Society pensioners and the fight to protect pensions during bankruptcy

When Nortel Networks Corporation filed for bankruptcy in 2009 under the Companies’ Creditors Arrangement Act, the pensions of 20,000 Canadians were at risk. What resulted was a long and expensive legal battle that eventually ended in a payout to pensioners.

But the more than $7 billion creditor payout approved by a Superior Court justice in 2017 was shared by government agencies, investment funds, and vendors with whom Nortel held debts. Pensioners suffered significant losses.

“Many people lost all kinds of money, and instead of having a comfortable retirement, they were destitute,” explained Anthony Pin, an executive member of the Society’s Pensioners’ Chapter.

In another high-profile case, 17,000 Sears Canada workers saw their hard-earned pensions significantly reduced when the company filed for bankruptcy in 2017. Sears Canada paid out billions to shareholders before seeking creditor protection.
In partnership with the Canadian Federation of Pensioners (CFP), the Society’s Pensioners’ Chapter has long called for federal legislation that protects pensions in the case of bankruptcy. Throughout the years, Pin has been a vocal advocate within the Pensioners’ Chapter on this issue.

“The Society Pensioners’ Chapter was one of the first supporters of the Canadian Federation of Pensioners,” said Pin.

According to Pin, “There were people in the Society who were retiring and said, ‘we need to do this to make sure we have a voice in these discussions.’” The CFP represents retiree groups across the country and continues to be a major advocate for pension protections at all government levels.

"The battle to reform Canada’s bankruptcy laws required persistence and dedication from Society advocates and other CFP affiliates, amid numerous developments and defeats."

The battle to reform Canada’s bankruptcy laws required persistence and dedication from Society advocates and other CFP affiliates, amid numerous developments and defeats.

In the first year of Nortel’s bankruptcy proceedings, NDP MP Wayne Marston put forth Bill C-476. The private member’s bill sought to amend the Bankruptcy and Insolvency Act to give priority to underfunded pension liabilities in the case of bankruptcy, designating pensioners as preferred creditors. The bill was defeated by the Liberals and Conservatives during the Harper government.

In 2017, NDP Pensions Critic Scott Duvall tabled a similar private member’s bill, bill C-384, in an attempt to end what Duvall called “legalized theft”. This was the same year Bloc Quebecois MP Marilene Gill tabled bill C-372, seeking similar protections for pensioners. Both bills died under Justin Trudeau’s Liberal government, despite mounting public pressure.
“Of course, the business lobby worked really hard to stop things from happening,” said Pin. He said that companies threatened that the changes would take away money to stimulate the economy and would impact job creation.

Society pensioners wrote letters to politicians to advocate for change. And the chapter donated money to the CFP through dues and special collections.

“When they had hearings on the bill, the CFP would go and make presentations, which would cost money because you had to go to Ottawa,” according to Pin. The CFP also hired lobbyists to help with letter writing campaigns and communications with government officials.

While individual provinces have their own pension regulations, advocates focused on federal lobbying because bankruptcy law is federal.

“Each province has their own rules on how to run a pension plan. But when it gets to the stage where everything falls apart, the federal government takes over,” explained Pin.

After more than a decade of public campaigning, pension advocates finally won increased protections to defined-benefit pensions in the case of bankruptcy. Bill C-228, The Pension Protection Act (PPA), received royal assent on April 27, 2023.
The Act, which will come into effect in 2027, amends the federal Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to give defined-benefit pensions “super priority” during bankruptcy and insolvency proceedings.

“When the firm goes bankrupt and when it stops being viable, all the money gets put in the pot, and pensioners get their share first,” explained Pin. He noted that this includes workers who are still in the workforce and paying into pension plans. While pension protections top other creditors, government debts may get settled before pension payouts.

“There is a benefit to having a simple bill like the PPA. Rather simply, it says ‘Bingo!’ This is the hierarchy in which people get paid. Pensioners are near the top,” said Pin.

The 2023 act was hailed by the CFP and groups like the Canadian Labour Congress (CLC). “This long-overdue legislation will provide financial security and peace of mind to millions of workers and their families, by prioritizing workers’ pensions over mega-banks and executive bonuses in corporate insolvency cases,” said CLC President Bea Bruske, according to a public statement dated April 19, 2023 published on the CLC website.

The passage of the act marks a massive victory for the labour movement, which plays a major role in fostering retirement security through the collective bargaining process. “None of this would matter if the Society itself wasn’t there in negotiations and making sure that pensions are addressed,” said Pin.

He noted that the PPA benefits the pensioners of tomorrow, not just the pensioners of today.

“There’s a Greek proverb,” described Pin. “People plant trees even though it will be their grandchildren who see the trees. A lot of what we do, we’re planting things.”

Oct. 17, 2017 - Members from the Canadian Federation of Pensioners participate in an Advocacy Day at Queen's Park.