Sears Canada Inc.’s pensioners reached a settlement last week after they were denied priority over the company’s other creditors.

The settlement is subject to certain conditions before it becomes binding, according to a news release from Koskie Minsky LLP, the firm representing Sears’ retirees in the proceedings. The firm is dropping the deemed trust option it was pursuing that would have placed pensioners as priority creditors, referring to the legal expenses and uncertainty of outcome that accompany the strategy.

Read: Sears Canada’s court monitor opposes priority for pensioners over other creditors

“At this stage, the vast majority of assets of Sears Canada have been sold and there is only expected to be about $180 million available for distribution to all of Sears Canada creditors,” noted a release from the firm. “Borrowing from economic theory, the law of diminishing returns applies in this case. Despite its merits, the pension deficit deemed trust claim was opposed by the monitor and other creditors and would have likely led to protracted litigation and appeals.”

The retirees’ total claim on the estate comes to about $1.2 billion, the release noted. The settlement is treating the $260 pension deficit claim at 2.5 times its sum, at $650 million. In addition, the claim includes retirees’ terminated health and insurance claims, about $421 million; the purchase discount claim, $13.7 million; and the unfunded supplemental pension claim, an amount currently being settled with the monitor.

Read: Feds must act to protect Sears’ Canadian pensioners: CARP

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com
See all comments Recent Comments

Steven Seeds:

The Stephen Harper Conservative government did nothing to help us Nortel Networks pensioners. I thought Justin Trudeau’s Liberal government would do something but like Harper he did nothing. Trudeau is more interested in forcing companies to pay women equal pay for work of equal value (not for equal work). When it comes to pensions, “big business” will always get the money before workers see it. Dalton McGuinty at least protected the first $1,000 per month.

I feel so sorry for Sears workers.

Monday, December 03 at 5:24 pm | Reply

Ketu Kingston:

We, as Canadians, have seen this occur before with other companies, i.e. Northern Telecom. What makes this such a travesty is that the CEO and other upper management received bonuses and large salaries, while the average employee suffers. The federaL government must have a mechanism in place to avoid companies sidestepping this vital responsibility. Why should taxpayers bail out the likes of car companies and then have that crash anyway and yet leave these people financially stranded?

Monday, December 03 at 11:02 pm | Reply

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