Ottawa: Insolvency reforms that are to come into force later this year, are designed to enhance retirement security and protect intellectual property user rights, according to a government statement.
As of November 1, reforms to the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) announced in Budget 2019 will come into force.
The BIA and CCAA amendments related to enhancing retirement security will:
- Require participants in an insolvency proceeding to act in good faith;
- Provide for the possibility of court-ordered disclosure of a creditor’s real economic interest in an insolvent company;
- Impose director liability in appropriate cases for executive compensation payments in the lead-up to an insolvency;
- Limit the decisions that can be taken at the outset of a CCAA proceeding to measures necessary to avoid the immediate liquidation of an insolvent company, thereby improving participation of all players; and
- Exempt assets held in registered disability savings plans from creditor claims in bankruptcy.
Currently, in BIA and CCAA restructurings, IP licensees in good standing can continue to use the IP if an insolvent licensor disclaims the licence. The reforms extend this right to liquidations (bankruptcies and receiverships) and asset sales.
“It is unacceptable that some pensioners face hardship because of their employer’s insolvency and underfunded pension plans. Our government believes that after a lifetime of hard work, Canadians deserve a secure and dignified retirement. With these reforms, we are protecting Canadians’ retirement security and the ability of businesses to invest, grow and create more good jobs,” said Navdeep Bains, Minister of Innovation, Science and Economic Development.
Quick Facts
Budget 2019 amended federal insolvency, corporate governance, and pension legislation following national consultations with pensioners, employers, experts and the general public.
The consultations received more than 4,400 submissions from the general public.