Major Company Looking to Suspend Payments to Retirees
Things are not looking up for embattled company Sears Canada and its many employees.
Recently, Sears Canada announced that it's closing dozens of stores (although none in Mississauga) and cutting over 2,000 jobs. Now, it has revealed that it's seeking court approval to suspend certain monthly payments to some retirees.
Due to financial difficulties (the company has found itself struggling to stay afloat in a changing retail market), Sears has asked to suspend special payments towards the defined benefit component of the Sears Registered Retirement Plan (SRRP)—payments that amount to approximately $3.7 million a month.
Sears also hopes to stop paying some post-retirement health and dental benefits, as those payments are running the company about $800,000, as well as post-retirement life insurance premiums (which amount to about $245,000 a month).
"Cash constraints at the Sears Canada Group have resulted in challenges for a number of valued stakeholders, including associates whose positions were recently eliminated or will be eliminated when a number of Sears Canada locations across the country close, [including] retirees, suppliers and landlords," Sears said in a statement.
Sears recently announced that it obtained debtor-in-possession financing of $450 million and that it cannot comply with its budget if it must pay the aforementioned costs.
Sears will seek court approval for the payment suspensions on July 13.
The company says it's reinventing itself in the hopes of becoming more competitive in the future.