Protect Students if Campuses Go Insolvent

Summary#

This bill requires the federal government to develop, within one year, a proposal to reduce the risk that post‑secondary institutions become insolvent and to protect students, staff, and communities if that happens (Bill s. 4(1), s. 4(4)-(6)). It also changes federal insolvency laws so that publicly funded post‑secondary institutions are excluded from the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA), but those changes only take effect by cabinet order after the proposal is ready (Bill s. 5–6; coming-into-force).

• Sets a one‑year deadline for a public, tabled proposal with a timeline for further laws (Bill s. 4(3)-(6)).
• Requires consultations with institutions, provinces/municipalities, and groups for students, faculty, and staff (Bill s. 4(2)).
• Excludes publicly funded post‑secondary institutions from BIA/CCAA once brought into force by order in council (Bill s. 5–6; coming-into-force).
• Limits the Minister’s ability to trigger the exclusion until it aligns with the completed proposal (Bill coming-into-force).

What it means for you#

• Households and students

  • No immediate change to tuition, programs, or student aid is specified in the bill (Data unavailable).
  • If a school becomes insolvent after the exclusions take effect, it would not use BIA/CCAA processes. Protections for students would depend on future measures set out in the proposal and any later legislation (Bill s. 4(1)(b), s. 5–6).
  • The proposal must be completed and made public within one year after the relevant section comes into force (Bill s. 4(4)-(6)).

• Workers (faculty and staff)

  • No immediate change to collective agreements or employment standards is specified (Data unavailable).
  • The proposal must include measures to protect faculty and staff in an insolvency scenario, but details are not yet defined (Bill s. 4(1)(b)).
  • If the exclusions take effect, insolvency would be handled outside BIA/CCAA, which could change how wages, pensions, or benefits are treated. Specific outcomes depend on future federal and provincial measures (Bill s. 5–6).

• Post‑secondary institutions

  • Institutions, and groups representing them, are named consultees for the federal proposal (Bill s. 4(2)(a)).
  • Institutions that receive government or municipal funds for ongoing educational services would be excluded from BIA/CCAA once those changes are brought into force, affecting restructuring options and creditor negotiations (Bill s. 5–6).
  • The proposal must list legislative amendments the government plans to introduce and a timeline, which will signal future compliance and risk‑management expectations (Bill s. 4(3)).

• Creditors, bondholders, and lenders

  • For publicly funded institutions, BIA/CCAA restructuring or liquidation would no longer be available once the exclusions take effect. Claims would be resolved under other legal or policy frameworks that are not yet specified (Bill s. 5–6).
  • Timing is uncertain until the proposal is completed and cabinet brings the exclusions into force by order in council (Bill coming-into-force).

• Provinces, territories, and municipalities

  • Formal role in consultations on the federal proposal (Bill s. 4(2)(b)).
  • The proposal must include support for communities affected by an insolvency, but it does not change provincial jurisdiction over education. Specific funding or tools are not defined in this bill (Bill s. 4(1)(c)).

Expenses#

Estimated net cost: Data unavailable.

• No explicit appropriations, transfers, or new fees are in the bill text (Bill, passim).
• Administrative costs to develop, table, and publish the proposal are not stated. Data unavailable.
• Any future spending or savings would result from follow‑on legislation listed in the proposal, which is not yet defined (Bill s. 4(3)).

Proponents' View#

• Reduces the risk of disorderly closures by moving publicly funded institutions out of BIA/CCAA and into a policy‑guided framework focused on students, staff, and communities (Bill s. 4(1)(a)-(c), s. 5–6).
• Ensures broad input and buy‑in through required consultations with institutions, governments, and groups for students, faculty, and staff (Bill s. 4(2)).
• Imposes a clear deadline and transparency: the proposal must include a legislative roadmap and be tabled and made public (Bill s. 4(3)-(6)).
• Phased implementation limits disruption: exclusions from BIA/CCAA only take effect after a plan exists and only if the Minister deems it consistent with that plan (Bill coming-into-force).
• Targets publicly funded institutions that deliver services to the general public, aligning insolvency treatment with their public role and funding (Bill s. 5–6).

Opponents' View#

• Removing access to BIA/CCAA could reduce predictable, court‑supervised restructuring tools, creating uncertainty for creditors, employees, and suppliers; financing costs for institutions could rise as a result (assumption; Bill s. 5–6).
• Uneven treatment: only institutions that receive public funds are excluded, while unfunded private institutions remain under BIA/CCAA. This could create incentives to adjust funding status to access preferred insolvency routes (Bill s. 5–6).
• Delegates significant discretion and timing to the Minister and cabinet. The exclusions may be delayed or fragmented, prolonging uncertainty for institutions and creditors (Bill coming-into-force; Bill s. 4(4)-(6)).
• The bill sets goals but not concrete protections or funding. Until follow‑on legislation arrives, there is a policy gap on how students, staff, and communities would be protected in an actual insolvency (Bill s. 4(1), s. 4(3)).
• Intergovernmental complexity: education is mainly provincial. Coordinating federal initiatives with provincial laws could slow implementation or create overlaps, despite consultation requirements (Bill s. 4(2)).