Bankruptcy law reform advocates say they’re cautiously optimistic the Trudeau government will approve protections for workers during corporate insolvencies before voters go to the polls for the next federal election in October 2019.

“I think there’s a perfect storm of vulnerability and pressure,” said Chris Roberts, social and economic policy director at the Canadian Labour Congress. He suggested that the Sears “debacle” has raised the profile of the issue, stirred public sympathy over the plight of employees while adding to the political pressure on the government to act.

Seniors Minister Filomena Tassi has been conducting public consultations on possible pension, corporate governance and insolvency policy reforms with members of the public. Possible measures could aim to proactively eliminate pension deficits before insolvency and promote more transparency and fairness in insolvency proceedings that could involve beefing up business oversight and disclosure requirements.

“We are working to ensure that Canadians’ retirement security is protected and look forward to reviewing the submissions,” said the minister’s press secretary Annabelle Archambault.

Roberts cited private members’ bills before Parliament as well as petitions from individuals as evidence that support is growing for new laws in the wake of the June 2017 Sears Canada creditor protection filing that left 16,000 retirees unsure about the future of their underfunded pension plans.

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Among the private measures is a petition submitted to the House last summer on behalf of Dick Sanders whose wife Ann received no termination pay when she was let go from a Burlington outlet of housewares retailer Bowring in 2015. The petition seeks to bump termination claims to the front of the debtors’ queue.

Bowring Canada and Bombay & Co., Inc., along with parent Brampton-based Fluid Brands Inc., obtained protection from creditors under the Bankruptcy and Insolvency Act in November amid more than $50 million in debt, according to a report from court-appointed trustee Richter Advisory Group, which did not respond to questions about the status of staff at the stores.

The trustee’s Nov. 1 report to the Ontario Superior Court of Justice said Bombay and Bowring employed several hundred workers who do not have union representation or a company-sponsored pension plan. Bombay and Bowring had previously filed for creditor protection and restructured in August 2015. After the 2015 restructuring, Fluid Brands closed 50 stores and laid off 164 employees.

Sanders said he has pressed his local MPs to sponsor his petition in the house but feels like “it’s hanging in suspended animation.”

Roberts sees it as unlikely the government will support private members’ bills tabled last fall by Bloc Québécois MP Marilène Gill and Hamilton Mountain NDP MP Scott Duvall to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to prioritize worker pensions and termination pay in bankruptcy proceedings.

“It’s basically modifying the legislation the way it’s worded now. When people go into bankruptcy protection the pensioners will be a secured creditor,” Duvall has said of his proposal which has had first reading but has not reached committee debate stage.

Instead, Roberts said he’s hopeful the Liberal government will follow through on election commitments and deliver its own proposal which he said could strike a balance between the demands of workers and corporate creditors.

Older Canadians advocacy group CARP, which has meet with dozens of MPs to lobby for legislative changes, has proposed that unfunded pension liability be granted “super priority” status in bankruptcy and liquidation proceedings. CARP, along with the Canadian Federation of Pensioners and advocacy organization Leadnow wants bankruptcy law amendments so that pensioners are paid in full ahead of secured creditors such as banks and bondholders.

“I do believe the Liberals will pass something and I am cautiously optimistic that it will happen before the election,” said Wanda Morris, CARP’s chief advocacy and engagement officer.

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As a rule, she added, “governments are always more likely to introduce their own bills than to endorse one from another party. I don’t see any reason that wouldn’t apply here.”

Innovation Minister Navdeep Bains has said that his government is engaging with the NDP and Bloc on their proposed changes but must consider the implications of granting priority to pensioners in bankruptcy proceedings.

Lisa Raitt, deputy leader of the Opposition Conservatives, however, says the Liberals are worried that prioritizing workers’ claims would discourage lenders from supporting businesses during restructuring, suggesting that if the Liberals were really interested in working on a solution they would have “ponied up by now.”

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