Liquidation of Sears puts pressure on feds

Letter representing pensioners has asked that $270M deficit be paid ahead of other creditors

The law firm representing Sears Canada pensioners has issued a letter to the agency overseeing the liquidation and all other creditors, asking that the pension deficit be paid first and as soon as possible, as money from liquidation sales becomes available.

“Our clients . . . are entitled to first priority recover for those amounts,” according to the letter, from Koskie Minsky’s Andrew Hatnay, citing a prior Supreme Court of Canada decision.

The letter is addressed to the monitor assigned to the case, FTI Consulting, and to the service list, which includes lawyers representing every party to the insolvency.

If Hatnay’s position is accepted by the creditors lining up to be paid, the pension’s $270-million deficit would be paid first, although pensioners would not receive other benefits — dental benefits and life insurance benefits, which were discontinued at the end of September.

If the other creditors refuse to allow the pensioners to be paid first, the matter could end up before the court, according to Hatnay.

“The Liberal government has done nothing to help workers except apparently monitor the situation, leaving workers . . . reeling.” SCOTT DUVALL NDP PENSIONS CRITIC

The legal letter was sent Thursday, a day after Innovation Minister Navdeep Bains said the federal government will consider legislation to protect employees’ pensions when a company goes bankrupt.

While there’s no plan for the government to introduce legislation at the moment, he said it will carefully examine two different private member’s bills on the subject, put forward by a New Democrat MP and a Bloc Québécois MP.

“This is a legitimate issue and a legitimate challenge,” Bains said Wednesday, adding that the government is “very mindful” of the fact that bankruptcy “could happen at any time with any company.”

“That’s why we support secure pensions, that we want to make sure that companies maintain and fulfil their pension obligations and so we’ll work with the employees and companies to address this issue.”

The government has come under increasing pressure to do something to protect the pensions of employees since struggling retailer Sears Canada won court approval to liquidate its assets and close all its remaining stores.

The company has been operating under court protection from creditors since June. The NDP wrote Prime Minister Justin Trudeau on Wednesday, asking him to launch a special parliamentary investigation into the liquidation of Sears.

“While in opposition, the Liberals vowed to change bankruptcy laws to protect workers,” NDP pensions critic Scott Duvall told the House of Commons.

“But since then the Liberal government has done nothing to help workers except apparently monitor the situation, leaving workers at companies like Sears, U.S. Steel, Stelco, Algoma steel, Wabush Mines and Cliff Mines reeling.

“This is criminal and it’s got to stop,” he said. “It’s theft, that’s basically what it is, it’s real theft.”