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The collapse of Sears Canada is a classic example of how too many of the laws governing corporations protect the wealthy, while ignoring the rights of workers and the long-term health of the economy.
Ottawa (03 Aug 2018) — A CBC article states that the 4 members of the Sears Canada board of directors have been paid at least $600,000 since the company went into liquidation just over a year ago. The information comes from an affidavit filed by Ursel Phillips Fellows Hopkinson LLP, the law firm representing unorganized workers at Sears. The affidavit also states that the board has spent $1.7 million on legal and other professional fees since Sears Canada went into liquidation.
At the same time, former workers at Sears Canada have received no severance and their pensions are being cut. When Sears Canada is finally wound up, the best case scenario is that workers will receive 10% of the severance they are owed — with zero severance being a very real possibility.
Two investigations of directors’ actions taking place
In addition to the cost of the payments to directors and the expenses they incur, the affidavit also raises concerns about the impact of 2 investigations into the actions of the board before Sears Canada went into liquidation.
An investigation of $3 billion in dividend payments between 2005 and 2013 was ordered by the Ontario Superior Court in March of this year. These payments deprived Sears Canada of funds that could have been used to fix a deficit in the pension plan and turn the company around. 2 of the current board members were directors during most of that time.
At the same time the court-appointed monitor of the liquidation is conducting a review of 3 board decisions between 2012 and 2017. All 4 current members of the board were directors for at least some of that time.
One law for the rich, another for the rest of us
The collapse of Sears Canada is a classic example of how too many of the laws governing corporations protect the wealthy, while ignoring the rights of workers and the long-term health of the economy.
Large dividend payments to shareholders were permitted, even though it was clear the company was in trouble and the pension plan was under funded. Workers who put in decades of hard work are deprived of the severance they earned, while board members continue to receive generous payments.
If we are going to reduce income inequality in Canada, this has to change.