Will Bankruptcy Reform Happen Soon?

On May 5, 2005 the government of Canada announced plans to create a Wage Earner Protection Program to pay up to $3,000 owing to workers in the event that their employer goes bankrupt. Currently, if a company goes bankrupt, the banks generally get paid first, the government gets paid second, and the employees get paid third. Suppliers are paid last.

This legislation may help employees recover lost wages, if it can be implemented in a timely manner. However, as we all know, the government may face a non-confidence motion and be defeated within the next month or two, and any legislation introduced would die with the call of an election. It is possible that this announcement is just another “pre-election goody” in an effort to win votes.

Also included in the same press release was a reference to further comprehensive bankruptcy reform, which may include changes to how student loans are handled in a bankruptcy.

Further information on how student loans are handled in a bankruptcy in Canada can be found at www.student-loan-bankruptcy.ca.

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