Sears Canada pen­sion ‘saga is not over yet’


The pro­vin­cial NDP is putting pres­sure on the Lib­eral govern­ment to pro­tect pen­sion­ers in bank­ruptcy pro­ceed­ings, such as the 18,000 Sears Canada em­ploy­ees and re­tirees fac­ing the pos­si­bil­ity of re­duced pay­outs due to the retail chain’s in­sol­vency.

“This govern­ment is fail­ing pen­sion­ers,” Oshawa MPP Jennifer French said dur­ing Ques­tion Pe­riod at Queen’s Park on Wed­nes­day, call­ing on Premier Kath­leen Wynne to make changes.

“Last year, the premier — ac­tu­ally, ev­ery­one in this whole House — sup­ported my mo­tion to pro­tect pen­sion­ers by pri­or­i­tiz­ing them dur­ing bank­ruptcy pro­ceed­ings. Now, the premier is say­ing that there isn’t a role for govern­ment. Now, she doesn’t seem to think they de­serve her help,” French said.

Judge says other cred­i­tors in com­pany’s in­sol­vency are not to be paid un­til the is­sue af­fect­ing 18,000 re­tirees and ben­e­fi­cia­ries is ad­dressed

“Why did the Premier go back on her word and de­cide that pen­sion­ers should be left to fend for them­selves?”

Fi­nance Min­is­ter Charles Sousa said the govern­ment is tak­ing steps to re­form pen­sions across the prov­ince to pro­tect the in­ter­ests of pen­sion­ers, which he said French is aware of.

“It’s cer­tainly an is­sue of great con­cern for all of us when any com­pany is fal­ter­ing on their com­mit­ments,” Sousa said, adding that On­tario is the only prov­ince that of­fers a pen­sion guar­an­tee that would help re­duce the im­pact of a pen­sion deficit.

“We’ve rec­og­nized that the as­sets of the pen­sion must be sup­ported. We are work­ing to en­sure that Sears, which does re­main an op­er­at­ing com­pany at this point, is con­tin­u­ing. FSCO (Fi­nan­cial Ser­vices Com­mis­sion of On­tario), which ad­min­is­ters the PBA (Pen­sion Ben­e­fits Act), in­clud­ing the pen­sion ben­e­fits guar­an­tee, is also mon­i­tor­ing the sit­u­a­tion.”

A spokesper­son for Sears Canada de­clined to com­ment. A mo­tion by the lawyer rep­re­sent­ing the pen­sion­ers to wind up the Sears Canada pen­sion fund was post­poned on Tues­day, but On­tario Su­pe­rior Court Jus­tice Glenn Hainey also or­dered that other cred­i­tors in the com­pany’s in­sol­vency are not to be paid un­til the is­sue is ad­dressed.

“There shall be no dis­tri­bu­tions to other cred­i­tors . . . prior to the fi­nal de­ter­mi­na­tion of the Wind Up Mo­tion,” Hainey wrote in the or­der.

There are ap­prox­i­mately 18,000 re­tirees and ben­e­fi­cia­ries who rely on re­ceiv­ing monthly pen­sion ben­e­fits from the Sears Canada Plan, which is un­der­funded by about $270 mil­lion.

Ac­cord­ing to doc­u­ments filed with the court in sup­port of Tues­day’s mo­tion, a group of 6,000 re­tirees has since Novem­ber 2014 been re­quest­ing that the de­fined ben­e­fit part of the plan be wound up in or­der to dis­en­gage it from the fail­ing com­pany.

Wind­ing up the plan would re­quire the com­pany to pay the full amount of the deficit, and could also trig­ger a pay­ment into the plan by the On­tario Pen­sion Ben­e­fits Guar­an­tee Fund that would help off­set un­der­fund­ing, ac­cord­ing to the court doc­u­ments.

Hainey said the is­sue is to be heard no ear­lier than on Nov. 30.

“It’s a step in the right di­rec­tion I would say, though this is still an out­stand­ing is­sue,” said An­drew Hat­nay, of Koskie Min­sky LLP, which rep­re­sents Sears Canada em­ploy­ees and re­tirees. “This saga is not over yet.”

Sears Canada filed for cred­i­tor pro­tec­tion on June 22 in or­der to re­struc­ture, and is clos­ing 59 stores and let­ting go 2,900 em­ploy­ees in an ef­fort to emerge a slim­mer, prof­itable busi­ness.

It is look­ing for a buyer for some or all of its op­er­a­tions.

Sears Canada has said it can­not con­tinue to make pay­ments on the pen­sion deficit.

“I don’t know if the word vic­tory is right, but it’s a good in­terim or­der, it pro­tects them pretty well.”


Hat­nay said that whether or not the com­pany will end up with $270 mil­lion to add to the pen­sion fund would de­pend on how much it is able to raise dur­ing the sales process, which will take sev­eral more weeks to con­clude.

“I think that is go­ing to be an­swered in the next phase of this file, which is when the sales process is con­cluded, which will take we think sev­eral months,” Hat­nay said. “And then we’ll see how much they have sold and how much they have col­lected from the sales. So that is yet to be de­ter­mined.”

Jus­tice Hainey’s or­der does not af­fect pay­ments to those en­gaged in the cur­rent le­gal process, in­clud­ing the trustee and com­pany pro­vid­ing fi­nanc­ing to Sears Canada.

“This is a win for the pen­sion­ers,” said Lou Brzezinski, a part­ner with Blaney McMurtry LLP. “I don’t know if the word vic­tory is right, but it’s a good in­terim or­der, it pro­tects them pretty well.

“The judge is say­ing: ‘Let’s pro­tect their in­ter­ests un­til the end of Novem­ber, and pro­tect them com­pletely.’ ”

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