Supreme Court of Canada finds that unionized employees are creditors too
Employees now stand a better chance of having their rights protected in bankruptcy cases and of sharing in whatever proceeds remain when bankruptcies occur, thanks to a recent Supreme Court of Canada ruling.
The case, GMAC Commercial Credit Corporation - Canada v. T.C.T. Logistics Inc, 2006, involves the key issue of successor rights and the protection of wage and benefit rights for employees affected when businesses fail.
The 7-1 ruling prevents courts from shielding "interim receivers" such as auditors from shouldering the responsibilities as legitimate successor employees.
The country's highest court said it is not the role of judges to make such declarations. Instead, they should be resolved according to standards already spelled out in provincial labour statutes.
Written by Justice Rosalie Abella, the judgment says trustees have a duty in bankruptcy cases to "salvage as much of the financial remains" of a business as possible for the benefit of creditors.
"Those creditors include unionized employees," she wrote.
The case, GMAC Commercial Credit Corporation - Canada v. T.C.T. Logistics Inc, 2006, involves the key issue of successor rights and the protection of wage and benefit rights for employees affected when businesses fail.
The 7-1 ruling prevents courts from shielding "interim receivers" such as auditors from shouldering the responsibilities as legitimate successor employees.
The country's highest court said it is not the role of judges to make such declarations. Instead, they should be resolved according to standards already spelled out in provincial labour statutes.
Written by Justice Rosalie Abella, the judgment says trustees have a duty in bankruptcy cases to "salvage as much of the financial remains" of a business as possible for the benefit of creditors.
"Those creditors include unionized employees," she wrote.
