative solutions under the supervision of the tribunal. There is no central registry with supervision for filings that come under the CCAA. Consequently, the information available is fragmentary and essentially anecdotal. Cases pursuant to the CCAA very often deal with complex situations, with a considerable number of stakeholders involved. In such cases, costs are normally higher and the timeframe for settlement a little longer.
Before addressing the issues identified by stakeholders during our consultations over the past two years, we would like to give you an overview of the level of activity pertaining to bankruptcy and reorganisation in Canada.
[English]
Over the past 30 years, filings of BIA bankruptcies and proposals with the Office of the Superintendent of Bankruptcy, OSB, have increased from approximately 10,000 in 1970 to just over 100,000 in 2002. Total insolvencies have levelled off at the end of that period. However, it must be kept in mind that a number of factors can influence the level of activity within the insolvency system.
For example, variation in economic factors, such as variations in GDP, inflation, dollar value and interest rates, change in family circumstances, such as job losses or illnesses, or change in personal or business indicators, such as saving rates or debt-to-income ratios, could all cause fluctuations in the rate of insolvencies.
Filings with the OSB in 2002 involved in excess of $50billion in liabilities and more than $5billion in assets — a shortfall for creditors of about $10billion. In the first four months of 2003, the BIA filings dealt with $1.5billion in assets, $5.5billion in liabilities and 38,000 insolvencies, which represent, to date, a 5.6 per cent increase over the same period last year.
[Translation]
Consumer insolvency filings clearly account for the largest number of cases in our economy. The number of filings has more than tripled during the period 1987-1997. Since 1997 the number of insolvency cases has stabilised and the growth rate is in decline. The level observed in Canada is still lower than that of the United States, and the disparity betweeen the two countries is still growing.
It is interesting to note that the reforms implemented in 1997 are now paying dividends. The work done to make consumer proposals more attractive has led to a move away from bankruptcy and towards greater use of consumer proposals. Proposals give creditors a better recovery rate while sparing consumers the stigma often caused by bankruptcy.
There is a concern that low interest rates are a reason for consumers going into debt. The combination of low rates of saving, a rise in interest rates or even a downturn in economic performance could push consumers in fragile economic health into bankruptcy.
We should also note that many consumer bankruptcies are the result of personal problems, job losses, health problems or even the breakup of debtors' families.
[English]
Similar to the experience with consumer insolvencies, in business insolvencies there has been a trend toward proposals and away from bankruptcies. Our economy benefits from the shift and we seek to encourage that transition. In addition, we have witnessed that this has been coupled with an overall drop in business insolvencies in recent years from, for example, 8.2 per thousand businesses in 1998 to 5.2 per thousand businesses in 2002. This can probably be attributed to solid economic performance. Our business insolvency rates are slightly above that of the United States— 5.2 per thousand businesses compared to 4.9 in the U.S.— but ours has been showing a steady decrease, so that the Canadian and American rates are now virtually the same.
From looking at the last two slides — both the activities of consumer and business insolvencies — it is fair to say that the amendments of the last decade have fostered a culture of reorganizations that have been embraced by the marketplace and yielded the intended results under the BIA.
[Translation]
Cases submitted pursuant to the CCAA are distinguished more by size than by number. On the basis of the answers received from a questionnaire sent to major accounting firms specialising in insolvency, we have been able to establish that on average approximately twenty cases a year are processed. Although it is possible that these statistics underestimate the total number of cases examined, there is no doubt that these reorganisations include the filings by the largest corporations, and that they are less frequent than those dealt with under the BIA.
As can be seen from this table, some filings may be very significant. Information obtained through our questionnaire indicates that one in ten cases involves debts of over one billion dollars, and that processing an average file requires approximately 14 months work.
This time frame is influenced by the fact that in some cases agreements are negotiated with creditors before initiating legal proceedings. The advantage of the CCAA is its flexibility. Companies using this Act have complex and specific needs, and they may require customized solutions. The goal is to find a solution acceptable to stakeholders and debtors, while at the same time allowing for the survival of viable businesses and the preservation of related jobs. A dynamic market requires the continuous modernization of insolvency rules.
[English]
Our insolvency statutes were considerably modified in 1992 and 1997. The reforms did not constitute a complete overhaul, but attended to the most pressing needs at the time and assured the modernity of our legislation. That process of ongoing modernization can now be continued through this review.
Our earlier forms have, for the most part, achieved their goals. However, the marketplace continues to change and adapt and our legislation must do the same. To achieve this, there are issues that need to be addressed. Some existed at the time of the previous reforms and are still in need of resolution. Some were not as pressing at the time of previous amendments, while others could not be completely dealt with in an insolvency regime. We have now also taken note of new developments that have taken place, and which may present issues in a new light.
However, stakeholders have been consistent. There is no need of an overall reform of our insolvency system. Rather, they are calling for specific changes to address specific problems.
To identify these views, Industry Canada undertook a consultation process in 2001 and early 2002 involving over 500 stakeholders — including creditors, banks, lawyers, judges, trustees, academics, credit counselling agencies and credit reporting agencies — examining both consumer and commercial issues. In addition, the OSB sponsored an independent group— the Personal Insolvency Task Force — to examine consumer issues. We have provided you with our report on stakeholder views for your consideration.
Let me turn to my colleague who will go over the structure of the report that was sent to you, as well as some of the issues that it captures.
[Translation]
Mr. Marc Mayrand, Superintendent of Bankruptcy, Office of the Superintendent of Bankruptcy: The report before you seeks essentially to define the issues identified by stakeholders as being the most important at the time the report was written.
The report does not include recommendations; it simply states the issues and tries to define them as objectively as possible while identifying possible solutions or options considered by stakeholders. It also summarizes the viewpoint of stakeholders on these issues. The report contains a list of some thirty-two of these issues, seven of which deal with administrative questions. Eleven deal with questions related to consumer insolvency and fourteen with commercial insolvency. The list is not exhaustive.
Obviously, you will be hearing various witnesses on many other issues which could be considered by the committee and which, in each case, will be of interest to members of the committee. There are also some other issues which have developed over the past year, that is since the time the report was written. Some of these are also identified in the presentation submitted to you. I will address them briefly in a few moments.
In order to simplify things, we have grouped the various issues in three categories. In the first, the stakeholders seem to be in agreement on the nature of the issue itself and often on possible solutions. In the second category, we have grouped the issues that raise important questions, differences of opinion, and where we think there may be the beginnings of a consensus, but which will have to be cultivated and developed further in order to arrive at a definitive solution.
Last, the third category contains the most contentious issues, where it is recognized that important issues are involved, but around which positions are quite entrenched. For this reason, it seemed to us more difficult to see a consensus being established at the time the report is written.
[English]
Moving to number 10, you will see the grouping of those issues. Time does not allow us to go through each of them, but maybe I can give you a flavour of some of those issues. We will be available to respond to questions on the issues that are of interest to you.
Looking at some of the issues that generated a consensus, the area of volume and growth of consumer insolvency has been a question of much debate by stakeholders and beyond, by the general public, in terms of Canada's high volume of consumer insolvency. The debate generally turns on whether the Canadian system is too permissive, too lenient, whether it allows people to take easy advantage of insolvency proceedings and whether the stigma that normally attaches to insolvency has eroded over the years.
On the other side of the debate, you will hear that much of the volume is linked to the use of credit in the country. If we look at volume, we would see a close relationship between the number of insolvencies and the extent of credit use in the country. There is also a close relationship between volume and the ratio of disposable income to indebtedness.
In the consultation, stakeholders and participants have told us that we should let the market decide how credit should be granted and that the market will discipline itself. That was certainly the substantive majority view expressed during the discussion. The other point raised with respect to volume is that perhaps better prevention efforts are needed to help people avoid becoming insolvent.
Currently, legislation provides for counselling programs that take place after insolvency, but there is nothing in the act or statute to assist before insolvency occurs.
The student loan issue is a major concern that was raised by many stakeholders over the last years. There is a general consensus that the provisions of the act are too harsh with respect to students.
Looking at the issues where there are significant differences, we look first at contractual rights. This has become a significant issue mostly but not exclusively in reorganization. In this area, the BIA does contain certain provisions that allow for the termination or repudiation of contracts in certain circumstances. One example that comes to mind is the treatment of a landlord during the reorganization of a tenant. The BIA, in its reorganization provision, provides a framework for dealing with the landlord of a tenant who reorganizes.
CCAA does not have provisions dealing with executive contracts. That is left to the inherent jurisdiction of the court. Depending on the circumstances of the case, the court will determine whether a contract should be terminated, repudiated or maintained and under what circumstances. There is some agreement that the rules with respect to those contracts need to clarification.
Intellectual property contracts are becoming more and more significant in the way business is conducted. Intellectual property is the core asset of many businesses. The rules must address how one deals with such contracts during a reorganization. That is true under both the BIA and the CCAA.
Among the several contentious issues is the RRSP issue. RRSPs have become the primary saving mechanism for self-employed and small-business entrepreneurs to provide for their retirement. Should those RRSP investments be exempt? Currently, the situation again is unclear. Some RRSPs, depending how they are invested, may be exempt. Two provinces have adopted rules that would make RRSPs exempt, namely Saskatchewan and P.E.I. There is a need to look at that matter.
During the consultation, however, there was not much consensus on the anti-abuse mechanism to be used. If RRSPs were to be recognized as exempt assets, what sort of anti-abuse mechanism, if any, should be put in place to prevent abuses? The Personal Insolvency Task Force, PITF, reports include specific recommendations on how to deal with RRSPs, but even those recommendations raised concern with some stakeholders.
There is also the issue of wage earner and pension protection during bankruptcy and reorganization. That is a major issue in any insolvency legislation and must be addressed. Currently, in Canada, there is a protection for $2,000 of wages earned during the six months prior to the insolvency. That is similar to what exists in the U.S. However, many countries around the world have adopted enhanced protection systems. Should Canada take that direction? There are various mechanisms that could be adopted to enhance the protection of a wage earner beyond the current level. Also, we must decide whether this matter is better addressed under insolvency legislation or under labour or human resources legislation, as it is in some countries.
Another contentious issue is debtor-in-possession or interim financing. This matter arose during reorganization. How is the financing of the business protected in order for there to be a certain peace of mind, while the business tries to reorganize and to develop a plan? What is the relationship between the interim-finance body relative to other creditors in the process? What is the relationship between the new lender relative to earlier creditors? Then there is the whole issue of priming. Can a new lender have a secured right or a priority over secured rights?
Again, some debtor-in-possession financing, or interim financing, is allowed under the inherent jurisdiction of the court under CCAA. Currently, the BIA has some provision to provide for interim financing, but it is rarely used. Some case law has been issued regarding debtor financing. Should that case law be codified in the CCAA?
There are other emerging issues. One issue that has recently been the object of newspaper discussions is the treatment of collective agreements. That issue probably best illustrates Canada's stand relative to the U.S. and the variation between a BIA reorganization and a CCAA reorganization. I will take a moment on this.
Under the BIA, there is no provision that deals with collective agreements. However, there are a number of provisions that deal with various types of contracts. That would lead many to believe that, under the BIA, you cannot reject or repudiate a collective agreement. Under the CCAA, Canada has no such rules, nor are there any rules on executive contracts. It could be argued that the court has inherent jurisdiction when presiding over a CCAA reorganization to suspend, repudiate or terminate a collective agreement.
Recently, the Court of Appeal of Quebec provided some guidance on this matter. Ruling was given on a number of points to state that, mainly, when you do a reorganization under the CCAA, the monitor who is appointed to look over the affairs of the company is not a successor or employer. That matter was settled by the Court of Appeal.
The court affirmed two other points in that ruling. One is that a collective agreement cannot be repudiated under a CCAA, suggesting that the monitor or the debtor must carry on with the collective agreement and the accreditation of the union, subject, of course, to any negotiations between the parties. That decision was just released by the Court of Appeal at the end of January, and it is uncertain how it will be interpreted across the country and how it will be applied in other provinces. I am not aware if there is a request for appeal to the Supreme Court of Canada at this time.
The U.S.has clearly set out that, yes, the court may repudiate a collective agreement, subject to certain conditions. You must demonstrate that the collective agreement is burdensome to the debtor. You must demonstrate that, on the balance of equities among all the participants, repudiation would be warranted. The third element is that you must demonstrate that repudiation does not constitute an unfair labour practice. Again, these are broad principles, subject to much interpretation, but they provides some guidance to the parties as to how to approach collective agreements.
In all three systems, the BIA, the CCAA or the American system, the incentive for the parties is to negotiate. At the end, that is the core of any organization proceedings. You want to bring the parties around the table and ensure that they negotiate the best agreement possible for the benefit of the company and all the stakeholders.
We are running out of time, so I will pass over the interim receiver appointment issue and spend a moment on the auditor issue, which is the last bullet on that slide.
The question arises as to whether it is appropriate to have the auditor of a reorganizing company become the monitor of the financial affairs of that company for the time of the reorganization. Much has to do with the role of the monitor, which is somewhat loosely defined in the CCAA, and the question is whether having the auditor acting as monitor may raise a question of perception of conflict of interest and whether, in terms of good governance for our insolvency system, this is appropriate. Again, this must be balanced with reasons of efficiencies and practicalities, but that is certainly an issue that is emerging and seems to be quite current in a time where there is so much discussion of good and sound corporate governance principles around the world.
[Translation]
Your recommendations and advice are absolutely essential for deciding whether there should be legislative reform and establishing the direction and thrust of such reform.
When considering the various issues which will be submitted to you in the course of your deliberations, we would suggest a few basic principles which should underlie not only the Canadian insolvency system but every insolvency system. These principles are absolutely consistent with those adopted by the World Bank when it conducts legislative reforms in various countries around the world.
The key principles in any insolvency system are fairness and transparency.
[English]
Fairness and transparency are key in an insolvency system. Fairness is about ensuring that all parties have a sense of participating in the process and understand what is happening during the process and why these things are happening. Everybody loses in an insolvency. There are very few winners, ever. Fairness is quite critical, and the appearance of fairness is also critical to the people involved. That is true of both commercial and consumer insolvency.
With regard to transparency, we need the ability to access information quickly — reliable information, credible information — so that people can determine their line of conduct during the proceeding. That is absolutely critical.
We also need efficiency. Of course, you do not want issues to linger on. You want them to be dealt with quickly at the lowest cost possible. Whenever looking at changes to the system, that must be a primary consideration.
Predictability is also important. It is also absolutely critical for investors and lenders to understand what will happen to their rights, or their security, or their assets or their particular contract if and when insolvency occurs. Predictability is the way that investors and lenders measure their risks and understand how to price those risks. It is essential to a sound insolvency system.
Effective governance is the whole issue of maintaining trust in the administration of the system and in the people that are charged with administering and carrying out the process envisaged by the various statutes. Obviously, we need to ensure that their duties and responsibilities are well spelled out and clearly understood by them. We must ensure that conflicts of interest are avoided and that everyone understands what to expect from those participants.
Finally, the challenge will be to balance those principles among themselves. Flexibility requires that we have a system that is not too rigid. Not all insolvencies are the same. Many require tailored approaches and solutions. We need a system that allows sufficient flexibility to respond to the needs of the time.
With those principles in mind, we must always give consideration to the need in Canada to maintain a competitive marketplace, not only within Canada but within the North American zone, as well as to ensure that Canada maintains its place in the global economy. That is absolutely critical, in our mind.
With that being said, I will leave it to Ms.Thivierge to bring you the final word.
Ms. Thivierge: The review of the Bankruptcy and Insolvency Act and the CCAA presents an opportunity to once again note the importance of insolvency within our marketplace and the need to keep it modern and to have a competitive system. This review, in our view, is an integral step towards fulfilling a recent commitment by the government to ensure that our laws and regulations remain among the most progressive in the world.
On behalf of the Minister of Industry, I wish to take this opportunity to thank you for taking on this task. Clearly, we welcome the views of the committee as fresh insights into these challenging issues.
My colleagues and I — and they are quite knowledgeable of Canada's insolvency question — will be happy to take questions you may have.
The Chairman: Thank you for your presentation. These hearings will go on for four or five months, especially because there is a summer break, et cetera. We will try to work during the summer. We are taking it seriously. It is part of our mandate to review these acts.
Prior to asking questions, I wonder if you could make, briefly, two explanations. On the question of collective agreements, in the Air Canada case that we read so much about it would seem that the collective agreements that Air Canada has with its various unions would appear to be— I do not know if this is true or not— a major cause of their financial difficulties. Yet, I understand from what I read that the court would not agree to cancellation of those agreements but is currently going to have a hearing to decide whether or not they should. Is that true?
Mr. Mayrand: At Air Canada, as with the entire air industry right now, one of the major costs has been labour. It is a labour-intensive activity. One of the focuses for those reorganizations has been to try to restructure those costs.
Initially, Air Canada interpreted the order as allowing them to suspend the application of certain provisions. That brought the parties back to the court to clarify the situation. The justice who was presiding in the court in Toronto indicated that it was not his initial intention to suspend the collective agreement but to force the parties to negotiate. He set a date for them to come back.
Currently, the collective agreement is still in place. It remains as is, subject to further discussion between the parties to review it. My understanding is that the court has reserved its final decision on the whole matter.
The Chairman: You brought up the question of student loans. Could you highlight what the problem is there, please? I think it is really politically sensitive.
Mr. Mayrand: I would tend to agree.
With regard to the student loan matter, there were amendments brought in 1997, as a result of the severe losses experienced with the various student programs across the country. Some amendments to the insolvency legislation in 1997 aimed at providing a cooling-off period before students could enter bankruptcy and be discharged of their debts, including student loans. The provision in 1997 was to ask the students to wait for two years after the completion of their studies, or coming out of school, before they could seek the discharge of their student loan debts.
That was found to be insufficient. In 1998, as a result of a budget measure, the act was further amended to extend the period from two years to 10 years. As it was a budget measure, there was limited public discussion about the matter before it was announced. I think that created a fair amount of resentment among stakeholders. That is what has been conveyed to me in many forums over the years.
The issue is whether 10 years — to be eligible for a discharge of a debt — is fair to students, and whether it is consistent with our insolvency legislation generally. Of course, you will hear from other witnesses that it may be harsh on students. There may be alternatives to dealing with that, but we are looking for your guidance on this matter.
Senator Kelleher: You quite correctly pointed out that we have two acts by which we are governed — the BIA and the CCAA. We are probably the only main industrial country that is governed by two acts.
I have a two-pronged question for you. First, could you explain to the panel how this came about? Second, have you given any thought to consolidating these two acts, or should we leave it the way it is? I am aware of the arguments on both.
Mr. Mayrand: On this issue of whether we should have two acts or a single statute to deal with reorganization, I should point out that it is not unusual for countries to have a multiplicity of legislation to deal with insolvency matters. In fact, the United Statesis probably more unique in that respect because it has put everything under the U.S.Code of Bankruptcy. However, many countries around the world have multiple legislation.
In Canada, how did it happen that we had two regimes for reorganization? Again, there are historical reasons. The CCAA was adopted during the 1930s, the Depression, to allow corporations who had debentures to reorganize before they filed for bankruptcy. At the time, the bankruptcy legislation did not provide for such options, so the CCAA was put in place specifically — and I understand that it was under pressure from foreign investors — to have a system to allow large corporations who had debentures issued to reorganize without a bankruptcy.
Over time, the Bankruptcy and Insolvency Act was amended. In 1949, it allowed for proposals, as they were called at the time, and the CCAA became somewhat obsolete. In the late 1970s and throughout the 1980s, practitioners rediscovered that piece of legislation because it allowed the tailor-made solutions that the BIA did not provide. The BIA is not set to deal with major, very large restructuring. It could, if it were a simple financial situation; but often those large reorganizations reflect complex financial situations that need more time to be addressed and more flexibility.
Is it time to integrate those statutes? Again, we will be looking for your guidance and direction in that regard. There is far from a consensus among stakeholders on this. There are significant differing views.
However, I think there is recognition that we still need two regimes — one to deal with the streamlined reorganization and one to deal with the more complex one that, again, requires that flexibility. Whether it should be in the BIA or in separate statutes, your guidance will be appreciated.
[Translation]
Senator Prud'homme: Since you are an expert, what do you think?
Mr. Mayrand: The report was written in the context of the present reform and took into consideration the suggestions made to us in 1997. At that time we were asked to submit the issues involved rather than solutions. We were told that, as public servants, that approach would be more appreciated, that the department should present the issues, but that it would be up to the House and Senate committees to identify solutions.
We look forward to your recommendations after you have heard all the witnesses and considered all the issues.
Senator Prud'homme: But I shall come back to my previous point: Help us to guide you.
[English]
The Chairman: It has been suggested to us that we keep the two regimes and perhaps incorporate them in one act. I do not know if that does anything.
Senator Kelleher: If I proceed under the Bankruptcy Act, to a certain extent I am under the supervision of the superintendent; on the other hand, if I proceed under the CCAA, and this is no disrespect, it is a bit of a crapshoot going into court under that act. It pretty well depends upon the judge who is hearing the case.
We are in pretty good shape in Ontario. There is a separate division in that respect, and we generally have the same judge, Mr.Justice Farley, who handles the cases and gets through them. However, there is no supervision as such; there is no supervisory structure as there is under the BIA.
Should we have some sort of a structure? For certain instances under the CCAA, should we give the Superintendent of Bankruptcy some jurisdiction? What is your thinking there?
Mr. Mayrand: It is a point raised in the report in terms of the systemic issue, or an issue surrounding the whole system of insolvency. The first thing about CCAA, from a supervisory point of view, is that there is no central public record — hence the difficulty to bring to you accurate and fulsome information about CCAA. It is because there is no CCAA central registry in this country, as we speak. The other thing that is mentioned in the report as a systemic issue is that there is no other mechanism for aggrieved parties to complain and then appear in court. In some cases, it is a very busy court at those hearings. There is no simple mechanism to address the concerns that may emerge during reorganization. There is no supervision.
It has been suggested, in the report and by other witnesses, that monitors should be licensed trustees. Trustees are governed by their code of ethics, which is set out in the BIA. They are subject to certain standards, including accountability standards. The report also suggests that if there is to be supervision, in addition to the three points I mentioned, the superintendent, as under the BIA, should be allowed to intervene in proceedings before the court generally where there is an issue of national interest. We use that provision from time to time.
Senator Kelleher: There is a private member's bill— I think it is number253— that seeks to amend the BIA to make unpaid wages a first priority. I think we faced that back in the 1980s; I recall discussing the issue in cabinet at that time. What are your comments on that proposed legislation?
Mr. Mayrand: I must admit that we are not familiar with that matter. Is it a motion or a bill?
Senator Kelleher: It is a bill. Knowing the process that is used in the House, that bill will probably never see the light of day. The fact is that it keeps rearing its ugly head in this type of legislation.
Mr. Jim Buchanan, Senior Project Leader, Policy Sector, Industry Canada: I must confess I have not seen that particular bill, but I have seen earlier versions of the same bill. Such bills purport to give to the claims of wage earners a super-priority status, ahead of all other creditors' claims, sometimes even ahead of the claims of the CCRA.
Senator Kelleher: Heaven forbid. What a tragedy!
Mr. Buchanan: The wage-protection issue is one of the main issues discussed in the report. The option of giving wage earners super-priority protection is discussed there. The stakeholders in the consultation had different views on it. A majority of stakeholders appeared to favour a super-priority protection over other means of enhanced wage protection. By no means was there a consensus on that. As Mr.Mayrand indicated, wage protection is one of the contentious issues in the report.
Senator Kroft: I suspect this is the beginning of what may be a rather long relationship. I have some questions about process. This is our first session with you and our first session of any kind on this task. I want to pick up from where SenatorPrud'homme was to help me understand the process and the task before us.
From everything I can see, you have done an extensive and very fine piece of consultation with stakeholders on a broad range of subjects. We are already receiving presentations from various interest groups on specific points and on wide-ranging points.
I am looking at page 10 of your presentation, and I sense that this as close as we will get, with your help, to organizing our work. You have set out categories like consensus and significant differences and, in the red column, contentious issues.
You have made no effort, and I gather from your response to SenatorPrud'homme that you have no intention of making any such effort, to give recommendations on any point. Is there any point today or in future meetings in pressing you on that subject? Would that be a hopeless question?
Ms. Thivierge: We did consult on the issues and we tried to portray the responses in the report before you. We wanted to provide you with a good sense of the legitimate policy options or the legitimate policy solutions.
As Mr. Mayrand mentioned, primarily because of what happened 1997, we have not gone as far as to say ``and therefore the government recommends the following policy direction.''
As I noted earlier, the consultations took place in 2001 and early 2002. Already a year has passed. Some issues are being seen in a new light. There are some emerging issues. Stakeholders made some substantive submissions after the report was tabled. We plan to continue monitoring the work of the committee, engaging in dialogues with the stakeholder community and refining our thinking on some of the issues. It is our hope that we can factor in the recommendations of the committee into the policy development process.
Do I have a policy direction on these issues today? No, I do not. If this is a long partnership over many months, perhaps we will come to a view down the road as you also articulate your thinking. Up until now, we have not, for all these issues, established a policy direction or policy decision of any sort.
Senator Kroft: I will pursue my questioning. We have this smorgasbord of items here. Beside the lack of any recommendation or even a discernible point of view, there has been no effort to rank these 30 or 40 items in terms of importance. Do you have a list of hot items from all of these? Are there three or five or ten that are most critical, which seem to cause the most problems for Canadians in accessing these procedures in our law? As of now, we could take it this way or that way. I am not sure if there is such a list. Can you give us any guidance on that?
Ms. Thivierge: From our discussions with the minister, it is fair to say that guidance from the committee on those contentious issues certainly would be truly welcome. Regarding the issues in the first column, there is consensus on how to modernize the Canadian statutes to deal with those realities. Your support for going in those directions would be helpful. Guidance from this committee would be particularly helpful with regard to the list of contentious issues. Many of these issues have been around for a while. Recent events are shedding new light. We will spend quite a bit of time on that list and we would very much welcome the advice of committee.
Senator Kroft: Again, recognizing that we are at the beginning of a process, I read, in advance of the meeting, your various reports and statistics over the years about rates of growth and rates of decline in proposals, in bankruptcies, on a consumer level and on a corporate level. The picture is not completely clear. It is all there, I am sure. As a background or an overview, I want to reduce it to a simple question: On both the consumer and the corporate sides, is the picture getting worse or better? Is a growth in number of proposals good news in that people are resorting to the mechanisms to solve the problems, or is it bad news that more people have more problems? You can look at all these statistics from either side. I do not know if you would venture a comment on that.
Mr. Mayrand: It seems that the rate of growth has come down significantly. Obviously, consumers especially are still very vulnerable because of level of indebtedness, and we always have a concern that should the economy slow down in a significant manner, we would see a substantial increase of consumer insolvency filings. You see the peaks and valleys that follow the economic cycles. We are in a period right now that has been unique. If you look at the last 30 years, we have had five years of relatively stable volume. That is why we are suggesting that things have levelled off. Yet many consumers are vulnerable, and hence the notion of looking at prevention.
On the business side, I should point out that the situation has improved substantially in the last decade. Our rate of business insolvencies has come down significantly in the last decade, and especially in the last part of the 1990s. As we mentioned, it compares favourably to the U.S. It is very comparable. In a market economy, when you want to foster entrepreneurship, you have to tolerate a number of insolvencies. In that sense, it is not alarming.
One other point about the statistics that you have seen and that have been presented is that one of the important pieces of the story here is that there has been a significant shift in both consumer and commercial insolvency toward reorganization or proposals. Reorganization in the commercial world preserves jobs and commercial relationships between the parties, and they are efficient. Successful reorganizations are efficient in enhancing the productivity of a particular business.
Similarly, for the consumer, there were no arrangements 10 years ago for consumers. Now, close to 15 per cent of all filings by consumers are arrangement proposals. That is beneficial to the debtor who has a sense of meeting obligations. It is a much-reduced sense of failure when you are able to enter into an arrangement with your creditor. On the debtor side, there is a positive thing. On the creditor side, it is a better return. We have figures showing that it is as much as seven times the return of bankruptcy, so financially it is better for creditors. As well, it allows them to preserve the relationship with those debtors.
Reorganizations are seen as much more effective ways of achieving fresh starts and rehabilitation than liquidation, and they are beneficial to all parties. That is a positive story. It was a deliberate intention of the amendments in 1992 and 1997, and we are just beginning to harvest the benefit of those legislative policies. It always takes time.
I want to ensure that it is understood that, in terms of consumers, they are still quite vulnerable. I would not be surprised to see another peak two years from now, depending on the economic situation, of course.
Senator Oliver: In view of the fact that you are really not here to answer specific questions about changes, amendments and proposals, I will, like the others, put general questions to you. You mentioned the types of stakeholders you canvassed and talked with in 2001, 2002, and you ended by saying that you hope that the acts that we will end up with will be the best in the world. I am interested to know what you have done about gathering information about what is being done in other major jurisdictions such as the U.K., the United States, Germany, Australia and so on. How did you go about getting that information, and where does Canada stand now in relation to those other jurisdictions in relation to bankruptcy and insolvency legislation?
Mr. Mayrand: I will let my colleagues answer for the policy sector. We are a member of an international association of regulators that brings together 23 countries from around the world. We meet once a year to exchange information on major developments, economic development, market development, legislative development and things of that nature, thereby allowing us to maintain a network where we can get information relatively easily about other systems.
My office is part of the initiative of the World Bank to design the principles for legislative reform around the world. My office is part of it, but many Canadian practitioners are also part of it, and judges. The World Bank is promoting reform in other countries and using our expertise or the Canadian expertise to design systems and train officials or private-sector parties in other parts of the world.
We also monitor development in main countries like the U.K., Australia and the U.S. Again, insolvency reform has been very active in developed countries, but also in developing countries in the last 10 years. The amount of reform we have seen in the last 10 years is quite astonishing. We are keeping track of the main ones.
For example, one thing that may come up during your deliberations is the issue of discharge of debtors. Should it be one year, nine months, two years or three years? This is an issue for personal insolvency, but it is often discussed. Just to give you an illustration of how the target is not fixed, Australia reduced its time for discharge from five years to one year at some point in time and just recently amended its legislation to bring it up to three years. The U.K., at the same time, in parallel, brought it from five years to one year in that most recent reform, and they are looking at Canada and how we do with our nine-month discharge period, how that is working and how we deal with surplus income and all the issues. There is a lot of exchange going on, but it is not a science. Especially in personal insolvencies, we are dealing with individual consumer behaviour, so finding the right point is often the object of much discussion.
Ms. Thivierge: I can add that, on the policy side, our people are monitoring what is happening. We have developed a few charts. Some of this information can be shared with this committee. For all of the issues outlined in the report, we have looked at what is happening in the U.S. as a benchmark.
Mr. Mayrand just mentioned recent developments. In some countries, there is proposed legislation, while in others laws have been passed. We have looked at those and the changes that were brought about. We have matrices and summaries of what has been happening internationally. We do monitor what is happening internationally in like- minded countries to ensure that, as we look at what options might be available for us, we are mindful of the global environment and some of the trends that are happening elsewhere.
Senator Oliver: Those charts would be useful if they could be laid before the committee.
Ms. Thivierge: With pleasure.
Senator Oliver: I have a question about public policy. In terms of the liability of directors on bankruptcy, if a company is getting ready to go bankrupt all the board directors will immediately call their lawyers and say, ``Look, I thought I had an insurance policy. What is my coverage? What should I do? Should I resign? Should I run and hide?'' At the same time, this board of directors are the people who you really need to help work through the negotiation process to try to save the company and the jobs.
I wonder from a public policy point of view how far should this committee go in trying to protect members of the boards so they do not have to resign. There are now in law a number of automatic payments that must be paid and submissions to be made to Revenue Canada and so on. Apart from specific payments, how far as a matter of public policy should we go in trying to ensure that something as important as a board of directors can stay in place to help work through these troubling problems?
Mr. Mayrand: That is an issue that is part of the report. It is one where we have noticed significant difference in terms of the approach. I am sure you will hear from other witnesses, but one of the challenges with respect to director liabilities and sanctions to directors and officers is how to distinguish proper versus wrongful conduct. Clearly, you want to attract competent and honest directors and keep them in the reorganization. That is critical for the success of the reorganization and the management of the business. At the same time, you have to have the ability to displace those who do not display the same level of competence or the level of conduct that you would expect normally in the corporate world. One of the challenges is how to go about making that distinction.
Senator Oliver: There is ongoing peer review being brought into a number of boards where, on an annual basis, they will do peer review and cull out those who are not performing; is that not enough, or are you recommending more?
Mr. Mayrand: Again, I will wait for your discussion and deliberations.
The Chairman: We have an impasse here. It is like, ``After you, Alphonse.''
We hope that at some point you will be more forthcoming with your recommendations. You have been at this for a number of years; you are world-class experts. I cannot speak for everybody on this committee, but I am certainly not a world-class expert. Mr. Goldstein is. We will come up with what we think are good recommendations, but you will have to hold our hands a little.
Senator Kroft: In case it was not clear, we will not be shy about disagreeing with you.
The Chairman: I do not know what word to use, but to say, ``The ball is in your court, ladies and gentlemen,'' is not good enough. You will have to help us.
[Translation]
Senator Prud'homme: Within this committee I see my role as being like that of a member of a jury, weighing the pros and cons. You are in senior positions in the Public Service, used to advising the minister. I imagine that if the minister wants to do certain things, he must consult you. Some officials will tell the minister what they think he wants to hear. That happens often, but I am sure you are not like that.
The minister tells you that something needs improvements and the committee also tells you to make improvements. However, it might be better to do nothing. So, like a jury, we listen to your suggestions. We are asking for your assistance since you are the experts..
When I was a student in university, I knew C.D. Howe. Not many people here can quote him. If he had an idea but did not know how to implement it, he would ask experts to help him so as to make sure that things were done properly. If anyone dared tell him there was no solution, he would retort that he had not brought in an expert to be told that. They were the best people in the field, so they should resolve the difficulty.
I am in the same situation today, but I will not say any more than that. You have in your group bankers, people from the world of finance and other areas. We listen to your views. As you look at this issue before us, you may perhaps be able to tell us what should be done. You can get together with our Chair, who can then tell us what to do.
[English]
We could go down the wrong track, and you will be there, knowing exactly that we are on our way down the wrong track. However, you are duty bound, as a high civil servant, to try to help us in terms of how to do it. I know about diplomacy and all that. Maybe it would be good to hear from you after you listen to others who will come and tell us what to do with the experts that we have there.
It is this shyness that I see from people, ``Well, you know, I could not do that, but, boy, is he on the wrong track.'' I have been told that for 40 years in Parliament: ``You were so close to asking the right question, but you did not ask it and I was not duty bound to answer you. I am obliged to answer if you ask a clear question.'' However, the question is to know what question to ask. My hope is that my chairman will continue along the path he is going.
The Chairman: The way we will leave this is that I am sure we will get along wonderfully well. As we get further into the subject, we will have some sort of off camera meeting to bring you up to date on where our thinking is going. Then we can have an exchange of ideas. In other words, we will not catch you barefooted with a recommendation of which you are not aware. We ought to have a chance to exchange ideas. We will not belabour the point.
Senator Moore: I have a couple of policy questions, so I do not think you will mind trying these on.
One of the big expenses in a bankruptcy or insolvency matter is the accounting and legal fees that are taken out. Do you think there should be statutory provisions regulating the amount of any special fees, including waiver fees, retention fees, staff bonuses or some other fees?
Mr. Mayrand: Are you referring to bankruptcy reorganizations, or generally?
Senator Moore: Should there be statutory limits?
Mr. Mayrand: Perhaps I can respond by explaining how the system is set up currently.
The Chairman: Could you could you be more specific, Senator Moore?
Senator Moore: We heard from an earlier witness that the fees charged by professionals like lawyers and accountants in some of these proceedings are quite onerous. That is the evidence we heard previously, and I should like a response from the witness.
The Chairman: As a follow up, someone told us the other day that they were at a hearing for Air Canada in a Toronto court and counted 150 lawyers.
Mr. Mayrand: That is my understanding, too, maybe 160.
Senator Prud'homme: There is not much left for the little people after that.
Mr. Mayrand: Maybe we should start with the BIA, because there may be some clearer rules there.
In regard to personal insolvencies, if it is a certain type of simple administration, there is a tariff that governs the cost and fees of administration of the file. Roughly, in Canada, to administer a consumer bankruptcy, it is around $1,500, including all disbursements and GST. It could vary, but that is the approximate amount. That is what it costs to cover a summary administration, which represents over 90 per cent of the proceedings under the BIA. There you have a tariff.
If the tariff on a file appears to be excessive or unfair, it is possible to go before the court and require taxation of those fees and have them reduced. That does happen from time to time. The authority to intervene before the court belongs to any of the creditors on the file, as well as to representatives of my office. That takes care of summary bankruptcy.
In ordinary bankruptcies, which would be the larger commercial ones, the act says that the trustee is entitled to 7.5 per cent of the amount realized. This is one area of the act that is obsolete and needs to be modernized, because those provisions are no longer of much assistance. At the end of a commercial file, the trustee will present a statement of receipts and disbursements, which, in most cases, will be supported by time sheets and work-in-progress documentation and will claim a certain amount for the work done on the file. That will be taxed by the court based on the result, the effort and the amount returned to creditors. Again, at that taxation, any creditor can intervene and make comments on the appropriate level.
Commercial proposals under the BIA are normally set between the debtor and the trustee tasked with administering the proposal. The prevailing view now is that such an agreement is a private agreement. There could be a debate on that, but that is the prevailing view.
In consumer proposals, there is also a tariff that predetermines the amount that the trustee will receive for the proposal. Under the CCAA, there are again no rules respecting remuneration of any of the professionals involved. It is my understanding that it is left to the court to approve the fees and that it is common practice in CCAA to get orders that would prime those fees in the reorganization.
Senator Moore: Could you explain what that means?
Mr. Mayrand: Often the court will issue a charge on the assets to guarantee the payment of the fees and the administrative costs on the files.
Senator Moore: Ahead of other creditors?
Mr. Mayrand: Yes.
As to the amount, there is no taxation per se in CCAA. Again, at the end of the day, there is agreement between the parties, and much consideration must be given to that agreement.
That is a brief overview of these matters.
Senator Moore: I want to ask about the assets that can be exempted. Should there be a statutory list of assets that are exempt from seizure in bankruptcy? If so, should a debtor be able to choose either federal exemptions or provincial exemptions in their totality? Did you have any discussions about that in the course of your deliberations?
Mr. Mayrand: That is an issue that was identified in the departmental report. It is also an issue addressed in great detail by the Personal Insolvency Task Force that produced a report that was conveyed to the committee.
Historically, Canadian legislation has always deferred to provincial legislation to determine what assets should be part of the estate and what assets should be exempt. It has been like that ever since we have had insolvency legislation for individuals.
Income is an exception to this. Income is treated separately from provincial legislation. How income is dealt with in bankruptcy is set out exclusively in the BIA without reference to provincial legislation.
The issued was raised again during the PITF. Canada's system is not unique. Many countries, including the U.S., have a dual system whereby states may opt to establish their own exemption for bankruptcies. The question is being raised by the PITF and the recommendation made to the effect is that we should have a federal list of exemptions with the debtor having the choice of statute, either federal or provincial, should the debtor elect to file under the BIA.
This is unique. It aims at recognizing the local circumstances, the vast geography and the diversity in economies and social structure across the country. At the same time, it provides a baseline of exemption across the country. It tries to balance with local circumstances.
Again, this has been offered as a possible solution by the PITF. This is also a contentious issue. I understand that it will be contentious with provincial governments. Also, I think it is important that you hear what creditors have to say. I was surprised myself when I heard them say that they prefer the current system. Most creditors prefer the provincial exemptions as they are. Their systems are adapted to assess their risk and to factor in the variations in exemptions across the country.
Senator Moore: They have been working with the system and it has become a structure with which they are happy.
Mr. Mayrand: It seems to be ingrained in their system and they are familiar with it. The message we heard from them is that the situation is fine as it is. Again, looking at it from another angle, it may seem unusual to see such a variety in exemptions from province to province.
The Chairman: Your brief describes the role that the Office of the Superintendent of Bankruptcy plays in supervising bankruptcy estates, business reorganizations, consumer proposals and receiverships; as well, your brief suggests that reorganization under the CCAA should be subject to the supervision of the superintendent.
I have three brief questions. First, are you recommending that the Office of the Superintendent of Bankruptcy play a role in CCAA restructuring similar to the role it plays in matters under the Bankruptcy and Insolvency Act? Second, have you considered whether more personnel will be required at the Office of the Superintendent of Bankruptcy? Third, do you know why this additional responsibility of the OSB was not defined and placed in the revisions of the CCAA in the 1997 amendments?
Mr. Mayrand: With respect to supervision of CCAA, that is mentioned in the report. The suggestion from this office is that it is time to consider having a national registry and to consider offering a mechanism to allow participants in the system to express or bring out their concerns, other than through court proceedings.
The third element, which was supported by practitioners, is that monitors should be licensed trustees, because there are standards with respect to trustees that are well known across the country and the community.
We must be cautious. This is an area in which I can express an opinion more freely, because as the supervisor I should have some thoughts on the system I supervise. We must be cautious on how far we want to push the provisions in the CCAA. I do not see a need for a full-fledged regime. I think it is supervision similar to the BIA. I should like to get some direction from the committee as to whether it should be more than the four items that are identified in the report. I am sure you will hear from practitioners in that regard.
Anything more than what is in the report raises certain issues about resources and funding the supervision. That is a point that has to be made. If we were to extend the same level of supervision that exists in bankruptcy, I am not sure it would be warranted. In the CCAA, you have large players that can self-discipline the system to a large extent; in bankruptcy and BIA proceedings, it is the opposite. You often find vulnerable participants, ill-informed participants that need the benefit of a more aggressive supervision.
In the continuity of incremental approach to insolvency reform, I think the four points that are identified in the report would establish a sound basis for having a supervisory regime in the CCAA proceedings, which will not impede the ability of parties to come out with the best agreement at the cheapest cost possible.
I think I may have missed the third point, Mr.Chairman, for which I apologize.
The Chairman: Why was it not done in the 1997 amendments?
Mr. Mayrand: I believe things have evolved quickly. The market is changing quickly. Issues are moving very quickly. It becomes a little bit more apparentthat the lack of having a national registry is a flaw in our system. It will impede one's ability to have a full review of those proceedings. That is becoming more obvious. As CCAA secures more importance in the insolvency system, those issues now emerge — like the issue of the monitor. Should the auditor be allowed to be a monitor? That was not seen as a major issue in 1997; but in these days, with all the discussion on corporate governance and the importance of ensuring public trust—
The Chairman: This committee would probably think it is a bad idea.
Ms. Thivierge: As we were trying to prepare for this review, one of the questions I asked early on was this: Have the amendments that were introduced in 1997, as they relate to the CCAA, been working? The answer was that we would have to inquire as to where those cases are and study them. In fact, from a public policy point of view, we do not have access to the data and some of the facts that come out of a restructuring. These are public; but we have to go out and try to find out in which court these cases were tried, what came out of them, go through the documents, et cetera.
The point that Mr.Mayrand has raised is valid. A registry gives you access to information that allows you to establish whether or not your policy outcomes are those that you set at the front end.
The Chairman: That is what we have been told.
Senator Kroft: In your last answer, you were saying that you are on the policy side and that as such you do not have access. What is the status of the documents in these proceedings?
Ms. Thivierge: What I meant to say, and I tried to correct it —
Senator Kroft: They are not part of your files.
Ms. Thivierge: They are not, and we have to go and check in all the courts across the country to try to find out where those cases were tried and where the information is, et cetera.
[Translation]
Senator Setlakwe: Mr. Mayrand, you have talked about the issues of concern to stakeholders, and in this regard you mentioned the appropriateness of a company's auditors acting as monitors. Does this stem from concerns related to conflict of interest problems resulting from the recent behaviour of a few corporations in the United States and Canada.
Mr. Mayrand: This is a concern, particularly in the area of insolvency, where the file director must be above any suspicion. Everything is based on the confidence to be given to the trustee, the monitor or the interim receiver, who may be involved in file administration. This has always been a concern. There is a code of ethics for trustees, which establishes rules or parameters with respect to conflict of interest. As we must recognize, one of the difficulties is to balance the efficiency of economic imperatives for effectively managing a file with a very different set of imperatives, namely to ensure public confidence and have conflict of interest rules which place the individual concerned above any suspicion.
The Act provides the possibility of an auditor acting as the monitor of a company. This question is even more important today given developments in the corporate world.
Senator Setlakwe: I think that is indeed the case.
Senator Biron: In order to use the Companies' Creditors Arrangement Act, the debt threshold must be five million dollars. If it were to be increased, could certain rules or powers in the BIA be applied to the other Act in order to achieve a similar settlement?
Mr. Mayrand: Could the threshold be increased? Generally, it is the larger corporations that use the CCAA. Now there are a number of corporations that use this act even though they have liabilities of between five and ten million dollars. Should these corporations be excluded? If you were to increase the threshold, that would mean that those companies no longer have a choice, you are quite right. In that case, the rules would have to be harmonized. If the threshold were to be raised, the companies excluded from C-36 would need quite a flexible system in order to enable them to reorganize. I think that in all the changes made with respect to reorganization, it is essential to determine whether the change has to be made only in the case of C-36 or the CCAA, or whether it should be copied with amendments being made to the Bankruptcy Act. We have to avoid too many choices being made for reasons other than seeking the best possible result for stakeholders. That should be a constant concern.
Senator Biron: And if there was only one statute for the two, would it be included?
Mr. Mayrand: Yes, except that as I indicated, even if everything was in the same Act, it would require a special regime. Everyone will agree quite quickly that Air Canada cannot be reorganized under the Bankruptcy Act.
Major corporations need a different regime from the Bankruptcy Act, which works very well for small and medium- sized businesses. In fact, there are thousands of companies that use this regime every year in Canada, and do so very successfully, compared with the situation in the United States. So we should keep this regime for small and medium- sized businesses.
The regime provided for under the Bankruptcy Act is not appropriate for publicly listed companies, since it does not offer the necessary flexibility. Even if everything is integrated within the same Act, a regime will be needed to deal with exceptional circumstances.
[English]
The Chairman: I wonder if you would consider, in due course, giving us ranges of choices on some of these highlighted issues, such as the contentious matters, just as guidance. You have been at this business for a few years; we come to this subject totally cold.
I find it interesting. I was a lawyer for about a month and a half. It is quite something to grapple with a whole new body of legislation and try to understand it. We will work our way through it and we will give it a good shot. We will be as thorough as we know how. However, your help would be appreciated as well.
One of the ways you could help us is by giving ranges of choices. You do not have to tell us what to do, but say, ``On the question of student loans, et cetera, here are some suggestions.''
If you could consider working with us from time to time over the next month, it would be helpful. In the meantime, thank you for being with us; you did a very good job.
The committee adjourned.