A court decision has given Sears Canada a retirement hoping that they can recover some of the missing millions of dollars from the pension scheme that are not funded by the retailers that are now dead.
Superior Court Ontario judge on Monday gave approval to two legal cases targeting U.S. billionaire businessman, Eddie Lampert and hedge fund, ESL Investments, in connection with $ 509 million in dividends paid to shareholders Sears Canada in 2013.
Legal proceedings – all have started on behalf of Sears creditors including pensioners – focusing on the same claim: that the payment of $ 509 million was damaging to the company and was organized by the largest shareholders of Sears Canada – Lampert and ESL – for their own benefit.
The plaintiffs also claim that the board of directors of the Sears Canada at the time failed to do their "due diligence" before authorizing the dividend payment that "had corrected the retailer's ability to remain in business."
Two former director William Harker and William Crowley have also been named in the suits.
"It's worried about me because all appearances of taking the money just regardless of the company," Ken Eady, pensioner and vice president of the Sears Canada Retiree Group, is a volunteer organization that represents retirement.
At the time of dividend payment, Sears had an operating loss of $ 187.8 million and the pension fund was $ 133 million short, according to court documents.
"If there had been a balanced approach, they would have said," No, we should not have paid this dividend, "said Eady.
In court documents, solicitors for both former directors claim that "an unusual approach to the conclusion that the 2013 dividend" had contributed to Sears insolvency that did not take place until June 2017.
ESL takes a similar position.
"We believe there is no legal basis to recover those dividends and no attempt to do so would be impartial," said a spokesman for the ESL, Michael Mittelman, in a statement.
He said, after paying the dividends in 2013, Sears had "very small debt "and $ 514 million in cash on its balance sheet.
Lampert is chairman and CEO of ESL as well as chair of Sears Holdings in the U.S., filed for bankruptcy protection last month with restructuring plans.
The aim of the legal cases is to recover money for creditors of Sears Canada, including 18,000 retired pensioners who had their pensions broken 20 per cent after the retailer was bent and left behind an unfunded pension scheme .
"I'm so exceptionally happy," said retirement, Gail McClelland on court news.
"We worked all our lives for that pension and got it [money] back would be the happiest day of my life. "
According to court documents, retirement claims that Sears is due almost $ 730 million to them, which includes $ 260 million for the pension fund deficit and $ 421 million for lost health benefits retire.
As a result of a purposeful agreement in October with the Sears Canada estate, pensioners are standing to collect about $ 48 million of what they owe.
In the meantime, they live with fewer pensions, enforcing some to return to work to make heads meet.
McClelland starting to look for a job in September.
"In this age, who's going to take me back?" said the 69-year-old widow who worked in selling furniture in Calgary for most of her 33 year career with Sears.
"It has a complete disappointment. I should be enjoying my life that I was working all my life and now I have to go back to the job because someone has compromised my pension. "
Long way forward
McClelland hopes that his situation will ultimately improve, but she will have to wait for the ruling in what is likely to be a long and parrot court fight before finding out if retirement will win any rewards .
It suggests that retirees could avoid a legal battle if the federal government had created legislation that guarantees employee pensions when corporations fall.
"If the laws were in favor of protecting pensioners and pensions, we would not have to go through this."
In Ontario, Sears's retirees are currently improving better than their colleagues elsewhere because Provincial law that guarantees the first monthly pensions of $ 1,500 for retirees in defined benefit schemes.