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May 2011

Wage earner protection program

The Wage Earner Protection Program Act, S.C. 2005, c. 47 creates a priority regime for wages owing to employees of insolvent businesses. Does "wages" in the Actinclude amounts paid to third parties under a collective agreement such as union dues, contribution to health or welfare trusts and extended health coverage? This was the issue in Re Ted Leroy Trucking Ltd., 2010 BCCA 223, in which the contest was between the employees' union and the company's secured creditor. The chambers judge had decided (2009 BCSC 41) that the definition of wages included all compensation earned by the employee including those amounts paid to third parties for the benefit of the employee. The Court of Appeal confirmed this decision, holding that such payments to third parties are part of the employer's compensation obligation or the employee's entitlement as they are for the benefit of the employee, not the third party.

First creditor's costs in bankruptcy

As a general rule, the claims of creditors rank equally in bankruptcy. TheBankruptcy and Insolvency Act makes some exceptions, permitting certain creditor claims to be paid ahead of the general body of creditors. S. 70(2) of the Act gives such preferred status for "one bill of costs" for the creditor who first attached or otherwise pursued execution against the assets of the now-bankrupt.

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