A private member's bill that would help protect employees and pensioners in the wake of a corporate collapse will go before a House of Commons committee after passing second reading on Wednesday.

Bill C-501, tabled in November by New Democrat MP John Rafferty, calls for former workers and pensioners to become preferred creditors in situations of corporate bankruptcy.

Currently, former employees of bankrupt companies — like those who worked at Nortel Networks Corp. — are considered unsecured creditors and are at the back of the line to receive payouts from bankruptcy proceedings.

The bill passed second reading on Wednesday by a vote of 144 to 111.

The bill will now go before an industry committee for further debate.

Private member's bills are rarely passed into law, but the proposed legislation has received some support from both government and opposition members.