Sears retirees tackle billions paid to shareholders

The saga surrounding the closing of Sears continues. The company’s retirees are now trying to recover some of the dividends of nearly $3 billion paid to shareholders.

By asking the Ontario Superior Court on Thursday to appoint a trustee to review these dividends, retirees hope not only to make up their pension reduction, but also to provide funds to other creditors to whom Sears owes money.

“There are good reasons to believe that was inappropriate,” says Sears former employee and retiree representative Ken Eady.

A court document filed by the retirees’ legal advisor says that dividend payments totaling just over $ 2.9 billion are worthy of close scrutiny by a litigation trustee.

This money, paid between 2005 and 2013 , comes from the sale of valuable Sears Canada assets, such as real estate. At the time, however, the retailer’s sales and profits were declining, and the company’s pension plan was starting to show a deficit.

“Despite the continued deterioration of the Company’s financial position, the Sears Canada Board of Directors has approved the payment of dividends to its shareholders,” says the court document.

It also targets the CEO of ESL Investments US fund Eddie Lampert, who has benefited the most from this transaction despite his criticism of Sears Canada .

“Through ESL, Mr. Lampert had direct and indirect control of Sears Canada’s interests at the time and was the primary beneficiary of dividend payments,” the document says.

Mr. Eady says it was inevitable that retirees would go after the dividend payments.

It is not surprising that this happens. In what universe is it correct for a company to sell its assets, pay dividends and leave creditors with nothing?

Ken Eady, former employee and retired representative of Sears
Pension Fund Problems

Ken Eady, relying on Sears actuaries, estimates that the pension plan is underfunded by approximately $ 270 million, which means a 19% reduction in the pensions of nearly 16,000 former employees.

” It will hurt. I may have to find a part-time job to compensate for what I do not get, “says Attilio Malatesta, 72, who has spent more than half of his 44-year career at Sears in the Kelowna area , in British Columbia.

Sears Canada has not responded to CBC’s interview requests at this time. However, in an online publication last weekend, Eddie Lampert defended dividend payments, stating that a company must provide adequate returns to shareholders to remain viable and that the payments have not hurt the retailer, since Sears continued to invest in the business.

Lampert also said that the company’s shareholders have collectively lost more than $ 1 billion since 2012, even after paying dividends.

With regard to the disappearance of Sears Canada, he said it was mainly the result of an expensive but unsuccessful restructuring strategy launched in 2016.

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