Sears Canada's court monitor opposes priority for pensioners over other creditors
FTI Consulting argues in a filing to Ontario Superior Court that the pension proposal should be dismissed
A court-appointed monitor for the Sears Canada bankruptcy process says it opposes a proposal that would effectively allocate all the failed retailer's remaining assets to the company's underfunded pensions.
FTI Consulting argues in a Sept. 7 filing to Ontario Superior Court that the pension proposal should be dismissed due to legislation and case law.
A petition filed with the court in July by the pensioners claimed about 18,000 Sears retirees should have first claim on assets to reduce a roughly $260 million shortfall in their pension plans.
However, Sears Canada had only about $158.3 million on hand plus a few properties that remain to be sold — meaning none of the company's other unsecured creditors would receive anything if the pensioners get first priority.
If the pension motion fails, the remaining assets will be divided up proportionately among all classes of unsecured creditors.
FTI says it's opposing the pension motion through its role as monitor — a sort of umpire assigned to help a judge sort out conflicting claims — in part because it doesn't appear any of the other unsecured creditors is in a position to challenge it.
It says the other creditors are primarily small businesses and individuals including former employees, retirees, contractors, vendors and customers with warranty claims.
The department store chain's last remaining stores closed their doors for the final time on Jan. 14 this year.