Sears Canada, former employees reach compromise on benefits, pension payments

Posted
July 13, 2017

A court-appointed monitor says Sears Canada, its lenders and lawyers for employees have reached a compromise that could allow the company to continue paying certain health benefits and special pension payments up to the end of September.

A monitor's report filed Thursday morning was prepared for a hearing in Toronto at the Ontario Superior Court, which granted Sears Canada temporary protection from creditors three weeks ago.

Sears Canada had initially asked permission to immediately halt payments for health and dental benefits for former employees, retirees and surviving spouses as well as the company's special payments to the Sears Canada pension plan.

    However, lawyers representing Sears Canada employees asked the court to reinstate or continue the health benefits until October as the company restructures under court protection from creditors.

    Andrew Hatnay, a lawyer who represents Sears Canada retirees, told CBC News that after "whirlwind negotiations" over the last few days, the retirees "managed to secure a settlement where the company agreed to continue health benefits and life insurance for three more months," as well as continuing special pension payments over the same period of time.

    "Currently, pension benefits continue to be paid in full, there are no reductions, and we're going to be watching how this plays out over the next couple months very closely," said Hatnay, who expressed concern that the pension plan "will ultimately need to be terminated."

    Sears Canada retirees are "sad and angry … because it's difficult for them to understand why their pensions are being affected and why their benefits could be withdrawn," said retiree Ken Eady, who worked for the company for 30 years before retiring in 2003.

    The deal to extend special payments to retirees' pension and benefits plans will hopefully provide "a bridge for people to find other ways to look after those things," said Eady. "We are not sure it's going to continue in the future."

    In separate documents filed by the company's lawyers, Sears Canada's chief financial officer says that it's "crucial" to begin liquidation sales of inventory no later than July 21, and to complete those sales by Oct. 12.

    Read here: Sears Canada, former employees reach compromise on benefits, pension payments