Tag: Art Eggleton

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CANADA FEDERAL BUDGET PLAN: RETIREE BANKRUPTCY PROTECTION REJECTED

Canada federal budget plan: Introduction

Like many Canadians, on March 19 I was watching to see if the Conservative Party would be successful or not in blocking Finance Minister Bill Morneau’s budget speech. In the end, the Liberals took the drop on Parliament by getting the budget introduced early, before the Finance Minister’s speech. That allowed the media in lockup to start broadcasting the details of the Canada federal budget plan before the Finance Minister gave his speech!

Canada federal budget plan: Retiree bankruptcy protection

I was also looking to see what the budget had in it about retiree bankruptcy protection. This matter has been in the news over the past two years. High profile insolvency cases such as Sears Canada and U.S. Steel Canada brought this matter to the forefront. I have written a few blogs on the topic of proposals to amend the Bankruptcy and Insolvency Act (Canada) (BIA) and the Companies’ Creditors Arrangement Act (Canada) (CCAA) to provide protection to retirees. This included private members’ bills introduced by Hamilton Mountain NDP MP Scott Duvall, Bloc Québécois MP Marilène Gill and Senator Art Eggleton, P.‍C.

As I have previously written, the issue for retirees (and current employees) relates to the employee health benefits plan and pension plan when a company enters into an insolvency administration. Insolvent companies have been allowed to put a moratorium on reimbursements to employees and retirees on valid health benefits claims. Also, the employee pension plan suffers a shortfall because the insolvent company has not made the required contributions. This automatically creates reduced pension benefits for retirees.

Pensions are delayed earnings. In either a bankruptcy or bankruptcy protection reorganization, there is generally nothing left for employees.

Given the recent high-profile insolvency cases, employees now recognize just how unsecure their pension plans and health benefits might be in the case of insolvency, reorganization or bankruptcy.

The Liberal Party already recognizes that this is a major problem. However, in this budget, they decided to ignore the issue.

Canada federal budget plan: What this budget is

Rather, this budget screams please re-elect the Liberal party. In the wake of the SNC Lavalin debacle, Prime Minister Justin Trudeau is trying to win votes by spending, spending and then more spending.

The Government of Canada market debt is projected to climb by $31 billion in the coming fiscal year, to strike a total amount of $754 billion. This brand-new funding demand comes along with $250 billion of existing debt that will be maturing and will require to be refinanced.

The Finance Minister estimates that Canada’s deficit will rise as a result of the $22.8 billion of new spending. The 2018-19 deficit projection is now set at $14.9 billion, slightly reduced from the Government’s estimate in Fall 2018. However, not surprisingly for an election budget, the Liberals found a way to spend those savings and then some. Their 2019-20 deficit projection is $19.8 billion.

Canada federal budget plan: What is in this budget

This budget has a bit of something for almost everyone. I am not an economist and this Brandon’s Blog is not meant to be an economic analysis of the budget. There are many sources for an in-depth analysis. However, some of the budget highlights are:

  • $1.25 billion over 3 years on a shared-equity home loan program for first-time home buyers.
  • RRSP withdrawal limit for new home buyers increases to $35,000 from $25,000.
  • To aid Canadians with uncommon medical conditions or diseases access to the medications they require, Budget 2019 proposes to invest up to $1 billion over two years into a National Pharmacare program, starting in 2022–23, with up to $500 million per year afterwards.
  • $3.25 billion to Indigenous Services for water quality, child welfare, education and other supports.
  • $2.2 billion for a one-time doubling of Gas Tax cash for cities’ infrastructure spending.
  • Personalized Canada Training Credit of $250 a year (up to $5,000 lifetime) for job retraining.
  • A credit of up to $5,000 for the acquisition of electric vehicles.
  • The rate of interest on Canada Student Loans decreased to prime and will be interest-free for 6 months after graduation.
  • Low-income working seniors can earn more without losing GIS benefits.
  • $595 million to sustain journalism will include 15% tax credit for electronic news subscriptions.
  • A promise of high-speed internet for all Canadians by 2030.

Canada federal budget plan: Vote for me

So as you can see, this budget is full of promises; a little something for everyone. The two glaring omissions seem to be nothing really for business and ignoring retiree bankruptcy protection. It appears that the Federal government went for the easy stuff – spending money, as opposed to harder things like amending the BIA and CCAA.

It is obviously an election budget. Details on how the new legislation and spending will work are scarce within Budget 2019. No doubt the devil will be in the details. The new proposed housing provisions will no doubt spur demand, which will keep the construction industry going which is a good thing. However, increased demand will probably mean higher prices in the major Canadian cities, especially in Toronto and Vancouver. So, it will take time to see if affordability gets worse or not for new home buyers.

Canada federal budget plan: I can’t spend more than I earn, how about you?

Our government has made no secret that it will be spending last year’s savings and then look to spend more than it takes in. The way they can do that is by just issuing more debt. This is certainly not unique to the Canadian government. All governments do it.

Unfortunately, normal working people can’t just take on more debt because we want to spend more. Eventually, I would run out of lenders willing to let me borrow more money, and my income would not be enough to make all my monthly payments, let alone repay the original loans! Rather, like you, I need to budget to make sure that my necessities are covered and that I have enough money for the other things I need to spend on. This includes my savings and emergency savings fund.

Have you lost the ability to borrow more money? Are you having trouble making your monthly payments? Is your business facing financial challenges that need to be addressed?

If so, call the Ira Smith Team today. We have years along with generations of experience helping people and companies in need of financial restructuring or a debt settlement plan. As a licensed insolvency trustee, we are the only professionals accredited as well as supervised by the Federal government to supply insolvency advice and services to help you avoid bankruptcy.

You can have a no-cost consultation to help you to fix your debt troubles. With you, we will discover your financial pain factors and offer you the strategy to finish them in your life. This will absolutely allow you to begin a clean slate, Starting Over Starting Now.

Call the Ira Smith Team today so you can start ending your stress and pain today. With the roadmap we create unique to you, we will quickly return you right into a healthy and balanced carefree life.

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ONTARIO PENSION PLAN: DOUG FORD GUARANTEES ONTARIO PENSION PLAN RELIEF FOR ALGOMA STEELWORKERS

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We are trying something new. At the bottom is an audiogram of this Ontario pension plan Brandon’s blog. If you would prefer to listen to it, and not read it, scroll down to the bottom and press on the play button. Let us know what you think by sending us a message in the Question box below.

Ontario pension plan: Algoma Steel

Ontario’s Premier Doug Ford is promising his help for Ontario steelworkers as well as their Ontario pension plan following the United States’ federal government’s 25 percent tariff on Canadian steel.

In news recently to Algoma Steel Inc. staff members in Sault Ste. Marie, Ont., Ford claimed the provincial government would assist in passing revisions under the Ontario Pension Benefits Act, R.S.O. 1990, c. P.8, along with insurance coverage from the Pension Benefits Guarantee Fund, subject to particular conditions.

Premier Ford didn’t provide any additional information on what specifically the help might be. However, he stated that negotiations are happening and extra info about just how Ontario is sustaining Algoma will certainly be introduced as quickly as possible.

Ontario pension plan: United Steelworkers

At the same time, the United Steelworkers union is prompting the federal government to enact regulations that would safeguard pension plans as well as benefits in situations of company bankruptcy, reorganization or liquidation. Union participants will be meeting legislators to check regulations focused on changing the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36) (CCAA) and the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA).

Ontario pension plan: Proposed federal legislation to date

We previously described the efforts of Scott Duvall, MP for Hamilton MountainA, , MP for Manicouagan and Senator Art Eggleton:

Ontario pension plan: Canadian Association of Retired Persons

The Canadian Association of Retired Persons (CARP) is calling out the federal government, claiming it’s unreasonable that Sears Canada could pay out millions of dollars in shareholder dividends, a large part of which went to the US. At the same time, the pension plans of Sears Holding Corp.’s American staff members will be safeguarded by the U.S.’s Pension Benefit Guaranty Corp. while Canadian workers will certainly see benefits cuts.

“It’s time for the government to take decisive action to protect Canadian pensioners,” said Wanda Morris, chief advocacy and engagement officer at the CARP, in a press release.

Ontario pension plan: Private member’s Bill C-405

On October 17, 2018, Bill C-405 was presented by Conservative Erin O’Toole, MP for Durham. It is called “An Act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act”.

The proposal is to change the Pension Benefits Standards Act, 1985 (R.S.C., 1985, c. 32 (2nd Supp.)), setting out what ought to take place if a business is under liquidation with the CCAA or Part III of the BIA.

His proposed changes lay out what should happen if a company is under liquidation through the CCAA or BIA. It proposes to allow, pending the permission of participants and beneficiaries, to transform the framework of the plan and/or move the pension’s assets to one more plans.

Granted this would probably be a necessary part of any global overhaul of pension plans. However, it is important to realize that it doesn’t do anything to safeguard the pensions or give the plan members and beneficiaries greater priority.

Ontario pension plan: Has a life event thrown you a curveball

Life has a way of throwing curve balls sometimes to good people. In the event of:

  • Illness;
  • addiction;
  • divorce;
  • family death; or
  • job loss

unbearable financial pressures can occur.

The Ira Smith Team has generations and decades of experience in dealing with people or their companies fighting the pain, stress and suffering that comes with financial problems and too much debt.

Our method for each person is to develop an outcome where Starting Over, Starting Now occurs. This begins the minute you come through our door. You’re just one call far from taking the essential actions to return to leading a healthy and balanced life, moving forward pain-free.

Call us today for your cost-free consultation.

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CORPORATE BANKRUPTCIES CANADA: SENATOR EGGLETON PROPOSES NEW PENSION FUND CANADA LAW

corporate bankruptcies canada
corporate bankruptcies Canada

Corporate bankruptcies Canada: Introduction

The U.S. Steel Canada court-supervised restructuring and the court-supervised liquidation of Sears Canada have something in common. They both forced us to focus on the treatment of pensioners in corporate bankruptcies Canada under the Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3) (BIA) (or restructurings and liquidations under the Companies’ Creditors Arrangement Act (R.S.C., 1985, c. C-36) (CCAA)).

We previously wrote about these pension fund Canada issues and the beginning of the focus in Ottawa for the need for new legislation. My previous blogs were:

  1. TORONTO BUSINESS BANKRUPTCY PROTECTION: NDP WANTS FEDERAL INSOLVENCY LAWS CHANGED SO THERE IS PENSION PLAN SECURITY WHEN FINANCIALLY TROUBLED BUSINESSES FAIL – September 27, 2017
  2. SEARS CANADA CLOSING: POLITICIANS WANT NEW LAWS TO PROTECT PENSIONERS DUE TO SEARS CANADA CLOSING – November 1, 2017
  3. SEARS CANADA DEFINED BENEFIT PENSION PLAN SHORTFALL: MP SCOTT DUVALL COMES THROUGH ON HIS PROMISE IN CANADIAN PARLIAMENT – November 8, 2017

Senator Art Eggleton, P.‍C., shortly before his retirement proposed BILL S-253, An Act to amend the Bankruptcy and Insolvency Act and other Acts and Regulations (pension plans).

Corporate bankruptcies Canada: Bill S-253

Bill S-253 passed First Reading on September 18, 2018, and Second Reading was moved on September 25, 2018. This Bill proposes to amend the BIA as well as the CCAA. It proposes to make certain that claims for unfunded obligations or solvency deficiencies of a pension are accorded priority. This is for both solvent companies and companies that would be rendered insolvent by certain payments to shareholders..

This proposed legislation likewise would change the Pension Benefits Standards Act, 1985 as well as the Pension Benefits Standards Regulations, 1985 to equip the Superintendent of Financial Institutions to identify that the financing of a pension is impaired and to recommend procedures to be taken by the employer in regard of the financing of such plan.1

Corporate bankruptcies Canada: Is Bill S-253 new?

Yes and no. In our earlier blogs, I told you about the proposals by Bloc Québécois MP Marilène Gill’s Bill, C-372 and Hamilton Mountain NDP MP Scott Duvall rose in the House of Commons for leave to introduce Bill C-384. The amendments proposed to the BIA and CCAA in those proposed Bills, to create a priority for unfunded obligations or solvency deficiencies, are pretty well the same as in Senator Eggleton’s Bill S-253.

However, Senator Eggleton’s Bill goes further. It requires a company to report to the Superintendent of Financial Institutions:

“…of any proposed or actual decision of the employer, transaction or event, including the repurchase of shares of the employer or the payment of dividends to shareholders of the employer…”

that would cause a solvency deficiency and/or render the company insolvent.

Corporate bankruptcies Canada: So what now for Bill S-253?

To become legislation, a Bill needs to initially be presented in either the Senate or the House of Commons. It needs to after that go through numerous phases in each House: 1st, 2nd and 3rd reading. After that, it has to obtain Royal Assent. No doubt there will be a lot of debating and tinkering with this Bill. It will be interesting to see if this Bill makes it all the way through, or dies before becoming legislation.

However, the picture is clear. The result of the Sears Canada dividend payments and asset liquidation is clear. Shareholders received dividends and pensioners will have to take a deep cut in their pensions. This has caught the attention of the legislators in Ottawa. It will be interesting to see if the political will is there for pensioners to be protected in Canadian insolvency cases.

Corporate bankruptcies Canada: Does your company have too much debt?

Is your company experiencing financial difficulties? If yes, call the Ira Smith Team. Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are at our front door.

The earlier you contact us, the more options we will have to implement. Whether it is a corporate restructuring or personal debt settlement through a consumer proposal, the goal is to avoid bankruptcy. However, if bankruptcy turns out to be the best option, we can assist there too.

You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, ending the pain and stress you are feeling forever. Call Ira Smith Trustee & Receiver Inc. today for your free consultation.ira smith trustee

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