The proposed bill aims to redefine "corporation" and "company" in the Bankruptcy and Insolvency Act to exclude certain public institutions, such as banks, insurance companies, and public entities receiving government grants from bankruptcy laws.
Groups that may be impacted include employees of public institutions, taxpayers, and consumers who rely on essential services like education and healthcare. Employees may feel more secure in their jobs, while taxpayers might be concerned about the potential for increased governmental spending.
If public institutions are exempt from bankruptcy laws and engage in poor financial practices, it could lead to higher expenses for governments. Increased spending might be necessary to bail out financially mismanaged institutions, which could ultimately raise taxes or divert funds from other essential services.
Supporters argue that exempting public institutions from bankruptcy laws will help maintain stability in critical services. They believe it protects taxpayer money from being drained by the costs of insolvency proceedings, ensuring that essential services continue without interruption.
Critics contend that this bill could reduce accountability for public institutions, leading to financial mismanagement. Without the pressure of bankruptcy laws, these institutions may engage in risky financial behaviors, potentially costing taxpayers more in the long run due to increased government bailouts and intervention.