Will changes to Canada’s bankruptcy and insolvency legislation give rise to unintended consequences?

The most recent private member’s bill that looks to give company pension plans special priority for pension entitlements in bankruptcy and insolvency has received approval from Canada’s House of Commons Finance Committee.

When asked about his thoughts on this latest development, partner and head of Torys’ Corporate Restructuring and Advisory practice David Bish told the National Magazine that it’s unprecedented.

“No other country puts these liabilities in that priority position. Nobody puts that in front of the line,” he added.

Read: Pension priorities in insolvency: Will Bill C-228 finally make them a reality?

David continued to tell National Magazine that if Bill C-228 becomes law, creditors will adjust their lending and make sure they’re protected. The real losers could end up being struggling companies that will find it harder to get financing and unsecured creditors, who will be less likely to recover their losses.

“There will be consequences. It will impact lending decisions. It will impact companies’ ability to survive through rough patches. It’s going to have implications, and it’s not all positive for labour,” he said.

You can read more about our Corporate Restructuring and Advisory work on our practice page.

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