[Recorded by Electronic Apparatus]
Thursday, September 19, 1996
.0932 
[English]
The Chairman: We shall resume consideration of Bill C-5, an act to amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Income Tax Act. I would like to welcome the witnesses today from Jean Fortin & Associés Syndics Inc.
Just before I start, there are two things I've forgotten to do for a long period of time. One is officially to introduce Margaret Smith, who is the researcher with the committee for this issue. This is her area of expertise and she's been helping to prepare the committee, so for the record I'd like to thank her for being here and helping us out.
Secondly, for the witnesses, my apologies. Some of the regular members of the committee are not here. In town a seminar is being given on a topic that is also being looked at by the committee, so some of the members have to go to that. They're all very interested in this and we'll make sure your briefs are available.
To members of the committee, the briefs this morning are available only in French and will be translated later on, but they are here for the committee members.
We can start now. You can introduce the rest of the people with you.
Mr. Pierre Fortin (Jean Fortin & Associés Syndics Inc.): First of all, we're sorry for the accidents involving translation of the text.
The Chairman: Don't worry about it for a second. It's not an issue.
Mr. P. Fortin: With me are Mr. Réjean Boudreau, Mr. Claude Gingras, and Mr. Jean Fortin. We each have a topic we've decided to entertain with you.
Mr. Boudreau.
[Translation]
Mr. Réjean J. Boudreau (Trustee, President, Le Groupe Boudreau, Richard Inc.): I want to talk about the valuation or appraisal report that a bankruptcy trustee is required to prepare and about the consultation sessions by the trustee or other persons so authorized by the Superintendent of Bankruptcy concerning the consumer's records, as we say in business, as opposed to corporate records.
The directives issued by the Superintendent of Bankruptcy and the proposed amendments are designed to bring some uniformity to the bankruptcy process.
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The purpose of my brief is to define the scope of theoretical models. In a society, it is normal for professionals in a particular field to have a theoretical model to assist and guide them in their day-to-day work.
The appraisal report, the first step in the process, presents the consumer's case. The trustee, or someone designated by his office, meets with the consumer - in our business, he is referred to as the debtor - and determines if he should indeed file for bankruptcy or if there are other possible ways of settling his financial problems.
The bill and the Superintendent's directives require the trustee to hold this initial consultation session, the purpose of which is to prepare a valuation or appraisal report.
We believe this initial stage, that is appraising the consumer's records and financial situation, is very important. It is quite normal for someone to have to make a professional judgement, that is to determine if an individual should or should not turn to the Bankruptcy and Insolvency Act.
Because an appraisal report is required, the process tends to be restricted to a licensed trustee. In some cases, we feel it is quite natural for a trustee to be involved. Some consumers may be in an extremely difficult financial position requiring more extensive knowledge and expertise. However, in a high percentage of consumer bankruptcy cases, albeit not in the majority of them, it is abundantly clear from the financial records submitted that the individual in question is insolvent and has been for quite some time.
I believe it is natural for us to define our field of activity. However, within the theoretical model, we professionals would like to be able to do this ourselves or to delegate this responsibility to someone else within our organization who has the necessary knowledge and expertise to display the professional judgement that we are being asked to show in preparing an appraisal report. We fully support the imposition of a theoretical model. However, we would like the process to be considerably more flexible.
In any case, regardless of the field of activity, models like this should be applied by professionals. It should be left to them to make a professional judgement. Therefore, if we are to do our job, we need a certain amount of flexibility to make decisions.
I believe this amendment goes to far. It runs counter to what we customarily see in our own industry and among all professionals.
Secondly, I want to talk about the consultation sessions, about who should give them and what they should involve.
Reviewing at great length every conceivable reason for a bankruptcy is a little like having a doctor try to explain every possible cure for an illness.
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A doctor has the freedom to choose which diagnostic tools he will use and the research he will conduct to find a cure and subsequently he passes this information along to his patient. He is not bound by rigid rules of procedure.
In our case, if we take into account the two consultation sessions, it is clear that based on the records, we have to give the bankrupt a slew of possible reasons why he is facing bankruptcy. We are not given any opportunity to make a professional judgement. That is the first flaw in the consultation process.
Secondly, the trustee is being asked to step outside his particular field of expertise. We handle the financial side of things, if you will, and now we are being asked to handle other areas.
I can give you two very specific, relevant examples. We come into contact with people who have drug, alcohol and addiction problems, but we do not have the required training and expertise to tell the person standing in front of us that his addiction problem is the cause of his bankruptcy. In any case, if we were to tell the person this, we run the risk of impeding the work of the psychologist, therapist, psychiatrist or social worker who have been trained for this job.
Therefore, there is a very real danger of our overstepping our authority.
The second aspect of the directives on consultation deal with education.
The trustee appears to be forced into a position of having to educate the bankrupt on how to manage his financial affairs in such a way as to avoid bankruptcy. This may be a very interesting objective, but here again, I remind you that whether or not a person goes bankrupt or succeeds financially can be traced to different behaviours and beliefs. We are not trained to counsel people. We do not hold degrees in this field.
If we want to teach a person how to succeed financially, we will to work with other professionals at changing the behaviours, beliefs and habits of the bankrupt individual.
The directive and the amendments seem to go much further than this. We are not even being asked to work together with other experts in society.
We believe that this is an extremely dangerous move. In addition to being put at a disadvantage vis-à-vis other professions, the trustee cannot achieve the primary objective, which is to avoid an unnecessary recurrence of bankruptcy, because the consumer does not understand society, himself or how things work. Unfortunately, even with my educational background, I cannot claim to be able to help a consumer debtor resolve his relationship problems with his spouse, children or work colleagues. That is not my area of expertise.
Therefore, the directive goes far beyond my abilities, knowledge and expertise. This creates a dangerous situation, in my opinion.
In closing, it is important to remember that we support the idea of a theoretical model, but we want to be able to apply it in a more flexible manner. That is why we trained, passed exams, received a degree and were assigned responsibilities pursuant to the legislation.
As far as consultation is concerned, we sincerely feel that the objective sought goes far beyond our abilities and expertise.
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If we conclude that less importance should be attached to the consultation aspect, we must ensure that we do not go to the other extreme and impose a very rigid system which precludes any intellectual flexibility in the application of the said model.
Thank you very much. I will now turn the floor over to Mr. Gingras.
Mr. Claude B. Gingras (Trustee, President, Ginsberg Gingras & Associés Inc.): I would like to discuss with you the subject of mediation as proposed in the amendments to the Bankruptcy and Insolvency Act.
In reviewing bankruptcy situations where a mediator must be called in, we have observed that in cases where a creditor disagrees with a trustee, the reason for the disagreement is sometimes minor, but more often than not it is major. In some cases the trustee or the creditor must turn to the courts to resolve the matter. However, the trustee is often the one to seek the court's assistance, at the creditor's request.
We have also observed that the bankruptcy court or the superior courts handling bankruptcies in Quebec or in the other provinces do not appear to be especially overworked. Cases are dealt with within a reasonable time frame.
Given his experience and expertise, the trustee himself can resolve most problems out of court. The Bankruptcy and Insolvency Act is a practical piece of legislation geared to business people. Bringing federal officials into discussions between business people merely weighs the system down and increases costs while lowering efficiency.
With respect to costs, the federal government will be required to provide facilities and personnel to hear parties outside mediation sessions. The process will incur costs without providing any benefits to the general public. Furthermore, the Public Service will be required to train those officials who will practice mediation.
We feel that federal officials are moving into a field which has always been the domain of the courts who have always dealt adequately with the situation. This concludes my comments on the mediation.
Mr. P. Fortin: Yesterday, you listened to a presentation by the Insolvency Institute of Canada. Generally speaking, this brief is a very sound piece of work. The Institute did not, however, touch on one particular issue and I would like to do so at this time. I am referring to the proposed amendments in clause 105 of the bill which would add another type of debt to the list of debts or obligations which cannot be discharged.
Section 178 of the act lists those debts which, despite a bankruptcy, cannot be discharged and remain after the bankruptcy. This is an extremely important point when we consider that a person will never be released from these types of debt. The issue here is student loans. Under the proposed legislation, a student who declares bankruptcy within two years of completing his studies will not be released from this debt, unless he is able to prove to the courts that special circumstances apply in his case and that the debt should be discharged.
It has long been acknowledged that any insolvent, honest individual has the right to declare bankruptcy and to be discharged from his debts and obligations. It follows then that the exceptions provided for in section 178 should be as limited as possible.
Among the exceptions listed are debts for alimony, often involving persons who are more disadvantaged than others, debts for fines or penalties imposed by a court or debts arising out of fraudulent misrepresentation. These are all rather unique cases and, given the values that society teaches, we can well imagine why these particular types of debts should not and cannot be discharged. We are talking about a specific category of debts.
On reading the amendment which would include student loans in this category, we feel that this is an inappropriate inclusion because these debts are not of the same nature as the others listed.
Moreover, when amendments to the legislation were introduced in 1992, Parliament decided to remove one of these exceptions pertaining to the necessities of life. Any debt of liability for goods supplied as necessaries of life was previously deemed a debt from which the debtor could not be released. The realization dawned that this provision benefitted big companies such as The Bay and Hydro-Quebec and a decision was made to remove this exception and limit this to a very specific category.
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Furthermore, in 1992, Crown debts which previously were considered privileged debts became regular debts. Government and Parliament had wondered why they should be put in a specific category. They wanted to be in the same category as all other creditors who lose money. Now the government is proposing to add to the list of exceptions student debts which are guaranteed by the State. Next year or when the next round of amendments comes along in seven years' time, will we be adding tax debts or those arising from State agencies to the list? Where will it end?
While deficit reduction is a commendable goal, the right to declare bankruptcy and to be discharged of one's debts is a fundamental principle which should not be compromised. There is no justification for imposing an automatic two-year delay because other circumstances can warrant recourse to protection under the Bankruptcy and Insolvency Act. From our experience, we believe that an insolvent person who remains in the system and keeps his credit cards and lines of credit often tends to behave like someone who has nothing to lose, precisely because he is insolvent. Why not use the remaining line of credit on his cards? Why not increase his line of credit?
We must also bear in mind the situation of student debtors. We mustn't forget that young people - as we see in the reports, credit cards and line of credit are ever present - are a targeted market. Although their incomes are extremely modest, they succeed in getting as many credit cards as they want. Often compounding the problem are student loans. These are not the only debt that a student has.
The job market also poses a problem. It is not a foregone conclusion that a student graduating from university with a diploma after spending thousands of dollars will find a job. Very often, students find a job that pays minimum wage, if they find work at all.
As for the possibility provided for in the bill to allow a debtor to petition the court to discharge his debts, this is one instance where the burden of proof is being shifted. In all of the other exceptions provided for in section 178, the burden of petitioning the court rests with the creditor, whereas in this case, it falls to the debtor.
The student debtor who completes his studies and sets out to find a job faces the possibility of his wages being seized. He may be hounded by his creditors and he may go bankrupt. His student debt cannot be discharged, but he can petition the court to have the debts discharged. This may scare off many young people who don't always have the financial resources to prepare valid arguments for the court.
It is wishful thinking on our part to believe that this bill will allow debtors to assert their rights, particularly when they go up against the Department of Justice representing the Department of Education. We are fooling ourselves if we believe that we can say to the young person who has just gone bankrupt and who is often very down: "There's no problem, you can petition the court to have your debts discharged. However, you will have to hire a lawyer."
Under the current system, the Quebec Department of Education and Higher Learning may object to a person filing for bankruptcy and it has in fact done so. Under the current system, the department can examine each case on its own merits and, based on the information at hand, decide: "In this case, I object and in that case, I do not object because recourse to the Bankruptcy Act was not an unreasonable".
If the department decides to pursue its opposition to the bankruptcy application, the records are forwarded to the court which is in a good position to evaluate each case on its own merits. The court will determine whether the person acted unreasonably in filing for bankruptcy or whether he had no choice in the matter.
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Therefore, the current system has a built-in mechanism to prevent abuse and we feel that it works well. What is being proposed here is a two-year delay which will apply in all cases, irregardless of special circumstances.
In closing, I would simply like you to bear in mind that the fundamental principle behind the bankruptcy process is an individual's right to seek to have his debts discharged in order to become once again a productive member of society. Any exception to this principle should be carefully scrutinized.
The Chairman: If I can interrupt you, Mr. Fortin, the witnesses have been speaking for nearly half an hour and the members still have many questions for them.
[English]
Mr. P. Fortin: I'll be finished in one minute. It's my conclusion.
Maybe the government should be more selective when it decides to give money to students, and maybe it should try to avoid permitting students to pursue studies in which there is no market. That is a suggestion. But I think we should not encroach on the right of a debtor to file for bankruptcy and be discharged from his debts.
These are our comments. We're open to questions.
[Translation]
The Chairman: Mr. Lebel, would you care to begin?
Mr. Lebel (Chambly): Thank you for appearing before our committee. I want to congratulate Mr. Fortin for displaying some compassion toward students. He is the first to have done so since the start of our hearings. His sense of professionalism is almost enviable, because very few professionals in the bankruptcy field have cautioned us as you have about the provision respecting the discharge of student debts. Therefore, I want to congratulate you. Keep up the good work and you will go far in this field. I am happy to see that someone working in this area feels this way.
I have a somewhat silly question for you. Perhaps it is directed more to Mr. Gingras than to Mr. Fortin. In your opinion, are bankruptcies handled equitably across Canada? Is a uniform system in place across Canada to deal with bankruptcy?
Mr. Gingras: Bankruptcy is governed by federal legislation and the objective is to ensure that all cases are handled equally in all regions of Canada. However, this is not the case owing to the refusal on the part of the Office of the Superintendent of Bankruptcy to allow trustees to incorporate. We are therefore at the mercy of each official receiver in each region. For example, in Quebec, the law is not applied in the same manner in all regions. The documents as well as the rules of procedure for trustees are different from one region to the next. In some instances, the differences are minor while in others, they are major. Each regional director develops his own habits and practices and imposes them on the system and on the application of a legislation. Would you agree with me on that?
A member: Yes.
Mr. Boudreau: I would like to add something to that. Two things make it very difficult to apply the legislation in a uniform manner across Canada. Firstly, the superintendent himself is responsible for applying the legislation in a vast country in which there are many offices. As Mr. Gingras pointed out, the application is not uniform, either for the trustees or for the public. Secondly, this lack of standardization leads to constitutional problems because the Bankruptcy and Insolvency Act is silent on this point. We then get into provincial law. Since each province is a little different, it is difficult to apply the legislation in a uniform manner.
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However, the fundamental problem, in my view, lies with the superintendent when he decides to issue a directive to the trustee and to the official receiver, the person who closely monitors the trustee's activities. Even at the level of the official receiver, directives are not applied uniformly across the country. This leads to disparities, at times minor, but also at times major, as Mr. Gingras indicated. Our two associations - one is provincial, the other federal - are not always successful in getting the superintendent to apply the legislatives provisions in a uniform fashion. Therefore, the regional offices enjoy a certain amount of latitude in this area.
The application of the Bankruptcy Act in Quebec raises a number of unique problems.
Mr. Lebel: For example, I have heard that in some provinces - I don't know whether this is true and you can enlighten me on this score - a trustee who hands real estate assets over to a mortgage creditor is entitled to 5% of the value of the property. It would appear that this directive comes from the superintendent. Is that correct?
Mr. Boudreau: You are referring to a provision in the legislation known as the 5% payable to cover the superintendent's administrative costs. This is known as paying a dividend to a creditor. Canadian financial institutions, which are surrounded by professionals, do not want to commit to paying this 5% and use a roundabout approach known as taking a buyback.
The superintendent's position on this isn't clearly stated. In any case, in the Montreal region, trustees were advised about a year ago to start recovering 5% of the money handed over to the financial institution in the form of a charge and forwarding it to the superintendent.
This creates two major problems for us. In the first place, this directive is applied in Quebec, but not elsewhere. Secondly, it comes after the fact.
Mr. Lebel: Therefore, what I heard is the truth.
Mr. Boudreau: Yes.
Mr. Lebel: It is not applied...
Mr. Boudreau: Montreal in particular seems to be targeted.
Mr. Lebel: That is what Mr. Gingras seemed to be alluding to when he said there were minor distinctions, albeit major ones as well. This would be one of them.
Mr. Gingras: Yes indeed. There are some minor differences between the provinces. For example, in Quebec, real property is exempt up to a value of $6,000 whereas in Ontario, the ceiling is $2,000. This is one example of a disparity.
Mr. Lebel: I didn't catch that because I was interrupted by the chairman. Could you repeat your answer, Mr. Gingras?
Mr. Gingras: The minor differences concern real property that can be seized in the provinces. For example, in Quebec, the exemption ceiling is $6,000 whereas in Ontario, it is $2,000.
If a person who is considering filing for bankruptcy and who owns real property resides in Ottawa, he should consider moving to Hull for two months, filing for bankruptcy there and then moving back to Ottawa.
It is an inconvenience for Canadians.
[English]
Mr. Mayfield (Cariboo - Chilcotin): I was interested in your comments on student loan bankruptcies. It's interesting to listen to your point of view. Others have said that perhaps the two years should be extended to three or more years.
I would be interested, though, in going beyond the ideal situation where everyone enters into a business relationship borrowing money as an honest person. It seems as if there has been an attitude amongst some students that you don't really have to pay the money back, that it's a simple matter of going bankrupt when you don't have anything anyway.
You offer the solution of having the courts adjudicate on this matter of when it's appropriate to go into bankruptcy and when it is not. But then we come into the whole complication and expense of involving the courts in a large number of instances - and it's my understanding that the student loan problem is not a small one.
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If we do not make an exception of student loans, then how should we deal with this problem, which has grown? I presume that in looking at this legislation the industry department has chosen this method because it's a big one. I'm wondering what you're suggesting.
Mr. P. Fortin: With any system, there are people who will abuse it. When it comes to filing their income tax returns, some people try to cheat the system.
It's not true that the majority of debtors are dishonest. I think the majority are honest, and for the majority of those who file for bankruptcy it's not just to get rid of cumbersome debts. It is because they are in very serious financial difficulty. I don't think it's right to impose a policy on everyone in order to try to avoid abuse of the system by a minority.
There are not very many abusive cases for the courts to look at. There are a lot fewer abusive cases than there are honest cases. So when you look at all of the repercussions that this will have on the majority who are honest and who are stuck with problems....
We see them every day. These people do not have a job and they will probably not have one in the next year or two years following that period. The letters they get ask for immediate payment or else the writer will proceed as the law allows them to do.
I understand your point of view, and there has been a rise in bankruptcies. But I don't think the problem is the bankruptcy itself; it's everything else around it. I don't think that for the minority of people who abuse the system we should impose an automatic delay that does not take particular circumstances into account.
Mr. Gingras: Your premise that the courts are overworked right now regarding discharges of bankrupts is not correct. The system of opposing discharges by creditors, and student loans doing it, is working now and the courts are not overburdened. A judge is coming in and listening to both sides of the story and making a decision, and the decisions that are coming out are fair and correct. So why penalize the majority, who are honest people, by putting in two years or three years?
You have to go back a bit further, go back to whenever you got your student loan. You should have professionals making these loans, based on what you're studying and where you're going. I say this because if you advance a $20,000 loan for somebody to do a master's in something for which there is absolutely no demand, at least explain this to the student in question. Say, ``You're not going to have a job after you have finished this. So why don't you go where there will be work and then, after you get a job, go for the pleasure of studying this thing, which is fun to study and fun to know but will not produce anything for you, for me, for the country, or for anybody except for yourself.''
I don't object to these people studying for the pleasure of studying, but I do not want them to do so with my money. Right now the people granting the loans do not take the time to explain that to the students.
Avoiding a bankruptcy does not start at 20 or 30 years of age; it starts in school. All of us have been to schools and given graduating students presentations on how to avoid bankruptcy; we've done that free of charge. There are no courses in school about preventing a bankruptcy, about managing your money.
This is where it should start, not by penalizing somebody who has gone to school, was honest about it and thought he was doing something good for everybody compared to the guy who abused it. For the guy who abused it, let the student loans people oppose the discharge and explain to the judge who made the mistake here.
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The Chairman: Mr. Fortin, would you like a chance to add something?
[Translation]
Mr. Jean Fortin (Trustee, President, Jean Fortin & Associés syndics inc.): I think the government realized the damaging effects of insolvency some 40 years ago. At some point, the government decided to pass legislation to prevent insolvent persons from continuing to act in a harmful manner, which could lead that person to become discouraged and to continue to consume. It was unacceptable to allow an insolvent person to remain insolvent and legislation was therefore passed to discharge that person of his debts.
As far as student loans are concerned, this doesn't really affect me because of my age. However, we are concerned that if one door is opened, groups of lenders will jump on the opportunity to ask the government to take steps to prevent another group from assigning its goods or imposing delays. For example, it is well known that credit card abuse is rampant. Lending money to a student for his studies is like lending someone money to purchase an automobile. If we know that the person is not employed, then we should also know that he will be unable to reimburse his loan. He should be required to start paying back his loan five years after completing his studies. Under the current system, students must start reimbursing their loans as soon as they have completed their studies. However, there are no jobs out there.
One of our clients, who had received a $50,000 loan from the province of Quebec, studied medicine in Mexico. However, the Mexican degree is not recognized in Quebec. Currently, this client is on social assistance. She doesn't know what to do and she is being hounded. How should we resolve her problem? We could advise her to work on the black market for two years because she cannot file for bankruptcy. From the moment we acknowledge that a person cannot remain insolvent and has to turn her situation around, Industry Canada has a duty to tell that person: "You are entitled to recourse under the law".
If the creditor believes that the person is guilty of having abused the system, he can turn to the courts. This mechanism works very well. The problem is not the number of bankruptcies but rather the number of insolvent persons and this is what we must bear in mind. If many people file for bankruptcy, it is because there are many people who are insolvent and this state of affairs can always be traced to a lending institution that has not been vigilant enough or has been too greedy for profits or has too many liquidities in circulation. It is no surprise that bankruptcies occur as a result.
To our mind, the objective is to discharge the debts of a person experiencing financial difficulties and to try to make that person responsible for his actions so that he can once again become a productive, responsible and solvent member of society. That is the objective of the act. For the past few years now, the number of rules has increased and the process has become cumbersome. Perhaps we should focus on the information aspect.
In Canada, consultations have cost creditors nearly $30 million since the latest legislative amendments came into effect. Only a minority of persons, perhaps 3%, have benefitted, namely those who declared bankruptcy a second time either voluntarily or for financial reasons. The total cost represents approximately $4,000 or $5,000 per individual. I do not believe this money was put to good use. It could be recovered from the body of creditors and used for training programs to help people find work and to caution them about the harmful effects of insolvency.
Ninety per cent of people who file for bankruptcy do so only once. They learn their lesson, having understood the harmful effects of insolvency and having no desire to repeat their mistake. And they do not. Only a slim minority file for bankruptcy a second time. People living below the poverty line are among those who file for bankruptcy a second time.
If I don't earn enough money to get by and face the prospect of going bankrupt and if companies like Zellers or The Bay or the banks send me credit cards, I'm going to use these credit cards to make up the shortfall in income and I will once again become insolvent and go bankrupt a second time. Consultation sessions and training courses won't help these people in the least because we are dealing with an income, employment and education problem. By education, I mean the necessary level of instruction to get a job. These persons do not know how to manage a budget. They do not earn enough money and they do not have the taxation powers of governments. Since they can no longer borrow money, they go bankrupt. If Quebec found itself in the position tomorrow morning of no longer being able to borrow money or to collect taxes, it would go bankrupt too. Individuals do not have these powers.
Therefore, we have to remember that these legislative amendments deal with insolvency and that we are not here to prevent people from borrowing money. Insolvency is the issue at hand. We want lending institutions to be more vigilant. The system is there to work. The courts are also there. We can object to debts being discharged if there is evidence of abuse. These mechanisms must continue to be implemented.
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[English]
The Chairman: Mr. Mayfield, do you want to continue on this?
Mr. Mayfield: There's a point you raise.... I asked how to deal with it, and perhaps you've pointed the way somewhat by suggesting the lender has some responsibility in this as well. I think that's an important point you raise. I'm wondering, perhaps within the legislation - I don't want to get into student loans - how the lender can be required to do the counselling, to make the proper evaluation. As it is now, with a government-guaranteed loan there's not much incentive to do anything but pass the money across the desk. How can that be changed?
Mr. Gingras: Having been a lender before I did what I do now, I know that before giving credit a good lender, if he's professional, must do certain things. One of the things is to verify if the person can repay or if he will be able to repay in the future. It's easily done. You analyse stability. You analyse if he can afford the rent, if he can afford the mortgage payment, if he can afford this and that, if he has been repaying some of the loans he's taken out, whatever. There is a scoring system. They used to give points for stability of work, if you're married or not, and so on. But our society has changed, and therefore the scoring of a loan has changed also.
Some of the people in the industry will refuse to give information to the competition as to the stability or ability of a creditor. If these people aren't crazy, they're not far from it. By exchanging their information, they would be able to judge each demand for its value. If you're dealing with a student loan you apply the same principle, except you allow a little more importance for the type of studies the party is doing.
An example is the $50,000 loan from the Province of Quebec to study medicine in Mexico. The guy who granted that loan must be off his rocker. That's crazy, because you know that whenever he comes back this person can't work; you know that. So there is a responsibility between lenders to exchange information and to make the decision based on facts.
The Chairman: Mr. Bodnar.
Mr. Bodnar (Saskatoon - Dundurn): Thank you very much, Mr. Chairman.
During the first two years after a student graduates, under the Canada student loans program for the first six months the student has a period of grace, so the student is not under any financial pressure for anything. Then the student, if the student meets the criteria of the Canada Student Loans Act, can get it extended a further 18 months. That makes it two years of really no difficulties for a student. Yet 70% of students who are going bankrupt go bankrupt during these first two years. In other words, students who are not under any financial pressure are going bankrupt within the first two years, and you're saying eliminate that two-year period.
Mr. Gingras: You're mixing apples and oranges. The problem is not with the Canada student loans program. The problem is with the provincial student loans, which are putting pressure on the debtors to exercise...and they want their money back immediately. I'm licensed in Quebec and Ontario and I see the difference. If you apply your statistics only to Canada student loans, you'll see they're very low; but if you apply them to provincial student loans, they're very high.
Mr. Bodnar: So the problem is with the provincial student loan programs.
Mr. P. Fortin: Yes, but there are other creditors. You're assuming these debtors come out of university or CEGEP without any other types of loans and debts. But with the system right now you can have as many as five, six, or seven credit cards with part-time jobs. As soon as you get one credit card you can have all the others that follow. You can have credit lines.
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The problem is not only with the student loan but also with other creditors. Very rarely do we see debtors going bankrupt for only a student loan. There are many other kinds of problems.
Mr. Bodnar: Let me just give you a thought on a few things here.
One of them is that when a student graduates from a university or goes to a university, the student has an asset. It's an asset that cannot be touched by any creditors. It can't be touched because it's a degree and it's right here for the student. The student goes through bankruptcy and wipes out the debt, but he still has that asset, which normally could be attached by creditors but, being a degree, cannot be attached. That is a problem I see.
The main reason why I see this problem is that I believe students should pay their way through universities. I too have children I'm putting through university. I just don't want to put another two or three children through university through my taxes because they are defaulting on student loans.
Perhaps there should be flexibility in the collection of student loans. Let me stick to the Canada student loans program, because I'm more familiar with it.
In the Canada student loans program, when there are defaults, there's no flexibility whatsoever. In other words, when the lawyers are collecting a Canada student loan, if there's $5,000 plus interest owing they want $5,000 plus interest. There are no deals. Yet quite often the student's parents or aunt and uncle or grandparents may come in with a lump-sum offer of $3,000 to settle it. They will not take it. The student goes bankrupt. The government loses everything. Perhaps there should be flexibility.
Do you believe that maybe flexibility should be built into the system, which doesn't fall under the bankruptcy legislation but is under HRD?
Mr. P. Fortin: It's certainly one aspect that is to be considered, but you're putting flexibility into that system and you're taking it out of the bankruptcy system.
We're assuming that what they have here can be translated into jobs and money, but that's no longer the case. It's not because you have a diploma that you can get a job that will pay you the amount of money you need to reimburse your loan.
Mr. Boudreau: As far as I'm concerned, the only cause of bankruptcy is the credit facility. Student loan, credit card, car loan, trip loan, whatever - it's all credit facility. For everyone who came into my office to do a bankruptcy it was their last resource, the last solution. Everybody wants to pay their debts. The problem is that those people end up in a train. They see a light; they arrive at the end, but the light is not there. Every student who ends up with a job at the end of his college or university years repays the loan. It's the same for everybody else who comes to my office. If they have a job, they pay their debt. The problem is that they lose their job or their business, or something major, such as a divorce, happens that triggers the ultimate solution.
Mr. Bodnar: I do not accept your emphasis on vigilance by lenders, especially with students, because otherwise we'd never get graduates in the areas of fine arts, political science, or the social sciences. No lenders would ever be willing to give money in student loans in areas that I consider to be crucial and very important to the social development of the country. Otherwise, loans would be restricted simply to the physical sciences because of jobs in areas of high-tech industries.
[Translation]
Mr. Lebel: I have one final question. One thing has concerned me since the start of the hearings. Have you examined subsections 14.06(2) and so pursuant to which claims for property clean-up costs rank above mortgage claims. This is ridiculous to my mind.
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The issue is more theoretical than that. A bankruptcy specialist told us several days ago that this provision forced the trustee to pay for the clean-up costs out of the value of the property whereas to my mind, this is simply a security. However, the trustee could recover or pay for the clean-up costs out of the bankrupt's other assets. I would be interested in your opinion.
Mr. Gingras: I see this as a form of security that the government keeps to ensure that clean-up costs are paid. However, the charge is against this property only, not against the use of other goods.
I think that lenders should have an opportunity to discuss this situation because this provision is going to create a problem, for example for owners of service stations and farms who try to secure a mortgage, because they will not be able to get a mortgage for more than 50% of the value of their property. They know that if an accident happens or if they file for bankruptcy, the government will take 15% or 20% of the value of the asset to cover clean-up costs.
This will create a problem more so for lenders than for the bankruptcy trustee.
Mr. Lebel: Therefore, this provision could considerably slow the pace at which loans are granted for job creation or business start-up, particularly if chemical products are involved.
Mr. Gingras: Yes.
[English]
The Chairman: Mr. Shepherd, a quick question.
Mr. Shepherd (Durham): Going back to student loans, Mr. Fortin, I think what you're talking about is that this is just a glimpse of the real problem, in the sense that there has been such a tremendous proliferation of consumer credit. If we look at the proliferation of consumer bankruptcies and also the amount of money for which people have been going bankrupt over the last decade, that number seems to be going down. In other words, the accessibility of credit would lead some to the conclusion that the ease of bankruptcies is part of our problem.
It seems to me that we're in a more circuitous route with lenders. Lenders today are saying that they have to keep the interest rates on their credit cards high because of the proliferation of bankruptcies.
You are alluding to what I think is a very real problem in this country, which is that credit is too easy. The question is what kinds of solutions we as a government can impose on financial institutions and others. I'm looking at profitability in the area of credit cards themselves. In other words, if you can keep your interest rates up at 18%, we can sustain 3% of bankruptcies throughout this. If the government said that you can't raise your interest rates above 14%, it might change attitudes toward lending.
Do you think there's truth in this?
[Translation]
Mr. J. Fortin: Your question is extremely interesting, but it raises a fundamental problem. It's the same thing in the case of student loans. The question is, do we control the economy and do we want the State to intervene, or do we want a free economy?
When banks make fewer profits, they will necessarily be more selective when it comes to issuing loans. Credit will be less readily available and there will be fewer bankruptcies because fewer people will be insolvent.
In the last five years, and the most recent issue of the Bank of Canada review backs me up on this, bank profits have increased, loss provisions have declined along with losses. Therefore, the economy is doing quite well and bankers are not affected by insolvency. They are making a great deal of money. Everything is going well for them.
We, on the other hand, are concerned about the harmful effects of insolvency. If all insolvent Canadians were to realize tomorrow morning that they could discharge themselves of their debts, there would be a tenfold increase in the number of bankruptcies and bankers would of course become more vigilant. They could no longer continue to operate at 17% and 20% or at 30%, to exploit persons who are defenceless in the face of this pressure to consume and to keep them in a state of insolvency which often leads to divorces, family break-ups and so forth.
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Everything is profit-driven. I would take at least $10 million of the $25 million spent on consultation and use it to make people aware of the harmful effects of insolvency and to inform them that they do not have to remain insolvent, that they don't have to return a television set against which there is a lien or commit an offence to pay a creditor who is putting too much pressure on them. We would advise them to assign their goods, in accordance with the legislation, to start over again and to become responsible citizens. Let them start rebuilding their lives. Then, the bankers who issue credit cards... Some of our clients who have yet to be discharged from their debts receive a second credit card. Credit pays and it pays well. That is the problem.
Our role is limited to putting out fires because the individual is insolvent. I'm not concerned about the number of bankruptcies, but rather about people who become insolvent and about the fact that loans are too easy to get. We live in an era of deregulation and free trade. Whether or not to regulate this particular area is a philosophical question. As trustees, this is not our responsibility. It is up to the government to act.
All we can say is that even in the bankruptcy field, there are too many regulations arising from the administration of this legislation in terms of directives and the like. There should be more confidence shown in trustees and more responsibilities should be transferred to them in order to cut costs and reduce the government deficit.
In the past several years, jobs have been created at the Office of the Superintendent. The number of controls has increased, along with the associated costs. We pays these costs through our taxes. Perhaps the process should be simplified and we should let the economy take its course by advising people, either through courses or publications put out by the government or the Superintendent of Bankruptcy, on steps they can take to prevent insolvency and avoid the traps set for them by lenders who clamour: "Buy now, pay later; pay only 3% interest on an automobile loan; receive a $1,000 bonus if you buy an automobile in November". We have all seen people take the bait. We ask them why they do it when they can't afford it. They answer that they received $1,000 as a gift for their children and besides, they only have to start paying back the loan in six months time. Persons like this are victims of the system. They are not to blame. When we have them file for bankruptcy, we discharge them of their debts and never again will they get caught. They have learned their lesson. We must look out for all those who have yet to come to this realization.
Look at the current statistics. Our office receives them on a regular basis and we do studies on debtor behaviour. Profits are up and losses are down.
The Chairman: As you can see, the members have a great deal of confidence in your expertise,
[English]
and I'd like to thank you very much for taking the time to come here and spend the time with us. We are limited by the other guests for the one hour altogether, but I really appreciate the comments. You've touched several nerves that have to be discussed in this legislation. I appreciate your coming to Ottawa and spending the time with us.
Mr. Boudreau: May I make a last comment? The bankruptcy system is the exit door of the economic system. As long as you don't check the opening door, we're going to be busy.
Thank you very much.
The Chairman: Thank you.
Welcome, Mr. Kershman.
Mr. Stanley J. Kershman (Credit Association of Canada): Good morning.
The Chairman: Good morning. Welcome to the committee. You know of our format, which is to allow time for the members to ask questions. We have an hour altogether. We'd like to finish on schedule, as close as we can to 11:30 a.m.
Mr. Kershman: That's fine with me. My presentation will not be lengthy.
The Chairman: Good.
Mr. Kershman: Everybody's ears perked up at that. That's a good sign.
The Chairman: That's right. You can tell people are paying attention as soon as you say ``brief''.
Mr. Kershman: That's what I was told - brief.
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The Chairman: Mr. Kershman, perhaps you can tell us your background and begin your presentation.
Mr. Kershman: I am a lawyer with the law firm of Kershman & Warren in Ottawa. I have been practising for 18 years, mostly in the area of debtors' and creditors' rights. I am certified by the Law Society of Upper Canada as a specialist in bankruptcy and insolvency law. I sit as a deputy judge in small claims court. I have had numerous articles published in various publications, such as Butterworths' Commercial insolvency reporter . I also do a lot of mediation.
I'm here today to provide to the committee, on behalf of the Credit Association of Canada, a presentation concerning the amendments to the Bankruptcy and Insolvency Act.
Mr. Chairman, Mr. Vice-Chairman, and members of the committee, on behalf of the Credit Association of Canada we would like to thank the Standing Committee on Industry for the opportunity to make representations to you today.
The Credit Association of Canada is a national organization that represents credit granters throughout the country. The membership of the association is made up of credit granters from all sectors of the economy, including wholesalers, retailers, financial institutions, and others.
Our industry is facing great challenges due to existing economic conditions and the heavy debt load being carried by consumers. The cost of that debt is being passed on to Canadians in the form of higher interest rates and higher costs of goods.
The Credit Association of Canada is pleased with the fact that the Bankruptcy and Insolvency Act is being reviewed and amended within four years of the last revisions.
The Bankruptcy and Insolvency Advisory Committee and other organizations have worked very hard to provide constructive suggestions on how to streamline the bankruptcy process and how to make it more effective.
The Credit Association of Canada supports the majority of the amendments contained in Bill C-5. The association would like to make representations with respect to the clause that deals with the provability of support claims and the superpriority that these claims will be afforded under the new legislation, being proposed paragraph 136(1)(d.1) of the draft legislation.
Under the current Bankruptcy and Insolvency Act, no spousal or child support claims are provable in bankruptcy, resulting in individuals owed support claims not sharing in the dividends of the estate. Furthermore, at present support claims are not stayed by bankruptcy, nor are they terminated by the discharge of the bankrupt. Support claims simply continue to operate outside of the bankruptcy system.
As the system stands, unsecured creditors receive their dividends from the estate and the bankrupt's liability to those creditors is extinguished on the bankrupt's discharge. The support recipient maintains his or her status as a creditor of the bankrupt notwithstanding the discharge.
Once the bankrupt's liabilities have been discharged, the bankrupt should have additional resources to satisfy his or her ongoing support obligations and arrears, subject to any other claims that might survive the bankruptcy.
Under the proposed amendments to the act, pre-bankruptcy lump-sum support claims and support arrears accruing in the year prior to bankruptcy would be claims now provable in the bankruptcy. These claims would receive a priority and would receive dividends from the bankrupt estate over all other unsecured creditors after the payment of secured creditors, trustees' fees, administrative costs, legal costs, the superintendent's levy, and any employee wage arrears. Furthermore, unlike other unsecured creditors, the support claim would not be extinguished by the bankrupt's discharge and the support creditor is therefore at liberty to continue their enforcement proceedings against the bankrupt, except for property which is vested in the trustee.
In other words, in addition to receiving the dividend priority under the Bankruptcy and Insolvency Act that's proposed, the enforcement procedures can continue with respect to provable claims, nonprovable claims - i.e., those that have accrued prior to one year before bankruptcy - and ongoing support claims.
The Credit Association of Canada strongly opposes this amendment. In many circumstances, credit-granting institutions grant credit when couples are together on the basis of their family income. When the parties separate it prejudices the credit granter. Even more, when one of the parties declares bankruptcy, the credit granter is left with only one party from whom to collect the debt. The non-bankrupt party is usually the lower-income spouse and, in addition, may be a support recipient.
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When the estate assets are collected by the trustee after payment of secured creditors, trustee fees and administration costs, any surplus is then divided amongst the other unsecured creditors who have proven their claims. If support claims are given priority over other unsecured creditors, the dividend available for the other unsecured creditors is going to be made smaller. So under the new legislation the pie is really going to reduce itself for all the other unsecured creditors.
This is going to prejudice the unsecured creditors in two ways. First, by virtue of the bankruptcy, unsecured creditors have had their enforcement rights terminated, so they can't collect on the debt. Second, the dividend they are going to get from the estate is going to be smaller by virtue of the fact of this new superpriority in favour of the support spouse. That's going to mean the credit grantors are going to incur more losses, and this will drive up the cost of selling goods to the public. I don't think that is really what is intended by this legislation, but I think that is what can occur by this legislation.
So what you will see is that the scales will be tipped in favour of the support recipient over the other unsecured creditors, which then brings the equity of the bankruptcy system into question. Therefore the Credit Association of Canada recommends that support claims not be claims made provable in bankruptcy, that the support recipient not be given the superpriority in the bankruptcy over other unsecured creditors, and that the status quo be allowed to remain.
On behalf of the Credit Association, I want to thank the committee for allowing the association to appear before you today. I tried to keep it brief, and I think I did.
The Chairman: Mr. Kershman, thank you for your very succinct presentation. You've covered some major points for us.
Perhaps I can turn to Mr. Lebel.
[Translation]
Do you have any further questions?
Mr. Lebel: No.
[English]
The Chairman: Mr. Mayfield, do you have any questions?
Mr. Mayfield: I think I do, but I don't have them formulated yet.
The Chairman: Well, we have just gone through a number of witnesses who don't leave us so much time.
Does anybody on the government side have any questions? Mr. Bodnar.
Mr. Bodnar: I was just wondering if Mr. Shepherd had any questions at this stage. But I do.
I would like to start with my pet question, since you're a lawyer.
Mr. Kershman: I don't know what the question is yet.
Mr. Bodnar: Well, you're going to hear it right away. Mr. Shepherd doesn't like it, but that's all right.
Thus far the Superintendent of Bankruptcy has issued licences, it appears, only to accountants or people like that, but practising lawyers are not issued licences to be trustees in bankruptcies. Do you see any problem in a change of policy to allow practising lawyers to be trustees in bankruptcies?
Mr. Kershman: I really don't have any comment on that, because I didn't know that was on the agenda, that lawyers would be allowed to be considered for becoming trustees. What I do know is that certain lawyers are trustees in bankruptcy, having gone through the approved course required by the superintendent to be licensed.
Mr. Bodnar: But they're not practising?
Mr. Kershman: They're not practising as lawyers, they're practising as trustees.
Mr. Bodnar: That's right.
Mr. Kershman: I know at least one, if not two, situations to that effect.
Mr. Bodnar: All right.
The Chairman: Mr. Shepherd.
[Translation]
Mr. Lebel: The young attorney who was seated over there earlier works for the bankruptcy trustee.
[English]
Mr. Bodnar: I'm not a practising lawyer.
The Chairman: Mr. Mayfield, are you ready now?
Mr. Mayfield: I need to move carefully here, because it's not an area I understand well. I'm neither an accountant nor a lawyer, nor have I ever been involved in bankruptcy.
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I'm wondering why you would suggest a support recipient should not have a prior claim. That seems to me to be a priority. You've raised the issue of raising credit costs, but I'd like to hear your rationale for that.
Mr. Kershman: My rationale is as follows. At present spouses' and children's claims for arrears of support don't fall within the bankruptcy system; they fall outside it, which means the arrears and the continuous support payments are collected outside the bankruptcy system, so they don't become a creditor of the estate. That's first.
Second, in Ontario they have a support and custody enforcement plan that collects these arrears on behalf of the spouse and the children and then pays those items over, whether for current support or for arrears. It's my understanding the system works reasonably well. Why tinker with something that works well?
Furthermore, these people are getting their money...at least in Ontario it's being taken directly from the employer and being paid to the support system. Then that money is being paid to the people who are entitled to receive that support. We don't see why there's a necessity now to add these people who are receiving their support payments to the bankruptcy system, where they will now receive a percentage of their money out of the bankruptcy process, possibly some and possibly all, when they can receive it all outside the system.
I think it will also make the system more cumbersome, because you're adding a whole new class of creditors, with a whole new series of priorities to the system. Instead of your streamlining the system, it's becoming bigger and bigger and potentially more cumbersome.
Mr. Mayfield: It seems to me there's a principle that has been involved with dower's rights, and it recognizes the obligations a person has to other members of the family. I have a feeling of some reluctance. I listened to the witnesses who were here just before you as they made a plea at least to hold the credit giver somewhat accountable in the economic process that sometimes leads to bankruptcy, and I must say I don't find your argument entirely persuading me. I feel that as the credit giver looks at the credit application and goes through the resources and the ability of a person to repay, perhaps that should be one of the points on that application: what are the responsibilities of the applicant that cannot be given up even in bankruptcy?
Mr. Kershman: The credit grantor, when they take their application.... Let's assume we have a couple who are together. If the couple are together and they take the credit application based on the combined income of both of the spouses and then there's a marital break-up, first, it's more expensive to run two households than it is to run one, so potentially someone or other is going to run into financial difficulty because they're running two households. That means the credit that has been granted by the credit grantor is potentially in problems because they may not be able to repay that debt. If it gets so expensive and goes so far that one spouse or potentially both spouses have to go bankrupt, then the credit granter is the one that loses, not the person receiving the credit.
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Whether it be a credit card or whether it be goods, the consumer has already received those goods and has received the benefit of them. Whether it's a meal out using a credit card, whether it's buying furniture on credit and it's unsecured, whether it's going on a vacation - all that benefit has been received by the consumer. The credit granter is the one that bears the risk.
It's okay to bear the risk, but when you're bearing the risk and then you find yourself no longer being in, for argument's sake, fourth position but in fifth or sixth position to receive any dividends, I think that's a prejudice to the creditors.
Furthermore, the present act specifically states in section 178 that an order of discharge doesn't release the bankrupt from any debt or liability for alimony or any debt or liability for support, maintenance, or affiliation order. So it's already codified within the section that if you're bankrupt you still have to maintain your support obligations. You have to do it whether you're bankrupt or not, and you're not going to get out of it just by the fact that you have gone bankrupt. That is a much stronger signal and is a much more effective remedy for the non-bankrupt spouse in collecting any arrears or lump-sum support payments.
The Chairman: Did you want one quick follow-up to this? We should have time to come back.
Mr. Mayfield: I'd be happy to let it go right now. Thank you.
The Chairman: Good. Mr. Shepherd.
Mr. Shepherd: Maybe you could just clarify something for me from a legal perspective. It is the issue under environmental claims and priority of registration on mortgages and the concept of contiguous property. I'm somewhat mystified by the act's definition of the word ``contiguous''. Maybe you can walk me through this, as a clarification of the process.
If I had a logging company and I got a mortgage from the Royal Bank of $500,000, I have a secured property. A logging company comes along twenty years later, buys a property beside this one, and for all I know has financing from another institution. It subsequently discovers that the property is polluted. My mortgage on property that is in fact clear of an environmental concern is subordinated to the claim for the environmental clean-up on a contiguous property.
Is that the way it would work?
Mr. Kershman: I'm going to sidestep the question, because I really haven't studied the environmental aspects of it and I'd rather tell you that I haven't than give you misinformation just in order to be able to give an answer to a question.
Mr. Shepherd: Okay.
Mr. Kershman: Sorry, Mr. Shepherd.
Ms Brown (Oakville - Milton): I was interested by just one thing you said, Mr. Kershman. You were explaining how the child and family support system is outside of the rules of bankruptcy and this would sort of draw it in and complicate the bankruptcy process.
Mr. Kershman: I think it will, because at least in Ontario they're going to say that you owe an amount of arrears and they will try to collect that money. Then there's going to be an argument, with the other side saying, well, maybe I owe those arrears, but there's x amount of money sitting in my bankruptcy estate that my spouse or my partner who's getting support or my child who's getting support is going to collect out of, so you can't take that much money from me.
So potentially it's going to lead to more court applications fighting over whether the amount of money being deducted is correct.
With respect to the amount of money paid to the trustee, when is that going to come out? Is it going to come out every month, payable by the trustee for those arrears of support? No. It's going to come out in a lump sum. And when is it going to come out? I'd say between six and thirteen or fifteen months later. By then the person looking for the support for either themselves or the child is going to be in financial difficulty. Potentially they will have to go bankrupt, having creditors call them looking for their money, whereas under the present system SCOE pays the money out every month, I believe.
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Ms Brown: I would agree with your point about not complicating the bankruptcy system if I believed, as you stated earlier, the system in Ontario was working well. Are you aware that 70% of the separation and divorce orders in Ontario which include support are in arrears right now? Are you aware that most of those people who are waiting for those payments are in financial difficulty right now?
If you believe it's working well, I can see your point. But the fact of the matter is that it isn't working well. In Ontario, even though it's working inadequately now and is understaffed and underfunded.... We had an announcement just two weeks ago that they're cutting the number of employees and the funds to support that operation drastically. So this SCOE business is a joke among people who are looking for their support. It doesn't happen.
Over the years of waiting and looking for support, the chance to get even one lump-sum payment out of a bankruptcy would be a plus for some of these people who aren't getting anything, haven't got anything for years, and have an application with SCOE that is not being enforced. The fact of the matter is it isn't working well, and this is a very small move in the direction of making sure somebody who has not been responsible about his or her family support obligations is going to get some of their assets transferred to their primary obligation, which in my view is their family.
So I disagree with you completely on this and think this is a big improvement. It's another wedge to try to enforce a value in this country, I believe, and that is that parents should be supporting their children, whether they're bankrupt or not bankrupt. Today if you went in with an application to SCOE to collect these arrears, the people behind the desk will tell you that file will not be picked up for the first time for eighteen months. It won't even be looked at. I don't call that a system that's working well.
Mr. Kershman: You make a good point.
I still believe, notwithstanding that, this amendment will potentially cause more problems than it's supposed to solve. Furthermore, if people's wages are being deducted from their income at source by the employer, I have a hard time understanding why a lot of people aren't paying. I think that if people aren't paying they are self-employed people as opposed to employees.
Ms Brown: It's possibly that, but it's also the fact that a lot of people whose incomes should be garnisheed are in a file in the SCOE office that has never been touched. It's the completion of the casework that isn't happening there.
Mr. Kershman: I can't comment on that.
The Chairman: Mr. Kershman, thank you very much. I know in the past you've expressed to me your interest in this legislation and certainly have brought to bear a great deal of experience. The committee appreciates that. You're probably familiar with the people behind you. We have department people here who are listening to these recommendations very carefully, and we're going to try to make sure this bill comes out of the committee as the best possible piece of legislation.
Thank you again for your time. The members have appreciated your contribution.
Mr. Kershman: Thank you, Mr. Chairman, and thank you, members of the committee.
The Chairman: We're adjourned until Tuesday, September 24.