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POSITION PAPER 2001
Par-O-Law Canada Inc.
The Executive Document Series

Introduction

Bankruptcy as an Economic Indicator

Even during periods of continued growth in our economy, bankruptcy in this country is increasing at a measurable progression. Business analysts are placing much more importance on bankruptcy statistics as a major economic indicator while the Canadian business landscape changes.

Many, like Par-O-Law Canada Inc., hold that such a fundamental change in Canadian business is and was evidentiary. The 'downsizing' behaviors of the 1980's, lead to some 80% of Canadian businesses being redefined as 'Small Business'. Coupled with the corporate culture of 'Merger & Acquisition' and 'Foreign Parentage', aided by the 'We're Moving South' syndrome, are all indicators of the startling trends we now see in bankruptcy statistics.

Bankruptcy Process Becomes Increasingly Difficult

We have come a long way since the English law of 1571 and Debtor's Prison, where the debtor was held until someone else paid the debt. There is no doubt however, that the Federal Government and the Office of the Superintendent of Bankruptcy are doing everything in their power to make the bankruptcy process much more difficult for the insolvent individual and/or business.

Government Expands Legislation to Lower Bankruptcy Rates

Each year the Government applies new legislation in an effort to keep bankruptcy figures down. Despite Government efforts bankruptcy filings are expected to exceed One Hundred Thousand (100,000) in Canada alone this year. The Government is once again positioning itself through legislation to be the preferred status creditor for debts owed to the government.

• The so-called Ten-year-rule on Student Loan Debt is one example.
• The Super Priority Status for Canada Customs and Revenue Agency (CCRA) in Companies' source-deductions is another
• A Three-Hundred percent increase for Trustee tariff fees for Consumer Proposals is yet another
• GST and PST super-priority status is in the making

Government Preferred Status unChallenged

Our Government's preferred status efforts are reminiscent of the 1970's, but unlike today's business people, the entrepreneurs of that time filed class-action lawsuits against the Government and had the legislation rescinded.

It's worthwhile noting that this type of legislation, not only penalizes the insolvent person, but unconscionably penalizes the other creditors in the insolvent event, contrary to the intent of the Bankruptcy and Insolvency Act (BIA). Oddly enough, most of the new changes go unnoticed or unheeded by the general public.

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