Ridout Barron


Employees raise business law questions for Sears Canada closures

Major changes in the economy have caused multiple retail stores to shut their doors. One of the most high-profile bankruptcies in Alberta has been related to the national closure of Sears Canada. Many employees are coming forward with issues regarding the handling of these proceedings. This raises questions about what is legal for a closing business under provincial and federal business law.

Sears Canada operates independently from Sears Holdings in Illinois, although Sears Holdings owns about 12 per cent of its shares. Sears Canada has been suffering from financial difficulties for at least three years, losing an average of 1 million Canadian dollars per day, and has thus taken steps to close stores and revamp debt. With all the closures taking place, Alberta employees have questions about their rights under provincial business law.

Among the concerns are issues regarding pension payment. Over 18,000 retirees of Sears Canada may be facing cuts to their pensions as the company's pension plan has a deficit of nearly 270 million Canadian dollars. A judge has frozen repayments to creditors pending a ruling on this issue. Laid off employees are also seeking answers regarding their compensation and benefits, including their rights to severance payments.

Judges will have to rule on the rights of creditors, retirees and current employees during the insolvency process. Retailers and employees of retail companies in Alberta are paying close attention to how business law plays out in this case, as it may set precedents for future bankruptcies. Those who have business law questions related to their own corporation or employer should contact an Alberta lawyer.

Source: Ian Austen, "Sears Canada to close, leaving 12,000 jobless", Ian Austen, Oct. 11, 2017

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