Sears workers get the cold shoulder

ed calls for change, including a new private member’s bill tabled in Parliament. But the only response from the government was a pathetic statement from Innovation and Economic Development Minister Navdeep Bains saying “the government is connecting Sears employees with services to help them through this difficult time.” There’s been no indication the government is considering changing bankruptcy laws that leave pensioners unprotected.

One of the arguments that has deterred governments from changing bankruptcy law is that it would harm the ability of Canadian companies to access debt capital. As the former CEO of a company that raised tens of billions of dollars in Canadian debt markets, I can honestly say that no banker or bondholder ever paid any attention to the funding status of our definedbenefit pension plan. In reality, the only time lenders become concerned about employee pension obligations is when a company is at the brink of collapse, in which case they wouldn’t consider lending anyway.

Calls for the Sears retirees to receive higher priority in distribution of insolvency assets have encountered opposition from the 250 independent local “Hometown” dealers whose businesses were destroyed by the Sears Canada closure. Clearly, their position is bleak, but the situation isn’t comparable to that of the pensioners. Like all business owners, they knew that their financial future depended on saving profits made over the years. Moreover, the demise of Sears is part of a massive restructuring of the entire retail sector that’s been unfolding for quite some time.

By contrast, Sears pensioners, many of whom spent most or all of their careers working for the company, were content with modest pay in the belief that the compulsory pension plan they paid into for decades would provide security for their retirement years. They had no reason to believe otherwise. Sadly, this belief has made them worse off now than if they had never had a pension plan and had been left to make other retirement preparations instead.

Sears Canada is jointly owned by its American parent holding company and a U.S. hedge fund run, strangely enough, by the CEO of the Sears parent holding company. Between 2005 and 2013, the company sold its prime Canadian real estate assets and sent $3.5 billion south of the border to those shareholders by way of special dividends and share buybacks. On Thursday, lawyers representing former Sears workers met with lawyers for the company to try and reach an agreement on appointing a trustee to review that huge transfer, made while the pension plan was short $300 million. That the Sears Canada Board would make the unconscionable decision to approve this massive asset stripping, while leaving their workers’ pension plan woefully underfunded, begs for legal retribution. But that would only increase the costly and time-consuming wrangling in bankruptcy court, further lessening any chance that the 16,000 laidoff employees and 18,000 retirees will ever receive any part of the meagre assets still left in the company.

Prime Minister Justin Trudeau likes to portray the image of a leader looking out for the little guy. It’s time he walked the talk. The federal government should act now to change the law to prevent Sears, and other private-sector defined-benefit pension plan members, from seeing their futures torn apart in bankruptcy court.