The Spec­ta­tor’s view: Time for new cred­i­tor pro­tec­tion rules //

The Hamilton Spectator - - FRONT PAGE - Howard El­liott

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.

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