A Mercer Communiqué reports on the progress of private member’s Bill C-501 which passed second reading on May 26, 2010. It will be studied by the Committee on Industry, science and Technology this fall. Among other things, Bill c-501 will rank pension plan’s total funding ahead of secured creditors when the plan sponsor is bankrupt.
The Communiqué outlines current priorities under the Bankruptcy Act and notes that a terminated DB plan’s solvency deficiency will be added to this list. One potential consequence would be that this shortfall could exceed the amount owed to secured creditors and wipe out all secured claims including the claims of former employees for health benefits and other compensation. It is suggested this would be particularlt unfair when only part of the workforce belongs to the pension plan. ….Read More