The company is seeking permission to suspend monthly payments amounting to $3.7 million that goes to the defined benefit component of the Sears Registered Retirement Plan, reported Global News. The company is also hoping to temporarily halt payments to its post-retirement health and benefits plan, which has an average before-tax cost of around $800,000 a month, as well as its post-retirement life insurance premiums, which amount to $245,000 a month plus tax.
Sears Canada said that a $450-million lifeline extended by creditors, which is to be used in a rebranding effort, came with a stipulated budget that doesn’t provide for payments toward the pension plan and post-retirement benefits listed in the motion. The retailer filed for creditor protection on June 22.
The company also recently said that it would be unable to provide severance packages for 2,900 employees that have been laid off as the company goes through restructuring. It’s still continuing business as it attempts to reinvent itself into a leaner, more focused operation.
The retailer is expecting a court hearing on July 13. It’s also hoping for an Oct. 4 extension on the injunction halting its creditors from collecting on debts.
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In a motion filed with the Ontario Superior Court of Justice, Sears Canada has asked for approval to suspend certain monthly payments to its pension plan as well as post-retirement health and life insurance benefits.