July 23, 2018
Deemed Trust Motion
On Friday, July 20, 2018, our firm, on behalf of all retirees and former employees of Sears Canada with pension claims, filed a motion with the CCAA Court seeking, among other things, a declaration that the amount of the pension wind up deficit (the “Wind Up Deficit“) is deemed to be held in trust by the company for the beneficiaries of the Sears Canada Plan.
Under section 57(4) of the Ontario Pension Benefits Act, the deemed trust captures an amount owing by Sears Canada to the plan that has not been paid. We are seeking a declaration that this deemed trust applies to the Wind Up Deficit of the Sears Canada Plan.
Our motion also seeks a further declaration that this deemed trust has priority ahead of all the other remaining creditors in the estate. We are, therefore, seeking an order from the court directing the Monitor to pay the amount of the Wind Up Deficit from the assets in the estate of Sears Canada into the fund of the Sears Canada Plan.
In addition, we are seeking a declaration that Morneau Shepell, as the replacement plan administrator, has a lien and charge over the same amount of the Wind Up Deficit in favour of the plan. This is an additional secured interest over the remaining assets of the Sears Canada estate in favour of the Sears Canada Plan, in the event that our deemed trust claim is not successful.
A copy of our motion materials can be found here. We expect this motion to be heard in the fall. If successful, we expect that most of the remaining assets of the Sears Canada estate will go towards reducing the Wind Up Deficit.