A University of Ottawa professor who watched the collapse of Nortel — and the hand-wringing over an under-funded pension plan — says a similar story is unfolding as Sears Canada seeks court approval Friday to begin liquidating assets.

On Tuesday, Sears said it wants to close its remaining 130 outlets, a move that could put about 12,000 employees out of work.

If the company gets the go-ahead, it will begin "a liquidation that would result in a wind-down of its business following court approval," Sears Canada said in a news release.

But this move will not only affect workers losing their jobs with the retailer, it could also have an impact on the 16,000 retirees who collect pensions from Sears, according to  Gilles LeVasseur, a law and business professor at the University of Ottawa.

Gilles LeVasseur

Gilles LeVasseur, a law and business professor at the University of Ottawa, says better laws are needed to protect workers and pensioners. (CBC)

Sears Canada initially went in to court-approved creditor protection on June 22, announcing then it would close 60 stores.

Could take years before settlement known

Last week, in a court hearing, lawyers representing the company said Sears Canada was running out of time and money. It's unclear whether the liquidation of assets will put any money back into the hands of Sears Canada pensioners.

It could also be years before Sears workers and pensioners know what kind of settlement they'll get from the company, LeVasseur said.

"The liquidation will favour key creditors," LeVasseur said. "Even though there may be liquidation, those secured creditors will take the best of it. There won't be enough assets to cover the obligations for the pension fund."

"We should have learned our lessons with the Nortel story. That was a disaster," he said.

LeVasseur said better laws are needed to protect workers and pensioners.

"We need to have appropriate regulation, legislation that would cover minimum standards of what should be the capitalization of these pension funds and require the business to meet certain standards," said LeVasseur.

He said the best way to make sure companies comply with those standards is to make corporate directors personally liable.

"They should not be getting any benefits or any personal advantages until those standards are met for the pension funds," said LeVasseur.

Sears Canada closing store

If Sears gets court approval, it will start liquidating the stores as early as Oct. 19, potentially putting about 12,000 employees out of work. (CBC)

Legislation to protect pensioners failed

Federal legislation to better protect workers during corporate bankruptcies was introduced during previous sessions of parliament.

In 2009, the NDP proposed the "Nortel Act" to have workers seeking to claim the unfunded portion of their pensions considered as preferred creditors in bankruptcy proceedings.

That proposed law was never passed.

In August, in response to the Sears Canada collapse, the NDP proposed hearings to "pay special attention to the layoffs of workers without severance, the bonuses given to executives."