The Association of Canadian Pension Management is urging parliamentarians to vote down the final version of a new bankruptcy and insolvency bill.
If passed, Bill C-253, also titled the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance plans), would force super priority on Canadian pension plan members in the event of bankruptcy or plan windups.
In a statement to the Canadian Investment Review, Ross Dunlop, the president of the ACPM’s board of directors, said the bill “will make the ability of companies to obtain and maintain financing at competitive rates nearly impossible for DB sponsors.
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“While we realize that bankruptcy is a bad experience for everyone involved, a super priority approach will negatively and significantly affect struggling DB sponsors and make Canada’s iconic companies that sponsor DB plans un-financeable. Instead, ACPM supports innovation currently taking place in the pension industry that allows for efficiency and consolidation so the bankruptcy of a single employer does not create a catastrophe for retirees.”
The private members bill was introduced in November 2020 by Bloc Quebequois member of parliament Marilène Gill. On May 12, a 189 to 139 vote in the House of Commons approved the general outline of its contents. During the vote, the draft of the bill received the support of all sitting members of opposition as well as 10 Liberal MPs. Gill didn’t respond to a request for comment.
In April, the Canadian Federation of Pensioners, which represents several retiree groups with more than 300,000 members, came out in support of the bill. It also voiced its support for similar Bill 249, which was introduced by New Democratic Party MP Scott Duvall in November 2017.
Unlike Bill 253, Bill 249 has yet to receive a second reading and preliminary vote from the commons.
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Speaking to The Canadian Press, Michael Powell, president of the CFP, said his organization was supportive of two legislative efforts to provide pension members with super priority to the unfunded pension liability in insolvency. “They’re somewhat different, but the core component of each is identical, which is extending super priority to the unfunded pension liability in insolvency.”
In order for the bill to be blocked, a majority of MPs must vote against it during its third reading, which could be held as early as this month. Should it be approved by the House of Commons, it would still need to pass through the Senate before becoming law.