The Spectator’s view: Time for new creditor protection rules //
U.S. Steel retirees, workers and the union that represents them are sick and tired and mad as hell. In their attempt to get fairness and equity on things like pension protection, they’ve been stymied at every turn during restructuring and bankruptcy protection proceedings.
In determined desperation, they have now demanded a public inquiry into the entire U.S. Steel restructuring and creditor protection process. They are getting able assistance in the call from MPP Paul Miller from Hamilton East-Stoney-Creek riding. It’s a well-intentioned effort borne from frustration and the increasing likelihood that workers, and especially retirees, are going to be hung out to dry to one degree or another.
A public inquiry would be welcome from this vantage point. But in truth most of us know what it would find. The deck is stacked, not due to any sort of bad behaviour on the part of any of the participants, but because the entire process is geared toward corporate survival above all else. Every other factor and interest at play comes far behind that, including the welfare of workers and retirees and pension stability.
The answer? Perhaps an inquiry would help, but in truth what we need to do is fix the Companies’ Creditors Arrangements Act. That is the law that allowed the American parent of U.S. Steel Canada to become the largest secured creditor while workers and retirees are at the end of the line. Clearly, that is wrong. This legislation was originally passed in the early 1930s when Canada and the world struggled with global recession. The idea was to apply a “rules-based,” court-monitored approach to creditor issues with the goal being, according to the British Columbia Court of Appeal in a 1990 discussion, “attempt a reorganization or compromise or arrangement under which the company could continue in business.”
No doubt that would be preferable to the alternative that was most common in that era — failure, liquidation and the resulting consequences, including job loss. This is a different time with different needs and demands. We’re living in a global economy with more integration and cross-ownership than ever before. Creditor protection and corporate reorganization law also needs to consider issues such as pension stability.
The welfare and sustainability of thousands upon thousands of pensioners cannot simply be sacrificed at the altar of corporate survival. Governments, in this case provincial, cannot be the default bailout mechanism when corporations don’t meet their obligations.
We need a new law that carefully and fairly lays out what a company must do when it invests in Canada and also what must happen when that investment fails, or promised commitments are not kept, which was the case with U.S. Steel.