TORONTO _ A court-appointed monitor says Sears Canada, its lenders and lawyers for employees have reached a compromise that could allow the company to continue paying certain health benefits and special pension payments up to the end of September.
A monitor's report filed this morning was prepared for a hearing at the Ontario Superior Court, which granted Sears Canada temporary protection from creditors three weeks ago.
Sears Canada had initially asked permission to immediately halt payments for health and dental benefits for former employees, retirees and surviving spouses as well as the company's special payments to the Sears Canada pension plan.
However, lawyers representing Sears Canada employees asked the court to reinstate or continue the health benefits until October as the company restructures under court protection from creditors.
The employees' lawyers had argued that their clients and retirees are the "most vulnerable" groups affected by the company's financial difficulties and its plan to close dozens of stores.
They also argued that the company was proposing excessive payments for about 43 head office employees who are being kept on.
The motion said $7.6 million in discretionary retention payments for key employees should have a lower priority than the claims by employees who have been laid off or given notice that they will lose their jobs without severance in the coming months.
About 400 employees from the Toronto head office were immediately let go on June 22 without notice and salary payments were immediately cut off for 1,000 employees who had received termination notices prior to June 22.
In addition, 2,400 store employees have been given notice they won't receive severance pay once their stores close.
In separate documents filed by the company's lawyers, Sears Canada's chief financial officer says that it's "crucial" to begin liquidation sales no later than July 21 and to be completed by Oct. 12.Suggest a correction