Canada is known around the world for many things including our hospitality, pristine lakes, beautiful mountains and exciting cities. Unfortunately, because of the Canadian household debt crisis, we’re now becoming known as one of the most indebted countries in the world!
Canadian household debt crisis: The OECD report
A report from the Organization for Economic Co-operation and Development (OECD) shows that:
Canadian households top the list of countries surveyed as the most indebted
Our household debt has surpassed Canada’s annual Gross Domestic Product (GDP) – it’s now more than 100% of GDP in Canada
Canadian household debt crisis: We are record breakers
We’re breaking other records as well:
Household and corporate debt-to-GDP increased 20% between 2011 and 2016 (Canadian Centre for Policy Alternatives)
Canadian household debt crisis: We have become deaf to all the warnings
We and many other financially responsible organizations and professionals have warned Canadians about the dangers of taking on too much debt. But, Canadians have become deaf to the message. And, borrowing with historically low-interest rates has become downright intoxicating. Sadly, these borrowers aren’t paying any mind to the fact that interest rates may rise which could have serious financial ramifications for many Canadians.
Canadian household debt crisis: It is time to focus on debt repayment and savings
It’s time to rein in the borrowing and focus on saving. Interest rates won’t stay low forever and with nothing saved, how will you pay your bills? Is the thought of retirement nothing more than an elusive dream?
Canadian household debt crisis: What can you do to get back on track financially before disaster strikes?
Canada, let’s stop leading the world in accumulating debt! Listen to the messages out there. The borrowing binge has to stop. Let’s reverse this Canadian household debt crisis.
Please look at your finances and see if you’re living paycheque to paycheque, or are already having trouble paying your bills. If this describes your current situation, you need professional help now!
A professional trustee can solve your financial problems with immediate action and the right plan. The Ira Smith Team has 50+ years of cumulative experience dealing with issues just like the ones that you’re facing. Give us a call today and let us give you back peace of mind Starting Over, Starting Now.
As you can imagine, I have a schedule for creating Brandon’s Blog. I created the above-mentioned blog and related video on the Office of the Superintendent of Bankruptcy (OSB) insolvency records search renewal (IRS) program and posted it for publishing on November 15. After doing so, the OSB published an update on its IRS program. The purpose of this blog is to give you the updated information.
The OSB November 2017 update offers more information about the IRS post it published in August 2017.
Online bankruptcy search: Updating the technology
The OSB has stated that its updated IRS system will consist of modern-day safeguards. The new IRS will secure the private information of people or companies who have either filed or become bankrupt or who have filed a consumer proposal or Division I proposal.
Online bankruptcy search: The legislative need
Under the Bankruptcy and Insolvency Act (BIA), the Superintendent of Bankruptcy is required to keep and make available a public document of all personal and corporate bankruptcies and proposals. The public document, includes the names of the insolvent debtors given statutory stay of proceedings from the commitment to pay their financial debts.
This record consists of vital information needed to administer the bankruptcy system. It is also important for the running of an efficient and well-functioning Canadian marketplace.
Online bankruptcy search: The purpose of the current system
The current Bankruptcy and Insolvency Records Search data source offers Canadians with access to search the public database for specific people or companies that have submitted a (consumer) proposal or bankruptcy, as the case may be. It is also for creditors to see if any party applying for credit are in an insolvency proceeding.
Online bankruptcy search: Uses of the current system
The OSB’s database allows for searches for:
creditors to take necessary activity with respect to specific insolvency filings;
insolvent debtors, either an individual or Directors of a company, to acquire information about their bankruptcy or proposal;
people and companies making informed credit choices on people or organizations applying for loans or trade credit.
Online bankruptcy search: How many times a year is the current system searched?
Each year the current database, (which has a cost of $8 each search for public users), is searched about 800,000 times by individual Canadians, including LITs (for whom there is no charge). Any member of the public who pays the charge could browse the government insolvency records. The present system does not limit access in any other way.
Online bankruptcy search: The proposed new IRS
The OSB will be changing the current system. It is outdated by today’s privacy standards. The OSB will create a new IRS. While still attending to the legislative needs to give access to a public document of bankruptcies, it will substantially make individual information of debtors more secure.
As compared to the old system, the IRS will consist of many steps developed to particularly restrict the disclosure and use of the individual’s details of the debtors who file for an insolvency proceeding.
online bankruptcy search
Online bankruptcy search: New IRS protections
Examples of the brand-new protections which are not available in the current system, to shield disclosure of individual information, are:
Individual information entered will just be confirmed, not offered in a search result.
Searchers will need to recognize the first, last name, as well as date of birth of a debtor. This is required to get verification of an individual in bankruptcy or who has filed a (consumer) proposal.
The new system will no longer supply access to bankrupts’ documents that do not match the search requirements. The new IRS will be search specific, and not providing a complete list of names matching search criteria.
For every right search, a decreased measure of individual information will certainly be returned in the public search results page. Home addresses and complete postal codes will no longer be included in search results.
The public document search retention will be lower. The duration for the storage of details will be 10 years post-discharge.
The new system will consist of innovations designed to decrease the possibility for unexpected uses of the information. For example, machine-based searches.
Online bankruptcy search: Meeting the needs of LITs
The OSB has talked to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) as part of developing the IRS. The OSB has dealt with comments received thus far. The IRS layout will certainly make best use of technology to protect personal information. The new system will fulfill the specific needs of LITs, in meeting their insolvency estate management and legal requirements. It must be kept in mind that the OSB has no plan to remove the $8 charge from the current system before its being retired. The first introduction of the fee was designed exclusively to sustain the OSB’s operating expenses in developing and keeping the existing system. The new IRS will consist of many measures to appropriately reduce disclosure and increase the defense of personal information of debtors. The OSB says that it has no proof that a service charge with the brand-new IRS would better safeguard debtor information against improper use.
Online bankruptcy search: This IRS won’t chase you for money!
As a result, the OSB says it will look at and suggest getting rid of the historic governing arrangement which permitted the charging of a cost to get access to the public record. The OSB states that this will align with Treasury Board Policy. That is why this IRS, is not planning to ever chase you for money!
Online bankruptcy search: What to do if you think you might need an insolvency process
Are you or your company insolvent and in need of restructuring? Are you scared to become another entry in an online bankruptcy search? If so, the worst thing you can do is procrastinate and not take positive steps to remedy your situation. Contact the Ira Smith Trustee & Receiver Team. If we meet with you early on, we can create a restructuring and turnaround strategy designed specifically for you.
For most Canadians the thought of being worth over a million dollars is a totally unattainable dream. Yet, there are now almost 357,000 Canadians with at least $1 million in wealth, not including their primary home (Capgemini). And, as difficult as it is to believe, some of these millionaires worry about being broke. They worry about having enough money in retirement. The reality is that they may have reason for concern.
Enough money in retirement: What do the ultra rich worry about?
20% of ultra-high-net-worth investors (defined as those with a net worth between $5 million and $25 million), are concerned about having enough cash to last throughout retirement. (a 2017 survey by the Illinois-based Spectrem Group, a financial research firm).
People feel angst about running out of money in retirement whether they have $1 million, $10 million or $50 million”, says Gordon Stockman, a fee-only financial planner and principal of Efficient Wealth Management Inc. in Mississauga.
Enough money in retirement: Why do the rich worry about running out of money?
The rich have very expensive lifestyles to maintain. They’re used to the finest things in life – mansions, vacation homes, household staff, exotic cars, first class travel, designer clothes – and they don’t want to give anything up. But, how will they be able to maintain these fabulous lifestyles for what could be a 25 – 30 year retirement? Something’s got to give.
Enough money in retirement: Is it possible to be worth over a million dollars and go broke?
Unfortunately, although difficult to believe, yes it is. There are examples in the news every day about actors, actresses and professional athletes who earn unimaginable amounts of money, and declare bankruptcy. It also happens to doctors, lawyers and other “regular rich folk” who lost track of their spending and blew through their money. It can happen to anyone. Very few people are rich enough to be immune from money problems.
Enough money in retirement: What about you?
No matter how much money you have, take a good hard look and your finances. And if you find yourself in a financial danger zone, contact Ira Smith Trustee & Receiver Inc. We’re a full service insolvency and financial restructuring practice serving companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now. Your financial problems can be solved with immediate action and the right plan. Give us a call today.
After writing and recording this blog, the Office of the Superintendent of Bankruptcy issued a position paper on measures to limit public disclosure of personal information while meeting legislative requirements to establish a public record. So watch next week for our video and blog titled “ONLINE BANKRUPTCY SEARCH: THIS CANADIAN INSOLVENCY RECORDS SEARCH RENEWAL (IRS) WON’T CHASE YOU FOR MONEY!” where we will describe what they have advised to date.
Bankruptcy filings free public records: Introduction
Ottawa’s planning to drop the $8 online search cost for personal bankruptcy records. The change to bankruptcy filings free public records may make it harder for some people. Especially those with earlier economic problems to get a job or a home. Bankruptcy filings free public records: No cost personal bankruptcy records search
The Office of the Superintendent of Bankruptcy Canada is updating its online bankruptcy document search that allows users to get access to public documents on bankruptcy estates. Their database allows users to search online for bankruptcies as well as receiverships. The have not explained yet why they are considering dropping the search cost so that the information becomes bankruptcy filings free public records.
Bankruptcy filings free public records: Why does a licensed insolvency trustee need to search for bankruptcy filings
A licensed insolvency trustee (LIT) maintains an account with the Superintendent of Bankruptcy. A LIT is allowed to do a bankruptcy search through its account for free. The bankruptcy system requires a LIT, prior to accepting either a personal bankruptcy or consumer proposal file, to do such a search.
The reason is that a LIT is required to find if the person considering filing has ever used the Canadian insolvency system before. If they have, what were the circumstances and what was the outcome?
This is important because one aim of the Canadian insolvency system is rehabilitating the honest but unfortunate debtor. For the person who is currently in financial trouble, the LIT must understand past problems, if any. The LIT must also find if the current problems are a result of the same behaviour and reasons as in the past or something different.
The LIT then has a duty to take all these factors into consideration when advising the person what their options are and the recommendations the LIT will make.
Bankruptcy filings free public records: Who else normally searches bankruptcy filings public records?
Right now, for $8 per search, employers, property owners, marketers or just meddlesome neighbors can conveniently access minimal information about an applicant’s, occupant’s or neighbour’s bankruptcy data. This will allow them to make assumptions about that person’s financial problems, credit worthiness or even trustworthiness.
The problem in doing so is that it is without proper context. If the federal government eliminates the $8 search fee, personal bankruptcy records can be searched for free.
Bankruptcy filings free public records: Reasons for personal bankruptcy
There can be many reasons why a person filed either a consumer proposal or for bankruptcy; divorce, illness, accident or plain overspending are just a few of the possibilities.
Bankruptcy filings free public records: What will personal bankruptcy case records search show us? A search only tells the:
date when the specific person filed for bankruptcy or the consumer proposal;
overall worth of their assets and obligations;
name of the LIT;
whether they successfully completed their consumer proposal or obtained their absolute discharge from bankruptcy; and
discharge date of the LIT.bankruptcy filings free public records
Bankruptcy filings free public records: Will this change to find personal bankruptcy records mean anything really?
The $8 cost likely limits random searches. A potential employer or landlord will not be deterred by this cost, but a nosy neighbour will be. This charge therefore provides some small security to personal information. I believe the federal government earns about $4 million a year in bankruptcy search fees. That $4 million annually is a rounding error in terms of the size of the federal government’s budget.
However, in times where our Prime Minister Trudeau and our Finance Minister Morneau are looking to increase revenue, why give away $4 million? The government could use some of that money to give financial education to Canadians. For the reasons I stated above, I doubt dropping the $8 search fee will increase the number of searches. You still have to know how to do the search. Nosy neighbours probably won’t spend the time to learn.
Equifax and TransUnion pay the Superintendent of Bankruptcy to get access to the bankruptcy search records. Therefore, the bankruptcy or consumer proposal information is available, if granted authorization, by obtaining a person’s credit report.
The Superintendent of Bankruptcy stated it will certainly protect the documents from trolling marketers. Exactly how they will do this has not been described. They also have not yet made public the date the searches will start to be free.
Bankruptcy filings free public records: Take our free consultation before your name appears in a Canadian bankruptcies search
If you have actually been declined for a loan through a normal lender, then that is a signal that you have debt concerns that have to be handled. ContactIra Smith Trustee & Receiver Inc. today. We are professional trustees. As such, the Canadian government licenses and supervises us. First, we will assess your situation and help you to come to the very best possible solution for your troubles. When you come to us for your free consultation, we first check and figure out with you if one of the bankruptcy alternative choices is best for you. These include credit counselling, debt consolidation or a consumer proposal. If none of those options are available to you, only then will we discuss the bankruptcy route. Starting Over, Starting Now we can help recover you to financial health.
After writing and recording this blog, the Office of the Superintendent of Bankruptcy issued a position paper on measures to limit public disclosure of personal information while meeting legislative requirements to establish a public record. So watch next week for our video and blog titled “ONLINE BANKRUPTCY SEARCH: THIS CANADIAN INSOLVENCY RECORDS SEARCH RENEWAL (IRS) WON’T CHASE YOU FOR MONEY!” where we will describe what they have advised to date.
Canadians have been on aborrowing binge due in large part to very low rates. But, the tide is beginning to change andinterest rates, although still low, are beginning to creep up. This rise in rates is making many Canadians very nervous. For some, it could cause seriousfinancial hardship.
Interest rates: The threat of rising interest rates
Forum Research Inc. conducted a survey after the Bank of Canada raised rates in September and the results are quite interesting:
60% of young people are at least somewhat concerned by the prospect of rising rates
Over 50% of Canadians think that rising rates will negatively impact their personal finances
35% of Millennials aged 18 to 34 have no savings at all
12% expressed concern that more rate hikes were on the way and that the impact would be extremely negative
Interest rates: “It was almost like money was free”
In theory, higher interest rates should provide an incentive for Canadians to save more, but the long period with low rates have taken their toll on many. “Rates were so low for so long, it was almost like money was free,” said Forum Research president Lorne Bozinoff in an interview. “Some may have overextended themselves during that time, thinking rates will never go up.”
Interest rates: How will you cope with higher interest rates?
The question now is how will Canadians cope with higher rates? “Some households might not be able to afford an increase,” says Frances Donald, senior economist with Manulife Asset Management. “And this is where we can see defaults, first on auto loans and then on housing.”
We approach every file with the attitude that your financial problems can be solved given immediate action and the right plan. Together we will explore with you all the bankruptcy alternatives available to you. I know that we can help you get back on solid financial footing, the same way we have helped many others just like you,Starting Over, Starting Now.
As claims against Harvey Weinstein transform from a few into an avalanche, several of the loan providers backing his named firm have actually started speaking to bankruptcy advisors about filing for bankruptcy protection, say sources knowledgeable about the issue. They are concerned that The Weinstein Company (TWC) may be filing for bankruptcy protection. Why do you ask? I will explain below. Everyone is lawyering up
A team of The Weinstein Company’s financial institution loan providers have involved restructuring lawyers from Sidley Austin to work as advisors in case of a filing for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. They have actually likewise held pitches to work with an economic consultant to give calculated restructuring guidance. TWC has retained the law office of O’Melveny & Myers, while Moelis & Company is acting as an economic consultant to the board. The firm has involved FTI Consulting, a financial advisory and restructuring firm.
filing for bankruptcy protection
Can The Weinstein Company borrow any more?
TWC has actually been attempting to raise money. It has also tried to offer itself totally to a brand-new financier. Talks have not yet produced a deal. Also if it locates a purchaser, a sale might have to be applied in the context of a bankruptcy, to “clean” the assets from the mounting claims against TWC.
What are its chances of a successful restructuring? The Weinstein Company has long shot of restructuring, however, filing for bankruptcy protection would certainly provide possible purchasers with the chance to buy its movie collection and other assets free from the claims against both Harvey Weinstein and TWC.
TWC might use bankruptcy court-approved public auctions to discover purchasers and after that make use of those sale proceeds to establish a fund against which claims can be made and sorted out by the bankruptcy trustee. TWC is certainly going to meet claims over its failure to stop Harvey’s transgressions. Is The Weinstein Company brand too toxic for it to survive?
TWC has borrowed millions of dollars in the last few years. It now faces the real possibility that its now-toxic brand name will materially influence future company chances of survival in the longer term. The cases associated with Weinstein’s alleged sex-related criminal offences will probably result in adverse annual report reporting obligations. This will further worry TWC’s lenders. Filing for bankruptcy protection: Watch for all the lawsuits – even the ones not involving sex!
Harvey Weinstein has actually currently filed a claim against the business, looking for accessibility to his earlier company e-mail account to strengthen his defence against the sexual harassment claims against him. A bankruptcy would likely leave behind just a shadow of the firm that might really well have no choice but to file a claim against Harvey Weinstein for sinking the company. In other words, what we have here is The Weinstein Company horror movie.
Filing for bankruptcy protection: Does your company have too much debt?
All of the financial experts stress the importance of saving, and they’re right. We’ve frequently blogged about it. We have also talked about the need to maintain an emergency fund savings strategy. Saving creates a solid foundation for living and for securing a comfortable retirement. In fact saving can even be taught to pre-school aged children.
Emergency fund savings strategy: Angus Reid Forum and Capital One survey
Sadly all this talk seems to be falling on deaf ears. According to a survey conducted by the Angus Reid Forum and Capital One, 33% of Canadians admit they don’t put anything into their savings on a monthly basis. And, instead of saving, they’re splurging on non-essentials.
Emergency fund savings strategy: What are Canadians splurging on?
The Angus Reid Forum and Capital One survey found that Canadians seem to really enjoy indulging themselves. And the amount of money they spend on these non-essentials really adds up.
72% dine out several times/month
71% regularly order takeout
50% buy daily coffees
44% are online shoppers
33% indulge in clothing purchases
23% spend on beauty services
Emergency fund savings strategy: Why is it so easy to splurge?
We now live in an almost cashless society. “It’s easier than ever to order in, hail a ride and shop online without ever opening your wallet, but you can lose sight of where your money is going if you’re not careful,” Capital One Canada CEO Brent Reynolds said in a news release. Years ago it was easy to keep track of what you spent because every time you made a purchase you had to pay with cash; if you didn’t have the cash, you didn’t make the purchase.
Emergency fund savings strategy: How can you get back on track if you’ve been overindulging?
There’s nothing wrong with splurging once in a while, as long as you’re saving. Make a budget and stick to it. Save before you splurge. Create an emergency fund for unexpected expenses or changes in your employment situation. Have a plan for your retirement.
Emergency fund savings strategy: Do you have too much debt?
If you’ve really overindulged and you’re at the stage where you can’t make your monthly payments, you need professional help; and you need it now. Contact a professional trustee.
The Ira Smith Team has a cumulative 50+ years of experience helping people who are facing a financial crisis and we deliver the highest quality of professional service. Make an appointment for a free, no obligation appointment today and Starting Over, Starting Now you’ll take your first steps towards financial freedom.
Sears Canada defined benefit pension plan shortfall: Introduction
On November 6, 2017, Hamilton Mountain NDP MP Scott Duvall rose in the House of Commons for leave to introduce Bill C-384. It is titled “An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance programs)”. Mr. Duvall’s motivation was the Sears Canada defined benefit pension plan shortfall.
Sears Canada defined benefit pension plan shortfall: Hamilton Mountain MP Scott Duvall introduces Private Member’s Bill C-384
“Mr. Speaker, I would like to take this time to thank my seconder, my colleague who has done great work and works very hard in this House, and who has also helped me a lot on this bill. I rise today to introduce a private member’s bill titled, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act. This bill will amend the Bankruptcy and Insolvency Act and the CCAA so that companies will have to bring any pension plan fund to 100% before paying any other secured creditors. It also makes amendments to require companies to pay any termination or severance pay owing before paying any secured creditors. Other amendments will prevent a company from stopping the payment of any post-retirement benefits during any proceedings under the BIA or CCAA. These amendments will inject some fairness into a process that often sees the interests of workers, retirees, and their families placed behind all others. We must fix the imbalances in current legislation and provide Canadian workers, retirees, and their families with the protection they expect and deserve. I am hopeful that all my colleagues in Parliament will put aside their partisan differences and support this bill. Canadian workers, retirees, and their families deserve no less.”
Although he did not mention it specifically by name in the House of Commons, Mr. Duvall has said that he would introduce such a Bill as a result of the Sears Canada defined benefit pension plan shortfall.
Sears Canada defined benefit pension plan shortfall: Hamilton Mountain MP Scott Duvall walks the walk
With his Bill C-384, Mr. Duvall has lived up to his promise.
sears canada defined benefit pension plan shortfall
Sears Canada defined benefit pension plan shortfall: This is actually the second Bill attempting deal with this problem
In our November 1, 2017 blog, SEARS CANADA CLOSING: POLITICIANS WANT NEW LAWS TO PROTECT PENSIONERS DUE TO SEARS CANADA CLOSING, we reported that Bloc Québécois MP Marilène Gill’s Private Member’s Bill C-372, passed First Reading. That Bill is titled “An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance plans)”. In that blog, we described the provisions included in that Bill.
Like Mr. Duvall, Ms. Gill is trying to pass legislation to avoid another Sears Canada defined benefit pension plan shortfall insolvency situation.
Sears Canada defined benefit pension plan shortfall: What does Bill C-384 actually say
The purpose of this blog, is to describe the terms of Mr. Duvall’s Bill.
Mr. Duvall’s Private Member’s Bill C-384 passed First Reading. It is very similar to Ms. Gill’s BIll C-372. He wishes to amend the Bankruptcy and Insolvency Act (BIA) as follows:
In order to be approved by the Court, a corporate restructuring proposal under the BIA, for a company with a prescribed pension plan, the Proposal must include payment in full of any unfunded pension liability or solvency deficiency. The amount is calculated at the time of the filing of the Notice of Intention To Make A Proposal (NOI) or the Proposal if there is no NOI filed.
New section 69. 7 be added to the BIA that in the restructuring proposal of an employer, upon filing, until the discharge of the Licensed Insolvency Trustee (LIT), or the insolvent employer becomes bankrupt, all amounts that the employer must contribute under any arrangement for the benefit of the employees, must continue throughout the restructuring period. This would cover any pension plan, health, injury or accident plans and group insurance coverage.
The unfunded pension liability or solvency deficiency calculation is called “special payments” in Bill C-384. The calculation is by section 9 of the Pension Benefits Standards Regulations, 1985.
In a receivership, the receiver is personally liable for paying any unfunded pension liability or solvency deficiency. However, the receiver’s liability is only from the proceeds of the sale of current assets.
In either a receivership or corporate bankruptcy, the charge for any unfunded pension liability or solvency deficiency would rank ahead of the charge of any other secured creditor. It is interesting to note that the Bill does not attempt to provide such a security ranking to anything other than the pension liability or solvency deficiency.
The Officers and Directors of the company are not entitled to the benefit of this secured charge. Even if they are participants in the pension plan that has the unfunded pension liability or solvency deficiency.
New subsection 136(1) (d. 001) to the BIA, creating an extra class of preferred creditor. A preferred creditor is an unsecured creditor who ranks ahead of the ordinary unsecured creditors and ranks after the secured creditors. The Bill states that it would say that the amount of any termination or severance pay owed to an employee by a bankrupt employer, less any amount previously paid by the LIT, would rank in priority right after the wages owed to the employee.
There are also proposed amendments to the Companies’ Creditors Arrangement Act (CCAA) in Bill C-384. It is to bring the same changes in that statute as those to the BIA described above. The intent is that the treatment under both statutes is the same.
Sears Canada defined benefit pension plan shortfall: Now it is up to Justin Trudeau and his Liberal Party
We will now have to wait and see what happens to both Ms. Gill’s and Mr. Duvall’s Private Member’s Bills. As we previously reported, it is unusual that a Private Member’s Bill becomes real legislation. As the Liberals hold a majority in Parliament, if they don’t want it, or a revised Bill for the same purpose, to pass, it won’t.
Sears Canada defined benefit pension plan shortfall: Does your company need a restructuring and turnaround plan?
Is your company insolvent and needs to restructure? Is your business viable but can only employ people and carry on business if it can restructure its debt? Contact the Ira Smith Trustee & Receiver Team. If we meet with you early on, we can create a restructuring and turnaround strategy. That way your company won’t have to be like Sears Canada closing.
sears canada defined benefit pension plan shortfall
Canadians obsess over loyalty programs, which contributes to credit card debt problems. The only way to get more points and rewards, is to keep buying things with the loyalty program credit card.
It’s no surprise since we’re constantly bombarded with advertisements telling us that we can get FREE trips, movies, discounts, merchandise; who could resist such tempting offers? From airlines to fast food chains, it seems that new loyalty programs are cropping up faster than weeds in your garden.
Credit card debt problems: Would you like 10% off your purchase today?
How many times have you gone to make a cash or debit purchase and be told, “If you sign up for our credit card today, we’ll take 10% off your purchase”? Pretty soon you’ll be signed up to a stack of loyaltycredit cards trying to accumulate enough points for all of those wonderful things that you’re planning to get free.
Credit card debt problems: How obsessed are Canadians with loyalty credit cards?
There are 130 million loyalty memberships in Canada. This averages out to more than four memberships per person (2015 study from Colloquy Loyalty Census Canada).
Canadians are currently hoarding $16 billion worth of points. This is an average of $629 per person (Bond Brand Loyalty).
The number of loyalty memberships per Canadian has grown 25% since 2013 (Bond Brand Loyalty).
Credit card debt problems: Here are our top 3 risks associated with loyalty credit cards
The morecredit cards you apply for the worse yourcredit score can become. Every time you apply for credit the lender requests a credit score. Each inquiry places a record on yourcredit report. Too many inquiries is often associated with higher rates of default.
You may get sucked into the cycle of buying things because of the amount of points you’ll get. Have a good look at yourcredit card statement and be honest about how many items you bought because of the points.
Are you paying your balance in full every month? If not, the high interest you’re paying will more than wipe out any benefit you’re getting. These discounts may be costing you a lot of money and the free stuff could actually be quite expensive.
Credit card debt problems: Are you caught in the loyalty credit card trap?
Is your obsession with accumulating points getting you into credit card debt problems? If so, you need professional help and you need it now. Contact theIra Smith Team. We can help you get out of credit card debt problems, or any other kind of debt problem. We will put you back on track to debt and stress free livingStarting Over, Starting Now. Book anappointment for a free, no obligation consultation today and take the first step to ending the cycle of debt.
Following the Sears Canada failed restructuring, is the Sears Canada closing of all stores. It is leaving 16,000 retirees unclear about the future of their underfunded pension plan. Support is expanding for brand-new laws to better protect Canadian workers during a company’s collapse.
Sears Canada Closing: What CARP has to say
CARP, a nationwide not-for-profit group formerly called the Canadian Association for Retired Persons, was recently on Parliament Hill to meet dozens of MPs as it lobbies for law adjustments.
Wanda Morris, vice-president of CARP,stated that CARP is requesting for the unfunded pension liability be provided priority position so it goes to the front of the line.
Pensioners hold no priority when it pertains to dividing up assets through a bankruptcy, and Ms. Morris wants protection for retirees for underfunded defined benefit pensions when the company goes through a restructuring or into bankruptcy.
Ms. Morris stated that along with the practically 16,000 retirees at Sears, CARP estimates that there are about 1.3 million workers in Canada that possibly could be in danger with defined advantage pension. Sears Canada closing all stores has made the plight of retirees a front and centre issue for CARP.
Sears Canada Closing: Private Member’s Bill C-372 passes First Reading
On Oct. 17, Bloc Québécois MP Marilène Gill suggested a member’s bill, C-372. The intent is to change the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act.
The change attempts to correct the injustice dealt with by retired workers whose pension as well as group insurance policy benefits are not secured when their company declares bankruptcy or undergoes restructuring. The changes are a result of the Sears Canada employees and retirees treatment, as a result of Sears Canada closing locations.
Sears Canada Closing: What the NDP has to say
Hamilton Mountain MP Scott Duvall plans to introduce his very own private member’s bill to try to solve this problem. While he notes he has actually had talks with Gill, he claimed his suggestion will be a bit different.
Mr. Duvall specifies that his bill will amend the regulations from where it’s worded currently. He wishes that when a company goes into bankruptcy protection, the pensioners will be a secured creditor. He is also responding to the process which has led to Sears Canada closing store locations,
Sears Canada Closing: Bloc MP Marilène Gill and her Bill C-372
On October 17, 2017, MP Marilène Gill rose in Parliament and stated:
“Mr. Speaker, I have the honour to introduce my first bill in the House today, a private member’s bill that seeks to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act.
This bill seeks to correct the injustice faced by retired workers whose pension plans and group insurance plans are not protected when their company goes bankrupt or undergoes restructuring.
I will do everything in my power to ensure that this bill receives royal assent, that way, we can help prevent retirees, like those from my riding who are here today to support me, from losing their pensions, and improve the existing legislation by giving pension plans’ unfunded liabilities preferred creditor status, among other things. I hope my colleagues will be supporting this bill.”
Sears Canada Closing: Can it get Royal Assent?
BILL C-372 which passed First Reading on October 17, 2017 is named “An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance plans)”.
Private member’s bills such as this one rarely pass the House. However, I thought it would be useful to describe what Ms. Gill’s views are as a result of Sears Canada closing.
Below is my analysis of how BILL C-372 proposes to amend the Bankruptcy and Insolvency Act (Canada) (BIA) and the Companies’ Creditors Arrangement Act (Canada) (CCAA). The impetus of course is certain high-profile corporate restructurings/failures with underfunded defined benefit pension plans. With Sears Canada closing, Ms. Gill put forward her private member’s bill.
The most recent corporate failure which initiated her private member’s bill of course was a result ofSears Canada closing.
Sears Canada Closing: Bill C-372 proposed BIA and CCAA amendments
Bill C-372 wishes to amend the BIA as follows:
In order to be approved by the Court, a corporate restructuring proposal under the BIA, for a company with a prescribed pension plan, the Proposal must include payment in full of any unfunded pension liability or solvency deficiency calculated at the time of the filing of the Notice of Intention To Make A Proposal (NOI) or the Proposal if there is no NOI filed.
The unfunded pension liability or solvency deficiency calculation is by section 9 of the Pension Benefits Standards Regulations, 1985.
In a receivership, the receiver is personally liable for paying any unfunded pension liability or solvency deficiency but only from the proceeds of the sale of current assets.
In either a receivership or corporate bankruptcy, the charge for any unfunded pension liability or solvency deficiency would rank ahead of the charge of any other secured creditor.
The Officers and Directors of the company are not entitled to the benefit of this secured charge. Even if they are participants in the pension plan that has the unfunded pension liability or solvency deficiency.
In a corporate restructuring proposal or bankruptcy, the amount not paid under the Wage Earner Protection Program Act (Canada) (WEPPA). It is the amount to adequately indemnify the beneficiaries in the event the employer ceases to take part in a group insurance plan. Such a plan is one that provides for the payment of benefits to, or in respect of, employees or former employees for, among other things, life, disability, health or dental insurance is a preferred claim. It will be a preferred, but still an unsecured claim.
The amount equal to the difference between any severance pay or compensation in lieu of notice owed by an employer to an employee and any amount previously paid by the trustee for that severance pay or compensation in lieu of notice.
There are also proposed amendments to the CCAA in Bill C-372. It is to bring the same changes in that statute as described above. The intent is that the treatment under both statutes is the same. I won’t repeat those again.
sears canada closing
Sears Canada Closing: Will Bill C-372 become law?
As I stated above, it is very rare that a private member’s bill becomes real legislation. The other reason is that the Liberals hold a majority in Parliament. If they don’t want it to pass, it won’t.
On October 25, 2017,Innovation Minister Navdeep Bains said the Liberal government has no plans to change laws to protect pensioners in the wake of Sears’ bankruptcy. That is a pretty definitive statement.
So right now it seems there is a lack of political will to make the proposed law amendments. I suspect that on a financial basis, there will also be opposition for the following reasons:
In most cases, it will be impossible to have a successful large corporate restructuring if 100% of unfunded pension liability must be paid. Therefore, jobs will not be saved if we have more corporate bankruptcy filings instead of restructurings.
Lenders will have to now ignore current assets in the borrowing base of corporations. This will make corporate borrowing much more difficult for solvent corporations with pension plans to carry on business.
Lenders may have to reserve the entire amount of any unfunded amounts. They will rank ahead in a receivership or bankruptcy.
Severance pay or compensation in lieu of notice will now be a claim ranking ahead of trade suppliers in a corporate restructuring or corporate bankruptcy. This may alter the amount of an unsecured credit line a supplier will be willing to give to a customer.
It will cause more chaos to normal lending and trade practices which will be a problem for any government.
Claims under the group health indemnity provisions may not result in any real benefit to employees of a company going through either a corporate restructuring or bankruptcy. There is rarely funds left over after the claims of secured creditors.
We will keep monitoring this important issue. We will update you when MP Scott Duvall puts forward his private member’s bill and as other matters arise.
Sears Canada Closing: What To Do If You Or Your Company Need A Financial Restructuring?
It is now Sears Canada closing time. If you’re attempting to discover a means to restructure your firm’s debt, so that you can avoid a Sears Canada closing scenario, callIra Smith Trustee & Receiver Inc. If we meet with you early on, we can create a restructuring and turnaround strategy. That way your company won’t have to be like Sears Canada closing.
Our strategy for every person is to create a result where Starting Over, Starting Now occurs, starting the minute you walk in the door. You’re simply one telephone call away from taking the crucial steps to go back to leading a healthy, balanced and tension free life.
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