As we warned in our earlier article, quot;Wage Earner Protection Program Act Comes Into Force - Secured Creditors Be Wary," the Wage Earner Protection Program Act (the "WEPPA") took effect on July 7, 2008 to establish a new regime to give employees enhanced protection for wages and pension contributions in the event of the bankruptcy or receivership (court or privately appointed) of their employer.

The WEPPA protection has been extended to include severance and termination pay owing to employees in respect of amounts owing by an employer who became bankrupt on or after January 27 or whose property came under the possession or control of a receiver on or after January 27. The maximum amount claimable under the WEPPA by an eligible employee remains at approximately $3,000 (subject to regulated increases, clawbacks).

While this amendment to the WEPPA should have minimal impact on the lending landscape (the existing super-priority regime remains intact and continues to exclude severance and termination claims), lenders and financiers will wish to continue protecting themselves by considering and implementing the various recommendations made in our earlier article.