Sears Canada Inc.

• September 14, 2017

  A letter has been mailed to all non-unionized retirees with life insurance coverage and/or health and dental benefits with Sears Canada. The letter and the enclosures can be viewed here.

• September 12, 2017

  Important note: Contrary to recent reports by certain media outlets, the Sears Canada Registered Retirement Pension Plan is not being wound up at this time and monthly pension benefits are continuing to be paid without reduction.

• September 5, 2017

  We are preparing a mailing on post-retirement benefits with details on the procedures to follow as well as discussing various options for other insurance you may wish to purchase on your own going forward.

  As a reminder, health and dental coverage provided by Sears Canada will be suspended at 11:59pm on Saturday September 30, 2017. Please ensure that you submit all health and dental reimbursement claims that you incurred up to and including Saturday September 30, 2017 to Sun Life Financial by no later than Sunday October 1 , 2017.

  Claims can be submitted by the following methods:

  1. Obtain the applicable claim form from www.sunlife.ca and mail your completed form to the claims office nearest you:
  Sun Life Assurance Company of Canada
  PO Box 11658 Stn CV
  Montreal QC H3C 6C1

  or

  Sun Life Assurance Company of Canada
  PO Box 2010 Stn Waterloo
  Waterloo ON N2J 0A6

  2. Members can submit vision, paramedical, dental, and drug claims electronically through mysunlife.ca or the mobile app if they have an online account with Sun Life. For more information on how to register online, please click here.

  Sears has agreed that claims to Sun Life that are post-marked on or before October 1, 2017 will be considered as received by October 1, 2017 and will be processed. Claims received on or after October 2, 2017 will not be accepted for processing by Sun Life.

• August 15, 2017

  On August 14, 2017, we filed a motion for an order directing Sears Canada Inc. to wind up the Sears Canada Registered Retirement Plan and to continue payment of monthly pension benefits, without interruption, during the wind up process.

  While under CCAA protection, Sears Canada is running a sales process to sell itself, in whole or in parts, to potential purchasers. The company is also closing over 50 stores, conducting a liquidation sales process for those stores, and does not appear to be restructuring. In these circumstances, we do not believe that any purchaser will agree to take over the liabilities of the Sears Canada Pension Plan and that the wind up of the pension plan is inevitable. The wind up will need to be done either by the company or the provincial pension regulator, the Superintendent of Financial Services of Ontario (the “Superintendent”). As reported by the company the Sears Canada Pension plan is underfunded by $266.8 million on its wind up.

  Under the Ontario Pension Benefits Act (“PBA“), there is a remedy for the members of an underfunded pension plan called the deemed trust in favour of the pension plan beneficiaries for the amount owing and not paid by the employer to a pension plan on its wind up. The PBA deemed trust, and the priority given to the deemed trust in the Ontario Personal Property Security Act (“PPSA”), is an vital remedy to help avoid pension benefit losses for members of an underfunded pension plan. The PBA/PPSA deemed trust was held by the Supreme Court of Canada in the 2013 Indalex decision to apply in CCAA proceedings (subject only to the doctrine of paramountcy). The PBA/PPSA wind up deemed trust operates as a priority in favour of pension plan beneficiaries over other creditors, including secured creditors, over certain assets of the company.

  In the circumstances of the Sears Canada CCAA proceedings, we are concerned with the delays by the company and the Superintendent to wind up the Sears Canada Pension plan, which delays can put the PBA/PPSA wind up deemed trust priority for the pension plan members at risk.  The main objective of our motion is to secure the deemed trust priority in favour of the pension plan beneficiaries as soon as possible. To view our motion materials, please click here.

• August 14, 2017

  It has come to our attention that a mailing from Sears Canada Inc., dated June 28, 2017, contained an incorrect local Toronto phone number for contacting the company regarding pension or benefits.  The correct number is 416-572-7300.

• July 25, 2017

  Update on Pension Election Forms

  We have been notified by a few individuals that they have now received their termination statements (or pension election forms) after experiencing some delays from Sears Canada. If you have not yet received these documents, please contact the Sears Canada HR Service Centre at HRSC@sears.ca or 1-888-444-9444 (locally in Toronto 416-572-7300).

  In light of the CCAA filing, Sears Canada as plan administrator has determined that those members who elect commuted value (CV) payments after June 12, 2017 will not receive the full value of their defined benefit pension entitlements at this time. This is as a result of the underfunding in the Sears pension plan. Members whose pension election forms are received by Sears after June 12, 2017 will only receive 81 % of their commuted value. The remaining 19% is payable over five years, but we cannot yet say when or if the additional 19% will be paid. Whether or not you will receive the balance of your CV payments will be determined based on a number of factors, including the outcome of the insolvency proceedings, whether the Pension Plan is wound up, and what additional amounts, if any, will be paid on its wind up. At this time, we do not have information on how this will proceed. The initial transfer at 81% of the commuted value is based on the Transfer Ratio as shown in the actuarial valuation report prepared as at December 31, 2015.

  Please contact us if you have any questions specific to your individual circumstances.

  We will continue to provide updates as information becomes available.

• July 24, 2017

  A letter will be mailed on Wednesday, July 26, 2017 to all non-unionized retirees, and active and former employees affected by the appointment of Koskie Minsky LLP as Representative Counsel. To view a copy of the Letter (in English and in French), please click here.

• July 13, 2017

  On July 13, 2017, the Ontario Superior Court of Justice (Commercial List) (the “CCAA Court”) approved the terms of a settlement reached between Representative Counsel (on behalf of those retirees, employees and former employees represented), the Ontario Pension Benefits Guarantee Fund (“PBGF”), and Sears Canada in respect of Sears’ motion seeking to immediately suspend the following:

  • Post-retirement benefits including life insurance, medical and dental benefits.
  • Special payments owing under the registered pension plan (the “Sears Pension Plan”);
  • Supplemental pension payments;

  To view a copy of the Term Sheet (being Appendix “A” of the Monitor’s Supplement to the First Report), please click here.

  The settlement provides, among other things, the following:

  1. Continuation of life insurance, medical and dental benefits, up to and including September 30, 2017, subject to further order of the Court;
  2. Continuation of special payment contributions by Sears Canada to the Sears Pension Plan and Supplemental pension payments, up to and including September 30, 2017, subject to further order of the Court;
  3. Subject to certain confidentiality restrictions, the PBGF and Representative Counsel will also be provided with access to certain financial and other information, as set out in greater detail in the Term Sheet.
  4. The settlement also preserves the ability for Pension Representative Counsel to bring a motion before the CCAA Court to seek a wind-up of the Sears Pension Plan and to claim priority as a result of a pension deemed trust and/or administrator’s lien and charge in accordance with the Pension Benefits Act.
  5. In exchange for the above, Representative Counsel and PBGF agreed not to oppose the orders sought by Sears Canada on July 13, 2017 approving the (i) the debtor-in-possession financing and related charges; (ii) the terms of the proposed amended and restated Initial Order and (iii) the Sale and Investment Solicitation Process (“SISP”).

   

• July 11, 2017

  On July 6, 2017, Sears Canada Inc. filed a motion seeking to suspend the following:

  • Special payments owing under the registered pension plan;
  • Supplemental pension payments;
  • Post-retirement benefits including life insurance, medical and dental benefits.

  Based on the material, Sears is seeking to suspend medical and dental benefits as of July 31, 2017 and life insurance will be suspended as of August 31, 2017.

  Representative Counsel is working on a response and will provide information as it becomes available. To view a copy of the motion material please click here.

  The motion will be heard on Thursday July 13, 2017 at 10 am at the Ontario Superior Court of Justice located at 330 University Avenue, Toronto, Ontario in court room 8-1.

• June 23, 2017

  At this time, the company has not made any change to retiree pension or health benefits. However, we are in discussions with the company about its intentions while it is under CCAA protection. We are particularly concerned with the company’s plans for the Sears pension plan and other retiree benefits. We anticipate motions will be brought by Sears for approval to suspend making special payments to the pension plan and to suspend health benefits. The company’s intentions with respect to these matters is set out in the company’s CCAA materials which were filed with the court. We understand that it intends to bring these issues before the court by July 13, 2017.  We are having discussions with the company about their proposed motions and will report to you further.

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Toll-Free: 1 800 244 7120

Email: searsrepcounsel@kmlaw.ca