July 6, 2018
Mediation on June 13-14, 2018
On May 9, 2018, the CCAA Court approved a mediation to be held June 13-14, 2018 among the major stakeholders to discuss various issues, including the allocation of recoveries in the CCAA proceedings. The mediation did not result in a mediated solution among the creditors. Following the mediation, various parties have considered alternative approaches. We will be seeking to bring a motion for a declaration that the PBA deemed trust is applicable in favour of the pension plan beneficiaries in the amount owing by Sears Canada to the pension plan and that a distribution in respect of the wind up deficit claim should be made forthwith.
Sears Canada is continuing to wind-down their operations in an orderly manner and complete the liquidation of their remaining assets, including certain owned real estate assets. The inventory liquidation processes for Sears Canada have been completed. In addition, the sales of all of the residual assets have substantially been completed.
In June 2018, letters were sent by Morneau Shepell, the Pension Plan Administrator, to all retirees and beneficiaries who are receiving a monthly pension notifying them of any applicable future pension reductions. Cutbacks to pensions will occur commencing with the August 1, 2018 pension payment. Morneau Shepell has reviewed the current funded status of the Sears Canada Plan and has determined, as an interim measure, to reduce monthly pension benefits to 70% during the wind-up process. At the end of the wind up process, any net over or underpayment paid to pensioners will be taken into account when determining the amount of pension they will receive on final settlement of plan benefits by annuity purchase.
For members who are former Sears Canada employees with employment service in Ontario, the Pension Benefits Guarantee Fund will apply to the first $1,500 of the members’ monthly pension. This means that the first $1,500 of any eligible monthly pension paid in respect of Ontario employment will be fully paid and any excess over $1,500 per month will be paid at the 70% during the wind up process.
We will continue to post new developments as they occur.