Shoppers enter and leave a Sears retail store in Toronto on Thursday, October 19, 2017. A court-appointed representative for Sears Canada retirees says Canada's bankruptcy laws should be changed to avoid financial hardship for members of other underfunded pension plans. THE CANADIAN PRESS/Nathan Denette

Representative for 17,000 Sears Canada retirees says insolvency laws are unjust

Representative for 17,000 Sears Canada retirees says insolvency laws are unjust


A court-appointed representative for Sears Canada retirees said Tuesday that Canada’s bankruptcy laws should be changed to avoid future financial hardship for members of other underfunded pension plans.

Kenneth Eady, a former Sears Canada management employee who now represents 17,000 other pensioners, told MPs that he doesn’t believe it’s fair that Canada’s two bankruptcy laws give banks more protection than pensioners.

Parliament should pass a Bloc Québécois bill to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act, Eady told a Commons committee that’s reviewing the proposed legislation.

“You’re the ones who can make a difference here, folks,” Eady said. “The MPs on this committee can vote in favour of this bill, and help protect seniors. I suggest you do.”

Under questioning, Eady said that Sears Canada retirees would have been helped if the proposed amendments to the two laws were in place when Sears Canada filed its initial request for court protection in June 2017.

But he said Sears Canada retirees probably wouldn’t have been helped much if they were ranked ahead of other creditors and still behind banks, which have “super priority” status.

“It’s a different type of debt that you have with the pension plan. It’s a long term outstanding debt. And so, they have to be treated as super creditors to be to make it meaningful to pensioners,” Eady said.

In the Sears Canada bankruptcy process, which hasn’t yet been completed, there wasn’t enough money to fund pension shortfalls after debts to banks and active employees were repaid ahead of other classes of creditors.

Eady is one of several witnesses who have spoken for or against a private member’s bill that proposes to give underfunded pension plans and banks similar priority in bankruptcy courts.

Representatives from the Canadian Bankers Association and the Insolvency Institute of Canada warned the same committee last week that the bill’s proposed changes would create worse problems than they solve.

Charles Docherty, assistant general counsel for the Canadian Bankers Association, said on Thursday that “a very careful balance has been achieved over several decades in the order of priority and bankruptcy.”

“Ultimately, changes to the order of priority in bankruptcy threatens to seriously undermine the delicate balance with ripple effects across the economy,” Docherty said.

Eady said in an interview Tuesday, after his virtual presentation to the committee, that the high profile nature of the Sears Canada bankruptcy serves as an example of what’s wrong with the current laws.

“MPs are people with family who shopped at Sears. Maybe they worked there as a kid. I know several that have,” he said. “Hopefully the fact that Sears is familiar to so many people, helps … bring this issue clarity.”

Laura Tamblyn Watts, a lawyer and seniors advocate who also addressed the committee Tuesday, said she doesn’t think the banks’ position is supported by evidence in other countries.

“Compared to other jurisdictions Canada significantly lags in its protection of pensioners,” said Tamblyn Watts, chief executive of CanAge, a non-partisan national advocacy group for seniors.

In an interview after her virtual appearance before the committee, she said “everyday Canadians” may not understand the technical terms in the law but they understand the Sears Canada story.

“For instance,” Tamblyn Watts said, “if you tell somebody that the pensioners at Sears in the U.S. didn’t lose any money or any benefits — but they lost 20 per cent (of their pension payments) in Canada and really all of their benefits — people are shocked to understand that the U.S. has better protection.”

This report by The Canadian Press was first published June 8, 2021.

David Paddon, The Canadian Press

SEARS Canada

Just Posted

Alberta premier Jason Kenney announced the province's reopening plan late last month and moved into Stage 1 of that plan Tuesday. (photography by Chris Schwarz/Government of Alberta)
Travel prizes added to Alberta’s vaccine lottery

More than 40 travel rewards available for those who are fully vaccinated

(Advocate file photo).
Red Deer voters can choose their voting station for fall municipal election

The rules are changing to increase accessibility while improving safety

Three Hills RCMP recovered stolen copper wire during recent investigation near Kneehill. (File photo by Advocate staff)
Central Alberta man causes extensive damage at Rocky Mountian House car dealership

A Central Alberta man caused more than $200,000 in damage at Edward’s… Continue reading

The border crossing into the United States is seen during the COVID-19 pandemic in Lacolle, Que. on February 12, 2021. THE CANADIAN PRESS/Paul Chiasson
LeBlanc signals some cautious easing of pandemic travel restrictions coming soon

Government has already said it will relax quarantine protocols in early July

Canada’s Cyle Larin (17) scores past Haiti’s Josue Duverger, bottom left, during the second half of a World Cup qualifying soccer match Tuesday, June 15, 2021, in Bridgeview, Ill. (AP Photo/Kamil Krzaczynski)
Canada, Panama, El Salvador advance in World Cup qualifying

Top three nations in the regional finals advance to 32-nation field for the 2022 World Cup in Qatar

Dragon’s Den cast member Arlene Dickinson poses on the red carpet at the 24th Annual Gemini Awards in Calgary on November 14, 2009.THE CANADIAN PRESS/Larry Macdougal
Entrepreneur Arlene Dickinson’s memoir being developed into scripted TV series

Dramatizing the battle to do business ‘ethically and honestly’

Tampa Bay Lightning defenseman Jan Rutta (44) celebrates with defenseman Victor Hedman (77) after Rutta scored against the New York Islanders during the third period in Game 2 of an NHL hockey Stanley Cup semifinal playoff series Tuesday, June 15, 2021, in Tampa, Fla. (AP Photo/Chris O'Meara)
Kucherov shines, Lightning beat Islanders 4-2 in Game 2

Lightning 4 Islanders 2 (Series tied 2-2) TAMPA, Fla. — Brayden Point… Continue reading

Brooklyn Nets forward Kevin Durant (7) shoots as Milwaukee Bucks guard Pat Connaughton (24) defends during the fourth quarter of Game 5 of a second-round NBA basketball playoff series Tuesday, June 15, 2021, in New York. (AP Photo/Kathy Willens)
Durant’s sensational performance sends Nets to 3-2 lead

Nets 114 Bucks 108 (Brooklyn leads series 3-2) NEW YORK (AP) —… Continue reading

New York Yankees starting pitcher Jordan Montgomery throws to a Toronto Blue Jays batter during the first inning of a baseball game, Tuesday, June 15, 2021, in Buffalo, N.Y. (AP Photo/Jeffrey T. Barnes)
Frazier snaps tie, Yankees come back to beat Blue Jays 6-5

BUFFALO, N.Y. — Clint Frazier snapped an eighth-inning tie with a pinch-hit… Continue reading

The Pornhub website is shown on a computer screen in Toronto on Wednesday, Dec. 16, 2020. Pornhub says it has removed all content uploaded by non-verified users. The sex website faced accusations it hosted illegal content. The company, which is owned by Montreal-based Mindgeek, says it has suspended all previously uploaded content that was not created by one of its content partners or members of its Model Program. THE CANADIAN PRESS
International women’s rights advocates call on Canada to hold Pornhub to account

Jeanette Westbrook says being sexually abused as a child will haunt her… Continue reading

Most Read