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12,000 workers out of jobs as Sears Canada calls it quits

Employees are not likely to get any kind of severance, according to labour lawyer

by Vanmala Subramaniam
Oct 11 2017, 11:47am

Sears Canada is going out of business, and it’s dragging 12,000 employees down with it.

In one of the biggest mass layoffs in Canadian retail history, Sears Canada announced Tuesday that it would shut down all of its 130 remaining stores across the country as early as October 19th. The liquidation process, it says, will continue for 10 to 14 weeks — it is unclear if Sears employees will continue to receive compensation during that time period.

A Sears Canada spokesperson told VICE Money that of the 12,000 employees impacted by the layoffs, only a quarter are full-time workers. The rest, he said, occupy part-time positions.

“I’m terrified now, they haven’t really told us what will happen, and when it will happen,” said Sam (not her real name), a current employee at Sears Canada’s Scarborough Town Centre location. Sam is 21, and an undergrad at University of Toronto’s Scarborough campus. She has worked at Sears for the last four years, mostly as a part-time employee given her school commitments.

“Contrary to what people think, it’s not very easy to find part-time work that can align with your schedule, especially when you’re in university,” Sam told VICE Money. “I’m dependent on this income. My mom needs it, and I need it, because my student loan isn’t enough for both of us.”

Sears Canada’s downward spiral began early this summer, when it entered into court-approved credit protection, shut down 58 stores and laid off more than 3,000 staff without severance. As recently as last week, Sears Canada’s court-appointed monitor, FTI Consulting was examining a bid submitted by the company’s most senior executive, Brandon Stranzl.

But that bid was unsuccessful, with the company calling it an “unviable transaction to keep Sears Canada going.”

What remains at stake is whether or not these 12,000 employees will receive any kind of severance as a result of the layoffs. According to Ryan Bonnar of Samfiru Tumarkin LLP — a labour and employment firm representing some former Sears employees that were terminated before bankruptcy proceedings began — there is an almost zero percent chance that employees will receive any sort of compensation.

“They are 100 percent owed severance, they are just simply not likely to get it,” he told VICE Money. “This is because secured creditors will get paid first as part of the liquidation, and there won’t be any money left to pay severance. So an employee is owed severance but the company will not be paying it.”

Upon Sears Canada entering into creditor-protection this summer, Samfiru and Tumarkin LLP began writing to every MP requesting that a legislative change be made to bankruptcy laws such that employees are at the “front of the line” when the company is in bankruptcy proceedings.

“The Ministry of Innovation, Science and Economic Development Canada responded to our recommendations with just a statement indicating that they would not be taking our suggestions into consideration,” Bonnar said.

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