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Canada

Sears Canada’s court monitor opposes priority of assets be given to pensioners over other creditors

(Jan. 15, 2018): Sunday was the last day for the Canadian retailer. The liquidation sales ended and the last of its stores are now permanently closed. Tanya Beja reports.

TORONTO – A court-appointed monitor for the Sears Canada bankruptcy process says it opposes a proposal that would effectively allocate all the failed retailer’s remaining assets to the company’s underfunded pensions.

FTI Consulting argues in a Sept. 7 filing to Ontario Superior Court that the pension proposal should be dismissed due to legislation and case law.

READ MORE: Sears liquidation puts pressure on Ottawa to protect pensions

A petition filed with the court in July by the pensioners claimed about 18,000 Sears retirees should have first claim on assets to reduce a roughly $260 million shortfall in their pension plans.

However, Sears Canada had only about $158.3 million on hand plus a few properties that remain to be sold – meaning none of the company’s other unsecured creditors would receive anything if the pensioners get first priority.

READ MORE: Video shows chaos and clutter at Sears store after liquidation sales

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If the pension motion fails, the remaining assets will be divided up proportionately among all classes of unsecured creditors.

FTI says it’s opposing the pension motion through its role as monitor – a sort of umpire assigned to help a judge sort out conflicting claims – in part because it doesn’t appear any of the other unsecured creditors is in a position to challenge it.