New legislation in Canada has given super-priority rights to employees for unpaid wages and pension contributions, which rank ahead of existing secured creditors.
On July 7, 2008 new legislation called Wage Earner Protection Program Act (“WEPPA”) came into force in Canada. By this Act, the Federal government has created the Wage Earner Protection Plan to fund the payment of certain unpaid wages owing to employees at the time a business goes into bankruptcy or receivership.
Concurrent amendments have also been made to Bankruptcy & Insolvency Act (“BIA”) which have the effect of creating new priority charges in respect of unpaid wages and for pension contributions, which, for the first time, now rank ahead of the interests of secured creditors. For more read Lenders beware – new employee super-priorities in Canada[August 2008]