Sears Canada files motion to suspend retiree benefits
Sears Canada has filed a motion with the Ontario Superior Court of Justice to seek, among other things, permission to suspend certain monthly payments to its pension plan and post-retirement health and life insurance benefits, the company announced today.
Citing cash constraints, Sears said it will seek court approval to suspend $3.7 million worth of monthly payments toward the defined benefit component of the Sears Registered Retirement Plan. The company is also hoping to temporarily stop pouring money into its post-retirement health and dental benefit plan, which costs approximately $800,000 a month on average before tax, and its post-retirement life insurance premiums, for which payments amount to $245,000 monthly plus tax.
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Sears said the $450 million it secured from creditors to help rebrand itself require that it comply with a budget that does not provide for the above-listed payments. The retailer is waiting for a court hearing on July 13.
The company, which filed for creditor protection on June 22, has previously said it intended to stop some payments to its retirement plan and benefits plan for retirees.
Sears also recently announced it would not be able to provide severance packages for the 2,900 employees laid off amid corporate restructuring.
The company is continuing operation while it seeks to reinvent itself to emerge as a leaner, more focused operation.
In today’s announcement, it also said it’s seeking court approval to start soliciting investors who might be interested in buying or investing in the Sears Canada Group’s business, assets and/or leases.
It is also hoping the court will extend until Oct. 4 the injunction that halts actions by its creditors to collect debts.