519-646-2222Insolvency and pensions
Insolvency and pensions are at an interesting intersection and under current Canadian insolvency laws are not good bedfellows. Although when filing a bankruptcy, the laws do protect the bankrupt’s interest in the pension funds by not requiring that they be distributed among the creditors the same protection is not afforded to the fund itself.
We have seen corporations filing for bankruptcy or making a CCAA proposal to their creditors and leaving underfunded pension plan to drift. Sadly, there is little or no accountability for the directors of the company, who in many cases enjoyed fabulous salary and bonus packages at the expense of the employees.
The fact that employees were hired on the premise of being compensated through salary, bonus and benefits seems to imply that the directors are complicit in a fraud by not take proper measures to segregate appropriate funds. The ripple effect to our economy is immense as we have seen with Nortel, one of the most noteworthy files.
Now, with the Sears Canada’s insolvency we see many more pensioners deprived of monies that would otherwise be injected into the Canadian economy in exchange for goods and services. Meanwhile, executives, who made off with millions in salaries and bonuses, will not be held accountable and not required to replace the funds they pillaged from pension funds.
One can’t help but feel this is a travesty of justice and highly immoral. Let’s hope that at some level the courts stop protecting the wealthy and see morality as a higher value than the interests of the few.