Sears pensioners have requested the Superior Court in Toronto to appoint an investigator to look into the nearly $300 Million shortfall found in the company’s pension fund. They particularly want the investigator to assess the $3 billion in payments made to Sears Canada shareholders.
The former employees are particularly targeting the U.S. hedge fund ESL Investments and have included its CEO Eddie Lampert in the complaints. This CEO has been the head of Sears since 2005 and has received the majority of the $3 billion pay out.
Lampert has said the the shareholder payments were not questionable and that most of the money came from the sale of the company’s valuable real estate holdings. Lampert has claimed that his hedge fund company had significant financial losses after the Sears bankruptcy. He said that the demise of Sears Canada is mostly attributed to a failed restructuring plan that he opposed in 2016. He also believes that the pension shortfall has been overestimated and that the money will eventually be recouped.
“ESL disagreed with the aggressive and risky strategy to stimulate sales growth known as ‘Sears 2.0,” said Lampert. He also stated that his firm advised Sears against borrowing money to finance an “untested strategy” that was “unlikely to succeed.”
However, management still continued with its plan and “the company’s operating losses and cash drain rapidly worsened,” Lampert said.
Lampert is also the CEO of Sears Holding Company (SHC), which operates separately from Sears Canada. The SHC has released the following statement:
“Sears Holdings received dividends that were duly authorized by Sears Canada’s board of directors during a time when Sears Canada was clearly solvent, with minimal debt,” stated spokesperson Chris Brathwaite.
The company had already cut health, dental, and life insurance benefits in late 2017. This pension shortfall could mean an almost 19 percent reduction to the payout, which will have a lasting impact on the 18,000 employees that rely on the pension payments.
Ken Eady is one of the court appointed pensioners representing Sears pensioners in Canada.
“At 72, having a part-time job is possible. The older you get the less likely you are able to do that. But the impact is the same, the loss is the same. There’s people in their 80’s and in their 90’s — with 18,000 retirees there’s people over 100,” Eady said.
The retailer’s financial troubles are well known. Sears has been in Canada since 1952 and was considered quite progressive with its mail order catalogs and popular department stores. The company has failed to keep up with recent retail trends. Sears has also alienated many customers during its restructuring, in which many employees were laid off without severance and pensions were being reduced to keep the company afloat financially. Many pensioners in Canada are eagerly awaiting the findings of the court’s investigation.
To learn more about this case or report suspected fraud, contact Jeffrey Newman Law today!