EDITORIAL PAGE — Directors no more

Are directors of public companies on their way to becoming an endangered species? If so, who would want to become a director in the first place?

In Vancouver recently, six of nine members of the board of directors of Westar Mining submitted their resignations. The reason? The avoidance of the potential liabilities worth $20 million or more.

The troubled west-coast coal miner, carrying debts of more than $400 million, is under court protection from its creditors. The resignations were prompted by the exposure to possible personal liability from service as directors for wages, severance and pension contributions that would be owed to company employees if Westar declared bankruptcy.

The company’s chairman seemed not to be caught off guard. “I understand and sympathize with the dilemma that board members find themselves in when faced with liabilities arising from the province’s Employment Standards Act, which appears to be in conflict with the objectives of the court in granting the company Companies’ Creditors Arrangement Act protection,” said Larry Bell. Westar is currently working on a restructuring plan which it says it expects will be available for discussion with creditors this summer. The company has liability insurance, but obviously not enough to ease the worries of the majority of the directors.

At stake, of course, are not only the directors’ seats, but the continued operation of the Balmer coal mine in southeastern British Columbia and the possible loss of jobs of the mine’s 1,300 employees.

In asking the British Columbia government to review the situation and help the directors out of their “dilemma,” the company drew attention to the assistance rendered by the Ontario government this year to the directors of Algoma Steel in Sault Ste. Marie when the steel company restructured its debt obligations.

If the law says a director may be liable for wages owing in a bankruptcy, then so be it. You can’t force an individual to be a director under those circumstances. Endangered species, here you come.