A number of legislative amendments to the Canadian insolvency regime came into effect on July 7, 2008.

In addition to the Wage Earner Protection Program Act, a number of the provisions of the Bankruptcy and Insolvency Act also came into effect, including those dealing with student loans, registered retirement savings plans and aircraft objects.

Wage Earner Protection Program Act

This programme is designed to protect individuals with outstanding wages whose employment is terminated as a result of a bankruptcy or receivership. Wages includes unpaid salary and vacation pay for the six months prior to the bankruptcy or receivership.

Eligible employees will receive a maximum of $3,000 from the Department of Human Resources and Skills Development Canada. These claims are secured against current assets up to a maximum of $2,000.

Unpaid expenses of a travelling salesperson are also secured against current assets up to a maximum of $1,000.

Normal pre-filing pension contributions have a priority over all assets in bankruptcies and receiverships.

Trustees and receivers have prescribed duties to fulfil in administering this program.

Student loans

The waiting period before which a student loan may be discharged is reduced from 10 years to 7 years following the date on which the bankrupt ceased to be a full- or part-time student. This provision also applies to undischarged bankrupts as at July 7, 2008.

The period before which an application may be made to court to request a discharge on the basis of hardship is reduced to 5 years. This provision applies to all bankrupts.

Registered retirement savings plans (RRSP)

Amounts held in an RRSP or a registered retirement savings fund are exempt from seizure in bankruptcy, except for contributions made in the 12 months preceding bankruptcy.

Aircraft objects

Provisions have been added regarding the treatment of aircraft objects in proposals or arrangements under the CCAA.

For more information on the changes to the Bankruptcy and Insolvency Act, go to the federal government site at:
http://strategis.ic.gc.ca/epic/site/bsf-osb.nsf/en/br01782e.html