In the wake of the Sears Canada bankruptcy, which is leaving 16,000 retirees unsure about the future of their under-funded pension plan, support is growing for new laws to better protect Canadian workers during corporate collapse.

CARP, a national non-profit advocacy group formerly known as the Canadian Association for Retired Persons, will be on Parliament Hill on Wednesday to meet with dozens of MPs as it lobbies for legislative change.

"What CARP is asking for is that unfunded pension liability be given 'super priority' status so it goes to the front of the line," said Wanda Morris, vice-president of CARP.

Wanda Morris

Wanda Morris, a vice-president at CARP, is calling for the government to change laws to better protect pensioners when corporations declare bankruptcy. (CBC)

Pensioners hold no priority when it comes to dividing up assets during bankruptcy, and Morris said that typically in this country, defined benefit pensions are underfunded.

"There are about 16,000 [retirees] at Sears, but it just pales compared to the 1.3 million that potentially could be at risk. That's 1.3 million corporate pensioners with defined benefit pension plans," said Morris.

Private member's bills being tabled

On Oct. 17, Bloc Québécois MP Marilène Gill proposed a private member's bill, C-372, to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act.

The amendment would "correct the injustice faced by retired workers whose pension plans and group insurance plans are not protected when their company goes bankrupt or undergoes restructuring."


Hamilton Mountain MP Scott Duvall plans to introduce a private member's bill to change bankruptcy laws. (CBC)

Later this fall, Hamilton Mountain MP Scott Duvall plans to introduce his own private member's bill on the issuer. While he notes he has had talks with Gill, he said his bill will be a little bit different.

"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 said.

'Could have been prevented a long time ago'

In 2009, the NDP proposed the so-called nortel act to have workers seeking to claim the unfunded portion of their pensions considered as preferred creditors in bankruptcy proceedings.

But that never passed, and Nortel retirees lost a percentage of their pension benefits as the former tech company dissolved.

"This could have been prevented a long time ago with Nortel. The Liberals said they wanted to change it, but it's been a long time. Many companies have gone bankrupt since and the law hasn't been adjusted," Duvall said.

"The crazy thing is, if this legislation doesn't pass, then corporations are allowed to walk away from their responsibilities," Morris said.

The office of Innovation Minister Navdeep Bains said in a statement Tuesday that the government is connecting Sears employees with services to help them through this difficult time, but gave no indication the department would seek to change the laws to protect pensioners in bankruptcy.

Navdeep Bains

It falls to Innovation Minister Navdeep Bains's department to make any changes to bankruptcy laws. (Travis Burke/CBC)